From foreign aid to healthcare and trade, the world’s systems are shifting in many subtle and not-so-subtle ways. And, while we may feel far removed at the southern tip of Africa, the ripple effects are reaching us too – not only in the healthcare sector, but also in the insurance and group assurance landscape.

Two major disruptive trends are at play. First, global trade tensions are mounting, with increasing protectionism – especially from the US and Europe – changing the rules of global commerce. Second, developed countries are reducing foreign aid and pulling back on their international development funding, most notably in the healthcare sector.

These aren’t just abstract macroeconomic issues; they’re now reaching into the heart of public healthcare, a system many South Africans rely on. USAID is a major donor to health projects in South Africa, funding around 40 major healthcare programmes (HIV being the largest, with six million people currently on treatment through these programmes) and providing 17% of South Africa’s HIV budget. Coupled with indirect sources, this goes up to 24% according to Africa Check.

Consequences of the cuts

South Africa could experience 150 000 new HIV infections by 2028 if funding isn’t replaced according to the Juta Medical Brief. The jobs of 15,000 healthcare workers have been impacted, with many retrenched. This has immediate consequences: delayed diagnoses, reduced Pre-Exposure Prophylaxis (PrEP) and Post-Exposure Prophylaxis (PEP) access, increased HIV and TB transmission, and a healthcare system that’s losing its grip on two of South Africa’s most pressing public health threats.

Since the funding cuts began, countries that received USAID have experienced more than 21 000 additional TB-related deaths and more than 27 000 new TB infections according to the latest statistics from the Tuberculosis Program Impact Tracker. The rise of drug-resistant TB (due to discontinued treatment) is particularly concerning. This form of TB is more complex, more expensive, and slower to treat. As a result, it places a heavier burden on Group Risk benefits, as longer employee downtime can result in increased disability claims and higher mortality rates.

The impact on Group Assurance Products (GAP)

Delayed or reduced treatment for HIV and TB weakens immunity, increasing the risk of opportunistic infections and chronic health issues, resulting in more frequent or severe death and disability claims. The effects could be felt across the major Group Risk benefits, namely:

• Group Income Protection: More short-term claims from drug-resistant TB and increased community transmissions.
• Lump-Sum Disability: Higher incidence due to opportunistic infections resulting from untreated conditions.
• Critical Incidents Cover: Rise in certain claimable conditions.
• Mortality benefits: Increased deaths from preventable diseases.

Faced with rising medical aid costs, many employees are moving to hospital plans or even dropping coverage altogether. This means greater reliance on public health services (which are already under pressure), increased risk exposure for insurers as members become more vulnerable to untreated conditions, and a need for more comprehensive Group Risk solutions to fill the gap.

Looking forward: navigating uncertainty

While the full impact of the funding cuts continues to unfold, uncertainty remains regarding the identifications of sustainable alternative funding sources. With constrained fiscal resources, it remains to be seen whether the South African government will increase funding in the new budget, and Europe is rediverting aid towards defence and internal crises. Other countries and private donors might step in, but nothing is certain, and many of the potential solutions are likely to provide only longer-term relief.

In these challenging times, it is important for intermediaries and employers to stay resilient and forward-thinking, and take proactive steps to navigate the changing landscape. Now, more than ever, is the time to stay ahead of the curve by offering well-structured Group Risk cover and advocating for proactive strategies amid disruption. We recommend positioning Group Risk benefits as essential rather than optional, and actively discussing health solution add-ons with your clients.

Old Mutual’s Group Risk offering is annually renewable, which makes us agile and ready to adapt quickly – attributes that can only benefit us (and you) as global dynamics shift. Our commitment to providing forward-thinking, integrated employee benefit solutions will be key to supporting clients through uncertainty, and our role is to help both employers and employees navigate change to achieve long-term financial success with confidence. Our Health Solutions take this even further, offering cost-effective alternatives that enhance the well-being of employees and provide strategic advantages to employers.