Bad news for anyone with medical aid in South Africa
The Council for Medical Schemes (CMS) has published its medical aid contribution increase guidelines for 2027, calling on schemes to anchor their price hikes by 3.8%.
The anchor serves as the base point for increases relative to CPI, but excludes the so-called “reasonable utilisation estimates”.
According to the Board of Healthcare Funders (BHF), the CMS has given no indication as to what constitutes “reasonable utilisation”, which could lead to unrealistic expectations from medical aid members.
In previous years, the CMS 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 2027 could be anywhere between 5.8% and 7.3%. However, the prices could be much higher.
The BHF pointed to global advisory WTW’s 2026 Global Medical Trends Survey, which projects medical costs to increase by 10.3% globally in 2026, following a projected 10% increase in 2025.
For the Middle East and Africa region, WTW projects an 11.3% increase.
The survey covers 91 countries and identifies factors, including new medical technologies, pharmaceuticals, utilisation and fraud, and waste and abuse, as pressures affecting medical costs.
Locally, the CMS recommended a 3.3% contribution increase for 2026, as provided in 2025.
Its subsequent evaluation in Circular 21 of 2026 showed an industry-wide overall weighted contribution increase assumption of 8.10%.
On average, the industry contribution increase assumption was 8.10% for 2026, against a projected CPI of 3.0%. This reflects the contribution increases CMS approved across all schemes.
For 2026, the overall industry-weighted increase assumptions for specialist and hospital costs were 8.61% and 8.51%, respectively, more than double the CMS’s 3.3% tariff benchmark.
“This confirms that the challenge of contribution inflation is beyond just issuing contribution increase guidance; more needs to be done,” the BHF said.
Without any certainty from the CMS, the final increases are up in the air until the various schemes get approval for their proposals.
The BHF said that it supports the objective of keeping contribution increases as low as possible for members, but says this cannot be achieved through contribution guidance alone.
“BHF believes the 3.8% recommendation should therefore be accompanied by tangible action to contain those costs,” it said.
“If schemes are expected to explain why contributions need to increase, we should also be asking why hospital, specialist and other healthcare costs are rising at the rates they are.”
South Africa needs lower-cost options
Total healthcare benefits paid by medical schemes increased from approximately R218.4 billion in 2022 to R239 billion in 2023 and R259.3 billion in 2024.
That represents an increase of almost 19% in benefits paid over two years. Over the same period, beneficiary growth remained very modest.
CMS reported beneficiary growth of 1.04% in 2023 and only 0.45% in 2024.
“What this tells us is that the largely stagnant group of beneficiaries are using more and more healthcare. Addressing this high increase in utilisation requires structural reforms in healthcare,” the BHF said.
BHF has consistently called for structural reforms to reduce private healthcare costs.
A key intervention is enabling collective tariff negotiations between medical schemes and willing healthcare providers within a regulated and transparent framework.
“Currently, healthcare providers and large hospital groups are effectively price setters, while medical schemes, and ultimately their members, are price takers,” it said.
“Allowing schemes to negotiate collectively could improve purchasing discipline, increase transparency, and help contain healthcare costs.”
The need for a transparent tariff-negotiation framework was identified by the Competition Commission’s Health Market Inquiry in its 2019 final report. Seven years later, meaningful tariff reform remains outstanding.
The group pointed to other reforms that could help contain costs.
These include modernising Prescribed Minimum Benefits (PMBs) and enabling medical schemes to offer Low Cost Benefit Options (LCBOs).
The CMS is currently reviewing the PMB framework and costing to transform it into a primary healthcare package (PHC). However, there has been a concerted move to block LCBOs.
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