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National Health Act, 2003 (Act No. 61 of 2003)


National Health Insurance Policy towards Universal Health Coverage

Chapter 3 : Problem Statement

3.3 Structual problems in the health system

3.3.5 Health care financing challenges Out-of Pocket Payments


77. South Africans are exposed to three forms of Out-Of-Pocket payments (OOPs) namely:
(a) Every time a patient must pay cash when they seek healthcare whether in the public or private sectors;
(b) Additional payments (co-payments or levies) for those on medical schemes but whose benefit option does not cover all the costs; and
(c) Cash payment for those on medical schemes whose benefits are prematurely exhausted before the end of the year.


78. Co-payments or user-fees are used in some health systems as a deterrent to service use and as a cost-containment (demand-management) measure. However, international evidence44 indicates that co-payments, by placing a burden on patients at the point of service, disproportionately deters use by the most vulnerable, particularly the lowest socio-economic groups and thereby entrenches inequalities in access to and use of needed health care45. Co-payments often increase the total cost of health care as the use of needed health care is simply deferred until an illness is serious, requiring more costly services including hospitalisation46.


79. Within the public sector certain categories of users of the health system are required to pay a facility-based fee at the hospital level that is based on the economic classification of the patient determined by income levels. The fee is in accordance with the Uniform Patient Fee Schedule (UPFS). On average, approximately R451 million annually is derived from user fees from those that are classified as H1 – H3d users. These payments are made as OOPs expenses from these users47.


80. Within the private health sector, members of medical schemes are subjected to high OOPs. Private hospital fees, specialists’ and medicine costs account for the bulk of the OOPs. According to the Council for Medical Schemes annual report, OOPs increased by 11.9% to R20.7 billion between 2013 and 2014. This translates to approximately R6,000 per beneficiary (8.8 million covered beneficiaries) paid out as OOP for accessed services. These figures, according to the Council for Medical Schemes, are an understatement of OOPs as beneficiaries do not claim for all OOPs when they realise that their medical scheme will not reimburse them for these OOPs. The structuring of benefit packages offered by medical schemes is a major contributor to OOPs as beneficiaries are forced to pay for non-covered services. In many instances those beneficiaries whose benefits are not covered or are exhausted seek care in the public sector.



d H1: Income < R36 000 per annum

H2: Income R36 000 - R72 000 per annum

H3: Income> R72 000 per annum