Medical aid price pain in South Africa – with worse to come

Medical aid contributions have skyrocketed over the past few years—at a rate double inflation—and the industry warns that members should expect more of the same for 2025.

Looking at historical data on medical aid prices, a member of a Discovery Classic Comprehensive plan in 2017 would have been paying R4,506 a month.

In 2024, contributions for the same plan (ignoring the changes to benefits and other details of the plans over the years) now cost a member R8,381 a month—an 86% increase, compared to the 40% rate of inflation over the same period.

This higher-than-inflation rise in medical aid prices is seen almost across the board, across schemes and companies, averaging around 70%, with very few exceptions.

The tables below outline how medical aid prices have changed since the peak increase in 2017 versus headline inflation averaging 40% over the same period.

While many schemes would argue that their contributions reflect the benefits they receive, some within in the industry have noted the opposite – that plans have become tighter, benefits more restricted and more red tape thrown in.

According to the Council for Medical Schemes (CMS), medical aid increases are not tied to headline inflation but medical inflation, often a few percentage points higher than average inflation.

However, the industry has always taken a position that medical inflation is around two to three percentage points above CPI – not double CPI.

The CMS’s data shows that contribution increases have consistently been much higher than average CPI over the last 15 years, except for the oddities introduced during the Covid-19 pandemic, where contribution hikes were deferred (resulting in split increases).

For 2023, however, increases were again above inflation, and in 2024 they are expected to once again return to historical trends.

Worse to come

Speaking at Momentum Health Solutions’ virtual Healthcare Insights Summit in July, Momentum Health marketing officer Damian McHugh said medical aid members in South Africa should expect hefty above-inflation price hikes again in 2025.

McHugh noted that medical fund demands are rising, and attempts to contain contribution increases are causing medical schemes to incur additional costs.

This has resulted in medical schemes reducing or tightening benefits to keep increases lower than necessary—something which may spill over to 2025.

The CMS urged medical schemes to keep tariff hikes for 2025 as close to inflation as possible – recommending a 4.4% increase, plus “reasonable utilisation estimates”.

In previous years, the council said its historical data points to reasonable utilisation estimates adding around 3.5% to the hikes, while private medical inflation generally exceeds CPI by 2% to 3%.

Thus the “reasonable” increase for 2025 should be anywhere between 6.4% and 7.9%.

While medical schemes managed to keep their “weighted average” increases in line with the CMS’ recommendations for 2024, on a plan-by-plan basis, many members saw their contributions hiked far above the guidelines.

For Discovery, the biggest medical aid scheme in the country, for example, increases ranged from 3% to 13%, with the biggest increases seen in the “premium” segment, which offers more comprehensive coverage.

Momentum announced a weighted increase of 9.6% for 2024 – the same as BestMed, which had the same average.

Bonitas had the lowest weighted average at 6.9%, but even its “comprehensive” cover could not escape the premium ‘tax’, seeing a 9.6% surge in prices.

This is something members should expect again in 2025.

Read: 5 biggest medical aids in South Africa – what they offer and how much they cost right now