Introduction

Health financing plays a critical role in achieving Universal Health Coverage (UHC) by ensuring that individuals can access necessary healthcare services without facing financial hardship. The World Health Organization (WHO) defines UHC as a system in which “all people receive the health services they need, including public health services designed to promote better health, prevent illness, and provide treatment, rehabilitation, and palliative care of sufficient quality to be effective while ensuring that the use of these services does not expose the user to financial hardship” (WHO, 2010).

Ensuring equity in health financing is essential for achieving UHC, as financial barriers remain one of the biggest obstacles to healthcare access, particularly for marginalised populations. The Health Financing Progress Matrix (HFPM), developed by WHO, evaluates national health financing systems based on their ability to meet key UHC objectives, including efficiency, equity, transparency, and financial risk protection (WHO, 2021). In South Africa, health financing remains highly fragmented and inequitable, with significant disparities between the public and private healthcare sectors.

South Africa operates a two-tier healthcare system, where 16% of the population—predominantly wealthier individuals—access private healthcare through voluntary health insurance (VHI), known as medical schemes, while the remaining 84% of the population rely on the public healthcare system (James et al., 2018). The public sector is largely tax-funded but remains under-resourced and overburdened, while private healthcare is well-resourced but financially inaccessible to the majority of South Africans (Competition Commission, 2019). This dual system perpetuates health inequalities, disproportionately affecting low-income groups who experience higher disease burdens and poorer health outcomes (Ataguba & McIntyre, 2018).

Recognising these challenges, the Government Employees Medical Scheme (GEMS) was established in 2005 as a restricted medical scheme for public sector employees. The objective was to enhance healthcare access for government workers, particularly those in lower salary bands, who were previously excluded from private medical insurance due to affordability constraints. Unlike open medical schemes, GEMS was designed to provide income-tiered contributions with government subsidies, ensuring that even lower-income public sector employees could access private healthcare services. To cater to the diverse healthcare needs and financial capacities of its members, GEMS offers five option plans: Tanzanite One, Beryl, Ruby, Emerald Value, Emerald, and Onyx. Regardless of their chosen option, all GEMS members are entitled to access Prescribed Minimum Benefits (PMBs), which are basic healthcare services mandated by the Medical Schemes Act. These benefits cover a defined list of emergency medical conditions, chronic diseases, and Diagnosis and Treatment Pairs (DTPs), ensuring that members receive essential healthcare services. Since its inception, GEMS has grown to become the largest closed medical scheme in South Africa, covering over 800,000 principal members and over 2 million dependents (GEMS Annual Report, 2022).

This article explores how GEMS aligns with UHC principles, focusing on its approach to health financing, benefit design, and affordability mechanisms. Additionally, it examines the impact of social determinants of health (SDH) on healthcare access among GEMS members and highlights the persistent challenges in achieving equitable healthcare utilisation. While GEMS has improved access to private healthcare for public employees, significant disparities remain in healthcare utilisation, preventive care uptake, and financial burden across different income groups (Mametja et al., 2023). Addressing these gaps requires a multifaceted approach that incorporates health policy reforms, strategic financing mechanisms, and targeted interventions to ensure that all members receive the care they need regardless of income or geographic location.

Historical Context and Policy Framework

Before 2005, the affordability of private health insurance excluded most government employees, particularly those in lower salary bands. In response, the South African government approved a policy framework for a restricted medical scheme for public sector employees, leading to the establishment of GEMS in 2005. This framework was built on the principles of equity, efficiency, and differentiation, ensuring that healthcare benefits were distributed according to need rather than ability to pay.

The Medical Schemes Act (1998) laid the foundation for GEMS by enforcing principles such as open enrollment, community rating, and PMBs. While the original plan considered mandatory enrollment, this was not implemented due to the evolving policy direction towards National Health Insurance (NHI). Despite being a voluntary scheme, GEMS integrates progressive funding mechanisms such as income-based contributions and government subsidies to enhance affordability.

Equity in Healthcare Financing: The GEMS Model

GEMS has adopted a two-pronged approach to achieving equity:

1. Income-Based Cross-Subsidies: Contributions are structured to allow for cross-subsidisation, where higher-income earners support lower-income earners. The government subsidises 75% of contributions up to a maximum threshold per family, ensuring affordability.
2. Standardised Essential Benefits: To prevent discrepancies in access, preventive and essential healthcare services are standardised across all benefit options. This includes access to primary healthcare, maternity benefits, and chronic disease management.

Despite these efforts, disparities in utilisation persist. Data from GEMS suggests that members in lower salary bands (L1–L5) access fewer benefits compared to higher-income members, despite having the same coverage (see Fig 1). This can be explained using the Social Determinants of Health (SDH) framework.