South African medical aid members are facing the prospect of another round of substantial contribution hikes next year, despite official guidance from the Council for Medical Schemes (CMS) recommending a modest 3.8% anchor for 2027 increases.

The regulator’s 3.8% benchmark, which is linked to inflation, serves as a baseline starting point for schemes. However, industry experts caution that actual monthly payment increases for consumers could land considerably higher once real-world healthcare utilisation and private medical inflation are factored in.

According to the Board of Healthcare Funders (BHF), which represents medical schemes, a realistic increase for 2027 is more likely to fall between 5.8% and 7.3%, with potential for even higher adjustments depending on specific scheme operational pressures.

The discrepancy lies in how the CMS benchmark is calculated. The 3.8% baseline excludes what the regulator terms “reasonable utilisation estimates” – the expected increase in how frequently members access healthcare services and benefits.

The BHF pointed out that the CMS has not defined what constitutes a “reasonable utilisation” allowance for 2027. Historically, increased benefit usage adds roughly 3.5 percentage points to scheme costs, while private healthcare inflation consistently runs 2% to 3% above the Consumer Price Index (CPI).

A look back at 2026 highlights how starkly actual increases can diverge from regulatory guidelines:

2026 CMS Guidance: Recommended a 3.3% contribution increase.

Actual Industry Average: Schemes eventually implemented an overall weighted increase of 8.10%.

Provider Cost Surges: In 2026, specialist costs rose by an average of 8.61% and hospital costs by 8.51% – more than double the regulator’s initial benchmark.

Global and local cost pressures

Medical schemes are grappling with persistent structural cost pressures locally and globally. Data from WTW’s 2026 Global Medical Trends Survey projects global medical costs to surge by 10.3% in 2026, following a 10% spike in 2025. For the Middle East and Africa region, cost increases are projected at an even higher 11.3%.

Key drivers behind these escalation rates include expensive new medical technologies, rising pharmaceutical costs, increased service utilisation, and operational inefficiencies such as fraud, waste, and abuse.

Locally, medical scheme benefit payouts expanded dramatically from R218.4 billion in 2022 to R259.3 billion in 2024. Over the same period, total medical scheme membership growth stalled, creeping up by less than 1.1% per year.

Industry calls for systemic reform

The BHF argues that simply capping contribution targets annually does nothing to curb the rising prices charged by private healthcare providers.

In formal correspondence to the CMS, BHF Managing Director Dr Katlego Mothudi stressed that sustainable relief for consumers requires addressing underlying cost drivers rather than engaging in annual rate disputes.

“Affordable medical scheme contributions require affordable healthcare. That is the bottom line,” said Dr Mothudi. “This should not become a battle between CMS and medical schemes over a percentage. We need to deal with the factors that determine affordability.”
The BHF contends that hospitals and specialist groups hold significant pricing power, while individual schemes have limited leverage to negotiate tariffs. To address this imbalance, the organization is calling for:

Regulated Collective Bargaining: Allowing medical schemes to collectively negotiate tariffs directly with healthcare providers.

PMB Overhaul: Reforming Prescribed Minimum Benefits (PMBs) to better manage compulsory costs.

Low-Cost Benefit Options (LCBOs): Accelerating the rollout of LCBO frameworks to provide accessible coverage to lower-income earners.

What comes next for consumers?

Public frustration over medical inflation is mounting. The Federation of Trade Unions of South Africa (Fedusa) has already lodged a formal Section 77 dispute at Nedlac over spiraling contribution costs.

For now, members will have to wait for individual medical schemes to finalise and submit their proposed 2027 fee structures to the CMS for approval. Detailed contribution changes for specific plans and benefit options are expected to be communicated to members in the coming months.