The Board of Healthcare Funders (BHF) has slammed the industry regulator’s guidance on contribution increases for 2027, saying it has failed to consider soaring healthcare costs, and risks creating unrealistic expectations among members, reports Business Day.
It has now written to the Council for Medical Schemes (CMS) calling for implementation of reforms recommended by the Competition Commission’s Health Market Inquiry, including a mechanism for tariff negotiation between funders and healthcare providers.
This comes amid ongoing political pressure from unions, which have been campaigning against the Government Employees Medical Scheme’s contribution increases for 2026. More recently, the Federation of Trade Unions of South Africa lodged a section 77 notice at Nedlac over rising medical aid costs, indicating it plans protest action.
In July the CMS recommended contribution increases for next year be anchored at 3.8%, with any additional provisions for solvency requirements being supported by a scheme’s financial position. This was aimed at helping cushion households grappling with the cost of living crisis, and was in line with the Reserve Bank’s projections for consumer price inflation for 2027, it said.
It advised schemes to make “reasonable” provisions for increased utilisation.
Last year the CMS recommended schemes aim for contribution increases of 3.3% for 2026, but its own analysis shows it approved plans that resulted in a weighted average contribution increase of 8.1%. All contribution increases must be approved by the regulator before implementation.
Annual consumer inflation has averaged 3.9% in the first seven months of 2026, according to the latest Stats SA data.
Now the BHF has pushed back, saying the CMS’ contribution increase guidance for 2027 is unrealistic. Achieving its target of 3.8% will require extensive reforms to reduce healthcare costs, it said.
Schemes faced cost pressures from rising healthcare utilisation, with sharp increases in tariffs charged by hospitals and healthcare professionals, 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. Bringing those costs down is how we create the conditions for lower contribution increases,” said BHF MD Katlego Mothudi.
The CMS was not immediately available for comment.
The overall industry-weighted increase assumptions for specialist and hospital costs were 8.61% and 8.51%, respectively, more than double the CMS’s3.3% tariff benchmark, the CMS’ analysis shows. “This confirms the challenge of contribution inflation is beyond just issuing contribution increase guidance; more needs to be done,” the BHF said.
“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 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).
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