ESWATINIBANK, SWAZIMED MEMBERSHIP ROW RAGES ON

MBABANE - Swaziland Medical Aid Fund (SwaziMed) has warned of a potential ‘healthcare disaster’, as it defends its long-standing operational model against legal challenges from EswatiniBank.

The medical aid provider argues that the bank’s push for ‘split membership’ threatens the very foundation of its not-for-profit structure and could destabilise the country’s healthcare system, potentially leading to a loss of over 7 000 members and a risk of insolvency.

This development follows EswatiniBank’s urgent application seeking an injunction to prevent SwaziMed from terminating the medical aid coverage of 130 employees. The bank argues that SwaziMed’s refusal to allow employees to choose their medical aid provider is anti-competitive and unfair.In its answering affidavit, SwaziMed, through Principal Officer Peter Simelane, detailed the fund’s structure and operational activities, emphasising its role as a not-for-profit entity serving over 43 641 lives, including employees and their dependents.

Simelane highlighted that the fund operates on core principles of open enrolment, community rating and prescribed minimum benefits, all underpinned by the concept of cross-subsidisation. “The fund was created solely to pursue a social objective and not an economic objective. It is founded on the principle of social solidarity, whereby the fund is sustained by the solidarity between the employees irrespective of age, health status and income,” Simelane stated. “This is characterised by cross-subsidisation between those who are young and healthy with the aged and less healthy members.”

Contractual

Simelane explained that the fund’s operational activities and contractual relationships are governed by its rules, which establish a framework for providing medical aid, facilitating employer participation and ensuring solvency. He stressed that the fund relies on risk pooling for financial sustainability, a system that would be severely compromised by split membership. “If the fund were to stop risk pooling, it would only sustain itself by stopping open enrolment and risk rate members. This would result in thousands losing coverage,” Simelane warned.

The affidavit further revealed that SwaziMed commissioned an actuarial assessment to determine the impact of split membership. The report, conducted by 3ONE Consulting Actuaries, concluded that allowing such arrangements could lead to the loss of between 1 473 and 7 364 principal members, an increase in the average member age, and a financial deterioration of up to E76 million annually. “In the worst case, it could cause insolvency by 2027,” Simelane stated, adding that contribution increases of up to 16.9 per cent might be necessary to neutralise the financial impact, potentially exacerbating member losses.

Simelane also addressed the bank’s actions, stating that EswatiniBank had ‘repudiated’ its contract with SwaziMed by attempting to terminate the membership of some employees while retaining others. He revealed that despite terminating their membership and ceasing contributions, some employees continued to utilise SwaziMed’s services, resulting in unauthorised claims totalling over E105 000. “The entire sad situation is happening because the applicant wants to share in the benefits of the fund and not the burdens,” Simelane asserted.

“The social solidarity nature of the Fund and the cross-subsidy are foundational to the sustainable operation of the Fund; without them, the Fund cannot carry out its mandate.” SwaziMed has now formally accepted EswatiniBank’s repudiation and terminated the contract, providing a one-month grace period for the remaining employees to find alternative medical aid.  

The fund maintains that its actions are necessary to protect its members and ensure the long-term sustainability of Eswatini’s healthcare system, emphasising the fundamental difference between its social solidarity model and profit-driven health insurance companies. The matter is still pending in court and appearing for SwaziMed is Mangaliso Magagula of Magagula and Hlophe Attorneys while attorneys from Robinson Bertram represent the respondent.

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