The government’s plan to ditch medical aid tax credits will have a disastrous effect on already cash-strapped South Africans and force nearly 2 million people onto the over-stretched state health system.
If the tax credit is removed, 22% of medical aid users will not be able to afford cover, Stellenbosch economics consultancy Econex warned in a report published on Friday – 1.9 million of the 8 million medical aid members, including children, will have to drop out of the private healthcare system.
In a national health insurance policy document released in July, Health Minister Aaron Motsoaledi said he wanted to remove the tax credit to users, which amounts to R20-billion a year.
Medical aid schemes’ members get a tax reduction of R3,636 a year – or R303 a month. Motsoaledi said then that “the tax credit … we believe, is unfair”.
Economist Paula Armstrong, author of the Econex analysis, said the rebate was intended to “alleviate some pressure on the state [
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