Medscheme actuaries warn gap cover can weaken medical schemes' cost controls

In context: this report covers a source published on 28 Oct 2026.

Actuaries from Medscheme, a South African medical scheme administrator, made the case at the Actuarial Society of South Africa convention in Cape Town, MedicalBrief reported on 28 October. The report describes the convention as recent but does not give its date. Allan Williams, an associate consultant, said gap cover "can undermine schemes' attempts to contain costs and ensure sustainability".

Gap cover pays members' shortfalls when a scheme does not meet a provider's full bill. The presenters said about 96% of its claims come from tariff shortfalls, co-payments and sub-limits. By paying those, they argued, it removes members' reason to use scheme networks, weakens schemes' bargaining power with providers and feeds a cycle of higher tariffs, benefit cuts and rising gap cover claims and premiums.

Their figures point to growing pressure on both products. An estimated 800,000 South Africans hold gap cover. Provider data for 2021 to 2026 show claimants with annual shortfalls above R50,000 rising about 13% a year and claim frequency growing more than 10% a year. In Medscheme's data, about 75% of hospital admissions in 2025 led to an out-of-pocket payment. Scheme contributions rose 8.1% a year on average from 2022 to 2026, against average inflation of 5%.

As remedies, the actuaries proposed that schemes and gap providers join provider arrangements that narrow tariff gaps without breaching competition law, and that gap cover reduce or exclude penalty co-payments, which apply when members skip designated networks, referrals or pre-authorisation. They also called for clear rules on which product pays first. MedicalBrief noted that reform of the Medical Schemes Act has been delayed.