Cost Pressures on Medical Schemes
For medical schemes and their members, affordability is becoming harder to separate from sustainability. Healthcare utilisation is increasing, the membership of medical schemes is gradually ageing, and members are carrying more of the cost when scheme benefits do not fully meet the cost of care.
At the same time, the regulatory environment is beginning to address more fundamental questions about how healthcare benefits should be structured. The result is a healthcare landscape being influenced by two forces at once, pressure on the existing funding model and reform of the model itself.
Medical Inflation: Balancing Costs with Affordability
The Council for Medical Schemes (CMS) reported that medical schemes covered 9.17 million beneficiaries in 2024, with membership increasing by just 0.45%. The average age of beneficiaries increased from 32 years to 34.2 years, continuing the gradual ageing of the medical scheme population.
Against this relatively modest membership growth, total healthcare benefits paid increased by 8.52% to R259.3 billion. Hospital services accounted for 35.95% of expenditure, followed by specialist services at 28.02% and dispensed medicines at 14.05%. The cost per hospital admission increased by 9.88%, despite fewer admissions.
Out-of-pocket healthcare expenditure remains a significant source of financial pressure, particularly where provider charges, benefit limits, tariffs and co-payments or network arrangements leave members responsible for part of the cost.
In contrast, the industry remains financially resilient. The CMS reported a solvency ratio of 40.87% in 2024, well above the statutory minimum of 25%. The concern is not whether medical schemes can meet their obligations today, but how the sector maintains sustainable benefits as healthcare costs continue to increase.
Benefit Reform and Access to Care
Prescribed Minimum Benefits (PMBs): Reforming the Foundation of Medical Scheme Benefits
The update issued in the latest CMS Circular 22 of 2026 covers the current focus on developing and costing a comprehensive Primary Healthcare (PHC) package, with the CMS and National Department of Health working towards alignment of the PHC packages for both the private and public sectors. The CMS is also developing a potential base benefits package comprising prioritised primary healthcare services and selected PMBs, with affordability and utilisation forming part of the assessment. In parallel, the CMS is developing PMB Definition Guidelines to ensure existing PMB entitlements remain evidence-based and aligned with developments in healthcare policy and treatment guidelines. There are no immediate changes to existing PMB entitlements.
The significance of this work extends beyond the technical definition of PMBs. It raises a broader question of what the minimum level of healthcare protection should be, and how that protection can remain affordable and sustainable.
This will become increasingly important as the sector considers greater emphasis on prevention and primary care alongside treatment of established disease.
Low-Cost Benefit Options (LCBOs)
The same affordability question sits behind the development of Low-Cost Benefit Options (LCBOs).
The intention is to create more affordable regulated healthcare cover for individuals who cannot readily afford conventional medical scheme options. However, achieving this requires more than reducing the price of a product. The level of benefits, risk pooling, PMB obligations and access to appropriate healthcare all need to be considered.
The LCBO review has progressed through the CMS’s framework development and public consultation stages, but a final LCBO framework has not yet been approved and implemented.
Primary Healthcare Products
Primary health insurance products have emerged as a valuable, affordable healthcare access solution.
These solutions, which cover day-to-day healthcare needs such as GP visits, basic dentistry, and medication, are not intended to replace full medical aid but rather serve as a complementary or interim solution. The value and role of primary health insurance products, particularly in serving the “missing middle” and supporting private healthcare access in underserved markets, have resulted in the government granting a series of exemptions under these regulations. As of 2025, the exemptions have been extended to 31 March 2027.
The Bigger Policy Picture
National Health Insurance
The NHI Act was signed into law in May 2024, with implementation structured across two phases: 2023–2026 and 2026–2028. The legislation provides for a progressive implementation approach, including health system strengthening and, in the second phase, selective contracting of healthcare services from private providers.
NHI is moving beyond being solely a legislative debate. The National Department of Health’s 2026/27 plans include work on healthcare benefit prioritisation, health technology assessment, provider accreditation and elements of the primary healthcare infrastructure required to support implementation.
However, the future operating model remains subject to significant policy, legal and implementation considerations.
The Constitutional Court’s 18 May 2026 judgment on the Certificate of Need is one such development. The Court confirmed the unconstitutionality of sections 36 to 40 of the National Health Act, which established the Certificate of Need framework.
For the private healthcare sector, the longer-term question remains how NHI, medical schemes and private providers will interact as implementation progresses.
Looking Ahead
South Africa is not simply experiencing rising healthcare costs. The country is reconsidering how healthcare should be funded, what level of care should be guaranteed and how that care can remain affordable.
The PMB review, primary healthcare reform, LCBO development and NHI are all part of that broader conversation, however they are progressing at different speeds and remain subject to further regulatory and policy developments.