Gov’t Moves to Regulate Medical Aid Funds

Government says the development of the Medical Aid Bill is a cornerstone piece of legislation that will lay the foundation for effective governance, transparency, and sustainability in Botswana’s medical aid fund sector. Presenting the Medical Aid Funds bill in Parliament this week, Minister of Finance Ndaba Gaolathe said medical aid funds play a critical role in enabling many Batswana to access private healthcare services, thereby improving access to quality healthcare. He emphasised that the sector is a multi-billion-pula industry, currently covering more than 300,000 Batswana. “There are currently five medical aid funds operating in Botswana, three of which are non-profit: Botswana Public Officers Medical Aid Scheme (BPOMAS), with a market share of 43 percent; Botswana Medical Aid Society (Bomaid), with 34 percent; and Pula Medical Aid, with 17 percent,” Gaolathe said. Botsogo Health Plan and Doctors Health Medical Aid operate on a for-profit basis and account for the remaining 5.9 percent and 0.1 percent of the market share, respectively. “The gross contribution grew from P2.6 billion in 2023 to P2.8 billion in 2024, reflecting the sector’s continued growth and economic significance,” Gaolathe said. “The for-profit operators only account for 6 percent of the market share, which shows that Botswana’s medical aid fund sector is predominantly not-for-profit, hence the need to put in place legislation such as this one.” Despite its scale and importance, Gaolathe noted that the sector lacks a dedicated legal framework, which presents risks not only to the financial system but, more critically, to the health outcomes and contributions of thousands of citizens. Currently, medical aid funds are regulated under the general provisions of the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) Act. “This regulatory approach lacks the specificity required to adequately address the operational, governance, and financial peculiarities of the medical aid funds sector,” Gaolathe said. “It is in this context that we are proposing a new and sector-specific legislation.” He explained that the proposed law would serve as a bridge between the financial services regulatory framework and the healthcare delivery system. While primarily a financial services law, Gaolathe said it will also ensure that the contractual and fiduciary obligations of medical aid funds are upheld. He referenced a 2012 study by KPMG, commissioned to determine the best regulatory pathway for the industry, which found that a standalone legal framework was necessary to properly regulate medical aid funds. “This framework must be robust—robust enough to protect member contributions, ensure transparency, support good governance, and promote the long-term sustainability of the sector,” he said. “Therefore, we now accordingly respond.” Gaolathe said the development of this framework is not merely a regulatory exercise but a national imperative to protect the health and financial well-being of citizens and to safeguard contributions made in good faith. He added that the bill was developed in consultation with local stakeholders and benchmarked against standards set by the SADC Committee of Insurance, Securities, and Non-Bank Financial Authorities, as well as the laws of countries such as South Africa, Namibia, and Kenya. The objective of the bill, Gaolathe said, is to provide for the effective regulation and supervision of the sector. It outlines provisions for licensing, governance, reporting, investment, solvency, start-up capital, and actuarial valuation requirements. “In addition, administrative requirements relating to developmental rules, protection of information, and complaints handling are included in the bill,” he said. “Furthermore, to ensure standardisation of processes, the bill prescribes conditions for statutory management, amalgamation and transfer, and the winding up of service providers.” The Medical Aid Funds Act will govern medical aid funds, medical aid fund administrators, medical aid fund brokers, and managed care organisations operating in Botswana.

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Gov’t Moves to Regulate Medical Aid Funds

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