Govt spends N$3.9b on PSEMAS amid growing inefficiency and tender Irregularities concerns

The government has spent N$3.9 billion on the Public Service Employees Medical Aid Scheme (PSEMAS) in the 2024/25 financial year, as concerns mount over escalating costs, inefficiencies, and restrictive tender conditions surrounding Namibia’s largest medical aid scheme.Both the Ministry of Finance and the Central Procurement Board of Namibia (CPBN) responded to Namibian Sun this week, while the Namibia Financial Institutions Supervisory Authority (Namfisa) confirmed it had submitted reform advice to government.The Ministry of Finance said spending on PSEMAS has steadily increased from N$3.11 billion in 2020/21 to N$3.9 billion in 2024/25, covering more than 120 000 civil servants and their dependents. The scheme remains one of the most expensive benefit systems in the country.A source familiar with the industry described the role of a medical aid administrator as critical but often misunderstood. “The fund doesn’t handle claims directly — administrators do. They verify claims, check for fraud, and ensure payments are processed. It’s specialised work, handled by only a handful of companies in Namibia,” the source explained.Fraudulent claimsSince 2004, that responsibility has rested with MedHealth, a Windhoek-based firm. According to industry estimates, government pays between N$6.3 million and N$7 million per month, or about N$70 million annually, to process claims. Critics argue that repeated extensions of MedHealth’s contract have left the system vulnerable. The source alleged that outdated systems and poor oversight may be allowing fraudulent claims to siphon off as much as N$1 billion annually — though these claims could not be independently verified. MedHealth did not respond to queries sent by Namibian Sun.In a written response dated 24 September 2025, the CPBN said a 2020 tender to appoint a new administrator was cancelled after all six bids were found non-responsive under Section 54 of the Public Procurement Act. Reference lettersFive years later, a new procurement process has finally been launched. An Expression of Interest (EOI) advertised on 31 July 2025 and closed on 15 September 2025 will shortlist eligible firms before moving to a Request for Proposal stage.The board said the criteria limiting bidding to Namibian-incorporated entities, co-operatives, trusts, or joint ventures with majority Namibian ownership were designed to ensure local participation. On the controversial requirement for bidders to provide reference letters from funds registered with or exempted by Namfisa, CPBN said this was not restrictive but rather aligned with the Medical Aid Funds Act of 1995.The Ministry of Finance confirmed that it had commissioned a compliance and forensic audit in 2023 into MedHealth’s performance. “The audit produced recommendations, and an implementation plan has already commenced,” the ministry said, adding that some reforms were complete while others were ongoing. It stressed that the current procurement formed part of a wider PSEMAS reform drive, with the new administrator expected to be appointed in line with the Public Procurement Act.Policy decisionNamfisa said PSEMAS does not fall under its regulatory scope but confirmed submitting advice to government. “Government asked us for our opinion regarding PSEMAS, and we have provided a paper with our recommendations,” Namfisa stated. Whether those proposals will be implemented remains a policy decision for government.For industry players, concerns persist that the tender’s requirements, particularly the Namfisa letter condition, may “lock out” new entrants and preserve dominance for politically connected firms. Allegations have also surfaced that MedHealth and other administrators maintain close ties to trade unions and the ruling party — claims that remain unverified.What is undisputed is the cost. With nearly N$3.9 billion in annual subsidies and tens of millions in administrative fees, the stakes remain high for taxpayers and for the more than 120 000 public servants relying on the scheme for healthcare.As one source put it: “It’s not about which company gets the contract. It’s about whether government can finally deliver a transparent, efficient system that protects billions in public money.”

Govt spends N$3.9b on PSEMAS amid growing inefficiency and tender Irregularities concerns

Comments

Namibian Sun 2026-01-13

Please login to leave a comment

Govt spends N$3.9b on PSEMAS amid growing inefficiency and tender Irregularities concerns

Comments

Namibian Sun 2026-01-13

Please login to leave a comment

Subscription Required to Access Content ×

Login

Subscription Required to Access Content