South African households face mounting pressure as medical scheme contribution increases continue to outpace consumer price inflation, leaving members with shrinking options and rising costs, Moneyweb reported. The Board of Healthcare Funders (BHF), representing numerous medical schemes, warns that families cannot indefinitely absorb these hikes or continually downgrade to lower benefit options that offer reduced cover.
Aging Members Drive up Medical Scheme Costs
Medical aid contribution increases consistently outpace general consumer price inflation. Damian McHugh, chief marketing officer at Momentum Health, attributes these climbing expenses to two primary factors: annual inflation-linked cost increases and member utilisation. As scheme members age, their healthcare needs grow more complex, leading to higher rates of hospital admissions and doctor visits.
Katlego Mothudi, managing director of the BHF, states that structural reforms are urgently needed to address what medical schemes actually pay for healthcare services. The BHF has written to the Council for Medical Schemes (CMS) to request formal regulatory reform aimed at lowering scheme expenditures so they can reduce charges to members. The CMS confirmed in its newly released annual report for 2025/26 that higher contribution increases will likely continue in the foreseeable future to close the gap between provided benefits and their pricing.
Stalled Prescribed Minimum Benefit Reforms Since 2003
A central element of the BHF’s reform push involves the long-delayed review of prescribed minimum benefits (PMBs). By law, PMB regulations require review every two years, but the core rules have remained unchanged since 2003. A formal review process began in 2003, but in 2023, the CMS reported that the health minister rejected its proposals because they lacked a primary healthcare element covering general practitioners and basic care.
PMBs mandate that medical schemes cover the full cost of treatment for 271 specified conditions, emergency medical services, and 26 chronic conditions, though schemes can require members to use specific generic drugs and procedures. These regulations aim to protect members from catastrophic health expenses and discourage patients from abandoning treatment for chronic illnesses. However, the CMS annual report notes that PMB costs reached roughly R1 242 per beneficiary in 2024, marking a 9% increase from the prior year, with peak expenditures concentrated among beneficiaries aged 85 and older. The CMS report observes that these trends highlight a growing concentration of resources among a shrinking older cohort.
To curb these expenses, the BHF advocates shifting PMB focus toward primary healthcare, preventive services, essential medicines, and diagnostics. This pivot is intended to create more affordable packages and encourage early interventions before members require expensive hospital care. The CMS indicates in its latest report that it is actively reviewing PMBs and has developed a proposed primary health package centered on preventive services, including vaccinations, screenings, mental healthcare, basic dental services, and rehabilitation.
Competition Commission Moves on Collective Bargaining Exemptions
Beyond PMB overhauls, the BHF demands the reinstatement of collective bargaining among medical schemes, hospitals, and medical specialists to drive down costs. Central tariff negotiations between the South African Medical Association and the BHF continued until 2003, when the Competition Commission prohibited the practice under the Competition Act. Since then, tariffs have been negotiated individually between medical schemes and individual hospitals or doctors.
Mothudi asserts that large hospital groups currently hold considerable influence over pricing, leaving individual schemes and their members with minimal bargaining power. The BHF prioritizes allowing medical schemes to negotiate tariffs collectively with willing providers under strict regulatory oversight and transparent pricing models. Regulatory movement on this front is underway, as the minister of trade, industry and competition published draft rules in February 2025 proposing a three-year exemption from laws prohibiting collective bargaining for medical schemes. The CMS supports this exemption, stating in its report that collaborative tariff setting could improve transparency and protect the financial sustainability of medical schemes.
Industry Regulators Delay Crucial Healthcare Market Reforms
Despite proposals from industry bodies and regulators, the crucial structural fixes remain incomplete. The PMB review has lingered for a decade, and the collective bargaining exemption published in early 2025 has not yet been finalized. Mothudi points out that the Competition Commission’s 2019 Health Market Inquiry recognized the pressing need for transparent tariff determination, yet seven years later, the required reforms remain outstanding. Meanwhile, the BHF awaits a formal meeting with the CMS following the regulator’s recent response to their urgent appeal for intervention.
Frequently Asked Questions About Medical Scheme Reforms
What are Prescribed Minimum Benefits (PMBs)?
PMBs are a set of legal requirements compelling medical schemes to cover the full costs of diagnosis, treatment, and care for 271 specified medical conditions, emergency situations, and 26 chronic illnesses. These regulations were established to shield members from catastrophic health expenses.
Why do medical aid contribution increases exceed inflation?
Industry stakeholders attribute the above-inflation price hikes to annual cost increases alongside rising member utilisation. As the membership base ages and healthcare needs become more complex, members rely more heavily on hospitals and specialists.
What is the status of collective bargaining for medical schemes?
Collective tariff negotiations between providers and schemes were prohibited by the Competition Commission in 2003. However, the minister of trade, industry and competition published draft rules proposing a three-year exemption to allow collective bargaining, which the CMS supports.
How much did PMBs cost per beneficiary recently?
According to the Council for Medical Schemes annual report, PMB costs rose to approximately R1 242 per beneficiary in 2024, representing a 9% increase from the previous year.
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