Cheaper healthcare for South Africa on the cards

The Minister of Trade, Industry and Competition, Parks Tau, has published a draft block exemption for tariffs in the healthcare sector for public comments.

This exemption is expected to increase affordability, transparency, and universal access to quality healthcare services in South Africa.

The Competition Commission announced on Wednesday, 19 February, that it has released a draft block exemption for tariffs in the healthcare sector. 

The draft block exemption aims to regulate how healthcare tariffs are determined, making the process more structured and transparent.

In simple terms, a draft block exemption is a temporary rule that allows businesses in a specific industry to work together in ways that would normally be considered anti-competitive or against the law.

In this case, the healthcare draft block exemption allows hospitals, doctors, and medical aid providers to collectively decide on medical tariffs, billing codes, and quality standards. 

Normally, this kind of coordination would be illegal under competition laws because it could lead to price-fixing. 

However, the government is allowing it to reduce healthcare costs temporarily and improve transparency. The exemption would last for three years, with a possible extension.

The Competition Commission explained that, currently, tariff negotiations happen bilaterally, leading to inefficiencies, high costs, and price disparities.

“This has led to inefficiencies, high cost of healthcare services, pricing differences, and a lack of pricing transparency,” it said.

“The draft block exemption is aimed at enabling a structured and streamlined process for tariff determination on an interim basis, effectively creating a multi-stakeholder framework for the determination of healthcare tariffs.”

“Establishing an equitable and transparent framework for tariff determination contributes to the long-term goal of reducing costs and promoting universal access to healthcare.”

In 2019, a Health Market Inquiry (HMI) recommended the establishment of a structured multilateral framework for tariff determination.

Therefore, the commission explained that two new structures will be created –

• Tariffs Governing Body (TGB): Experts overseeing tariff determinations
• Multilateral Negotiating Forum: Stakeholders setting maximum tariffs for healthcare services

This draft comes after the commission declined individual exemption applications, favouring an industry-wide approach with regulatory oversight.

Controversy

The Board of Healthcare Funders (BHF) has been actively seeking ways to address the escalating costs of private healthcare in South Africa. 

As a representative body for medical schemes, the BHF believes that allowing collective negotiations between medical schemes and healthcare providers could lead to more affordable healthcare services.

Therefore, in December 2021, the BHF submitted an application to the Competition Commission, seeking an exemption to allow its members to collectively negotiate tariffs with healthcare providers. 

The Department of Health and the Council for Medical Schemes (CMS) opposed this application. 

In January 2025, the Competition Commission rejected the BHF’s application, stating that such collective negotiations could reduce competition in the market.

However, this dispute comes as the government is planning to roll out National Health Insurance (NHI).

The BHF has alleged that the CMS’ reluctance to make these options available is politically motivated.

The BHF has now taken the matter to the High Court, arguing that CMS’ refusal is unfair and unlawful and deprives people of affordable healthcare.

Chairperson at The Health Funders Association (HFA) and Profmed CEO Craig Comrie told The Money Show that the industry has waited an immense amount of time to see regulations relating to the possible introduction of low-cost benefit options for medical schemes. 

“And in the interim, we have seen a perpetuation of exempt health insurance options, which are for-profit options offered by many of the insurers,” he said.

He explained that the CMS has the opportunity to exempt medical schemes. 

“They have all the power to do it, but the very fact that they’re consulting with the Minister of Health gives you an idea that they don’t want to be in conflict with the NHI agenda,” he said.

“You can understand exactly where the BHF court case is heading – to say you need to equalise the playing fields.”

The Competition Commission explained in its latest statement that it declined three individual exemption applications received from the BHF, the Independent Practitioners Association Foundation and the South African Orthopaedic Association. 

“The applicants sought exemptions only for their members. In its assessment, the Commission found that the individual exemption applications did not meet the requirements for granting the exemptions as contained in the Competition Act,” it said. 

“Industry stakeholders generally expressed a need for collective tariff determination in the private healthcare sector and objected to the granting of individual exemptions to associations in the healthcare sector.”

“The commission is of the view that an industry-level collective tariff determination will offer a more effective means of cost reduction across the industry, thereby fostering greater efficiency and transparency.” 

The competition watchdog said this approach will also enhance the participation of small, medium and micro enterprises and historically disadvantaged individuals. 

In addition, the approach reflected in the draft block exemption provides regulatory oversight over the collective tariffs determination process.

This, it said, ensures market power dynamics are not tilted in favour of a single association in the healthcare sector.