By Thapelo Molefe
The Board of Healthcare Funders (BHF) has said that the Council for Medical Schemes’ (CMS) 3.8% contribution increase benchmark for 2027 risks creating unrealistic expectations unless government and regulators also act on the underlying healthcare costs pushing medical scheme contributions higher.
The BHF has written to the Registrar of the CMS, supporting the regulator’s objective of keeping contribution increases as low as possible but said that contribution guidance alone cannot address the underlying costs driving increases.
“Without greater clarity on what constitutes reasonable utilisation and the underlying costs driving contribution increases, the 3.8% headline figure may create unrealistic expectations among members,” the organisation said in a statement on Tuesday.
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The affordability issue is also becoming a concern for organised labour. The Federation of Trade Unions of South Africa (Fedusa) has lodged a Section 77 notice at Nedlac over rising medical aid costs.
Global advisory WTW’s 2026 Global Medical Trends Survey 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, it projects an 11.3% increase.
The survey identifies new medical technologies, pharmaceuticals, utilisation, and fraud, waste and abuse among factors contributing to rising medical costs.
BHF managing director Dr Katlego Mothudi said international trends should provide context rather than be used to justify higher increases.
“Our task should be to identify which of these pressures we can influence and then implement the reforms required to bend the cost curve. Affordable medical scheme contributions require affordable healthcare. That is the bottom line,” said Mothudi.
The BHF pointed to the gap between previous CMS guidance and the increases ultimately assumed by medical schemes.
For 2026, the CMS had recommended that contribution increases and tariff cost assumptions be limited to 3.3%, plus reasonable utilisation estimates. Its subsequent evaluation in Circular 21 of 2026 showed an industry-wide overall weighted contribution increase assumption of 8.10%, compared with a projected CPI of 3.0%.
The overall industry-weighted increase assumptions for specialist and hospital costs for 2026 were 8.61% and 8.51%, respectively, compared with the CMS’s 3.3% base benchmark before reasonable utilisation estimates were added.
This confirms the challenge of contribution inflation is beyond just issuing contribution increase guidance, the BHF 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. Bringing those costs down is how we create the conditions for lower contribution increases,” said Mothudi.
Total healthcare benefits paid by medical schemes increased from about R218.4 billion in 2022 to R239 billion in 2023 and R259.3 billion in 2024, representing an increase of almost 19% in benefits paid over two years.
The number of medical scheme beneficiaries increased by about 0.98% in 2023 and just 0.45% in 2024.
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BHF said the slow growth in beneficiaries alongside rapidly rising claims expenditure pointed to increased healthcare utilisation, which it said required structural reform.
The Competition Commission’s Health Market Inquiry, which published its final report in 2019, also examined the cost and pricing structures in South Africa’s private healthcare sector and called for reforms to improve competition and transparency.
Medical schemes have an obligation to remain financially sustainable and ensure they can continue paying members’ healthcare claims.
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.
BHF said that healthcare providers and large hospital groups are effectively price setters, while medical schemes, and ultimately their members, are price takers.
“This should not become a battle between CMS and medical schemes over a percentage,” Mothudi said.
“CMS is right to place member affordability on the agenda. BHF is saying let us now broaden that agenda and deal with the factors that determine affordability.
“The sustainable answer is a stronger health system that prevents more disease, purchases healthcare better, broadens risk sharing, removes structural inefficiencies and delivers better outcomes for every healthcare rand.”
