South African Government Moves Against Big Medical Aids After Section 59 Report

Section 59 fallout: The state pushes back

South Africa’s biggest medical aid schemes are facing the heat after the Department of Health confirmed that the Council for Medical Schemes (CMS) is seeking legal advice on possible penalties. This follows the damning Section 59 investigation, which exposed how black, coloured, and Indian medical professionals were disproportionately targeted by medical schemes.

The three giants in the spotlight, Discovery, GEMS, and MedScheme represent nearly 80% of the country’s medical aid membership. That dominance is precisely what makes the findings so explosive: where most South Africans with medical cover turn, allegations of systemic bias appear to follow.

A long road to accountability

The story goes back to 2019, when black healthcare practitioners first raised alarms about racial profiling. They alleged that claims were being unfairly flagged, payments withheld, and investigations disproportionately aimed at them. This sparked the establishment of the independent Section 59 panel, which spent years reviewing evidence and industry practices before releasing its final report in July 2025.

That report didn’t hold back: it confirmed procedural unfairness, highlighted a troubling power imbalance between medical aids and providers, and directly pointed to racial profiling as a structural issue in the sector.

Unsurprisingly, the industry has fought back. The Board of Healthcare Funders and the schemes themselves slammed the report as “fundamentally flawed,” insisting it misrepresented their processes. Still, the Department of Health has made it clear, the state intends to act.

What’s next: Legal muscle and new penalties

Health Minister Aaron Motsoaledi told Parliament that CMS is now hiring lawyers to develop a “comprehensive legal opinion” on how best to proceed. This advice will shape both immediate actions against medical aids and longer-term protections for practitioners.

Critically, Motsoaledi confirmed that Section 67(1)(o) of the Medical Schemes Act could be applied to impose penalties. CMS is even looking to benchmark those penalties against financial regulators like the FSCA and Prudential Authority to make them sting.

More regulation on the horizon

Motsoaledi has also signalled that this fight is bigger than just Section 59. He wants broader reforms to rein in medical aids and prevent similar abuses in the future. Among the ideas on the table:

• A new collaborative body between CMS and the Health Professions Council to tackle fraud, waste, and abuse.

• Stricter transparency rules for the use of algorithms and AI in monitoring claims.

• The urgent creation of a Tribunal and mediator services to rebalance power between providers and schemes.

• Expanded regulations under Section 59(3) to close loopholes in how medical aids investigate healthcare workers.

For doctors who’ve long felt bullied by powerful schemes, these proposals could represent a long-awaited shift.

Public and professional reaction

On social media, healthcare professionals have voiced cautious optimism. Many see this as validation of their lived experiences, years of struggling against opaque systems they believed were stacked against them. Others worry that strong industry pushback could water down reforms before they’re implemented.

Patients, too, are watching closely. For ordinary South Africans, the fear is that legal battles and new regulations could push medical aid costs even higher in a country already battling rising healthcare expenses.

A bigger question: Trust in the system

At its core, this saga isn’t only about penalties or new laws, it’s about trust. Can medical aids that dominate the sector regain credibility after being accused of systemic bias? And will government follow through, or will political compromises blunt the reforms?

For now, one thing is certain: the Section 59 report has set in motion a reckoning that the medical aid industry can no longer avoid.

{Source: BusinessTech}

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