The Board of Healthcare Funders (BHF) has written to the Council for Medical Schemes (CMS), expressing concerns that the regulator's guidance on contribution increases for 2027 is unrealistic. The CMS had recommended a 3.8% increase, citing the need to cushion households from the cost of living crisis. However, the BHF argues that this target is wishful thinking, given the soaring healthcare costs and rising utilisation rates. The BHF represents medical schemes covering about half of South Africa's 9-million medical scheme beneficiaries.
The CMS's guidance is intended to help households grappling with the cost of living crisis, which has been amplified by elevated fuel prices. The regulator had also recommended that schemes make "reasonable" provisions for increased utilisation. However, the BHF says that achieving the 3.8% target will require extensive reforms to reduce healthcare costs. The association cites sharp increases in tariffs charged by hospitals and healthcare professionals as a major challenge.
According to the CMS's analysis, 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. The BHF says that this confirms the challenge of contribution inflation is beyond just issuing contribution increase guidance; more needs to be done. The association has proposed implementation of reforms recommended by the Competition Commission's Health Market Inquiry.
The BHF has called for a mechanism for tariff negotiation between funders and healthcare providers. Currently, healthcare providers and large hospital groups are effectively price setters, while medical schemes, and ultimately their members, are price takers. Allowing schemes to negotiate collectively could improve purchasing discipline, increase transparency and help contain healthcare costs. The association believes that this could help reduce the financial burden on medical scheme beneficiaries.
The BHF has also proposed updating the prescribed minimum benefits (PMBs) to reflect South Africa's current disease burden and allowing medical schemes to offer pared-down packages known as low-cost benefit options (LCBOs). PMBs are a basic basket of benefits that all schemes must cover and include emergency care, some hospital procedures and a list of chronic conditions. LCBOs do not include the full suite of PMB benefits. This could provide more affordable options for beneficiaries.
The CMS's recommended contribution increase for 2026 was 3.3%, but its own analysis shows that it approved plans that resulted in a weighted average contribution increase of 8.1%. Annual consumer inflation has averaged 3.9% in the first seven months of 2026, according to the latest available data from Stats SA. The Federation of Trade Unions of South Africa has lodged a section 77 notice at Nedlac over rising medical aid costs, indicating it plans protest action.
The BHF's managing director, Katlego Mothudi, says that 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. The CMS was not immediately available for comment on the BHF's concerns and proposals.
Key points
- The Board of Healthcare Funders challenges the Council for Medical Schemes' guidance on contribution increases for 2027.
- The BHF proposes reforms to reduce healthcare costs, including tariff negotiation between funders and healthcare providers.
- The association also suggests updating prescribed minimum benefits and allowing low-cost benefit options.
