The Government Employees Medical Scheme (GEMS) has defended the 9.8% contribution premium hike for its 2m members for next year, telling outraged unions that this is necessary for the scheme’s long-term financial sustainability.
Other schemes, meanwhile, are already struggling to maintain their solvency ratios, as evidenced by Council for Medical Schemes (CMS) Industry Report 2024, released recently.
News24 reports that the Public Servants Association (PSA), which represents about 245 000 current and former government workers, as well as the Federation of Unions of SA (Fedusa), among others, have slammed the GEMS increase, describing it as “reckless” and likely to devastate the financial stability of hundreds of thousands of public servants.
“This is not a mere affordability issue, it is a crisis that threatens their health and dignity,” said the PSA, adding that it was “actively exploring litigation options to challenge this increase and hold GEMS accountable for breaching its mandate”.
It has urged the Minister of Public Service & Administration and the Minister of Finance to intervene urgently “to restore fairness and affordability”.
“We cannot accept another year in which workers are expected to pay more for the same stagnant benefits, while the scheme continues to sidestep accountability and meaningful consultation,” Fedusa said, adding that it was “deeply troubled” that GEMS intends to repeat the “excessive increase” every year until 2029.
“To describe this as a ‘single digit’ adjustment is misleading and dismissive of the reality faced by workers. These increases are nearly double-digit. They far exceed CPI,” Fedusa said. “They are well above anticipated wage adjustments of 4% to 5%. For workers, this is not an administrative matter. It is a direct attack on household stability and the right to dignified healthcare.”
GEMS said increases would be determined by what salary band members were in, as well as the number of beneficiaries.
The PSA said GEMS could not punish members for its own governance failures and failure to address fraud, waste and abuse of its system while continuing to “outsource billions” to private medical scheme administrators.
Fedusa has demanded that GEMS immediately withdraw the proposed 9.8% increase and that a full forensic review of all cost drivers, including administrative inefficiencies and governance gaps, be instituted. It also called for “a national intervention” on the affordability of healthcare, saying workers were at breaking point.
However, GEMS’ principal officer Dr Stan Moloabi said: “This adjustment is explicitly positioned as the necessary financial input to deliver value, access and ensure long-term sustainability.”
In comparison, Discovery Health Medical Scheme (DHMS) will institute a weighted average increase of 7.2% in member contributions in 2026, though these will only start from 1 April. Bonitas will raise its 2026 member contributions by an average of 8.8%, while Medshield and Bestmed will increase theirs by 7.5% and 6.8% respectively.
The GEMS increase takes effect from 1 January, and Moloabi said that for a standard public service family, contributions will be up to 23% lower than comparable open schemes before subsidies.
“It is important to consider the actual rand value of the increase and the final contribution amount when comparing affordability, said Dr Vuyo Gqola, GEMS’ chief operations officer.
“GEMS contributions will continue to be among the most affordable in the sector because of its low starting base.”
Fail to maintain solvency ratio
Two other local medical aid schemes – Medihelp and Compcare – failed to maintain their solvency ratios at or above 25% in 2024, the minimum statutory level prescribed in the Medical Schemes Act, reports Moneyweb.
The Council for Medical Schemes (CMS) Industry Report 2024, released last week, showed that Medihelp’s solvency ratio was 33.93% in 2022, deteriorated to 23.84% in 2023, and plummeted further to 20.99% in 2024.
Compcare Medical Scheme’s solvency ratio deteriorated from 25.14% in 2023 to 21.83% in 2024.
The report said 4.93% of beneficiaries in open schemes were covered by Medihelp and Compcare Medical Scheme in 2024, and that no restricted medical schemes failed to meet the minimum required solvency level at the end of 2024.
In 2023, Medihelp, Sizwe Hosmed Medical Scheme and Transmed Medical Fund failed to maintain their solvency ratios at the required minimum level.
Transmed inches up
Transmed Medical Fund had attained a 25% solvency ratio during 2024, improving its ratio from 17.7% in 2022 to 23.79% in 2023.
However, the latter was at least the fourth consecutive year it failed to comply with the prescribed minimum after achieving a ratio of 19.72% in 2021 and 22.37% in 2020.
Provisional curatorship for Sizwe Hosmed
The CMS said in September it had obtained a Gauteng High Court order to place Sizwe Hosmed Medical Scheme under provisional curatorship and had appointed Lebogang Mpakati as the provisional curator.
Its solvency level had declined to a level far below the statutory requirement of 25%, and the CMS was told by the South African Local Government Bargaining Council that it had not been granted accreditation to market the scheme and benefit options to local government employees for the 2026 year.
The CMS said Mpakati was expected to investigate Sizwe Hosmed’s financial position and advise on viable solutions and its future, including a merger, liquidation, or continued existence.
Last week Mpakati indicated that the scheme had restored provider access and improved its claims processes – but despite “substantial progress” in stabilising its operations, its challenges remain.
Overall industry solvency ratio down
The CMS Industry Report said the overall industry solvency ratio of 40.87% in 2024 exceeded the minimum required, but declined from 43.94% in 2023.
The solvency ratio of open schemes decreased by 2.68% to 33.36% in 2024 from 34.28% in 2023, while restricted schemes decreased 10.87% in their solvency ratio to 50.52% in 2024 from 56.68% in 2023.
The average industry solvency ratio has dropped over the past three years, from 59.48% in 2022 to 56.68% in 2023 and 50.52% in 2024.
The report attributes this to the growth in reserves not keeping up with the growth in contributions.
Medihelp, it said, had deliberately under-priced its benefits during the pandemic in an attempt to provide relief to its members, and seen a 3.89% decrease in its insurance revenue per average beneficiary per month (pabpm) from 2021 to 2022 compared with an average CPI of 6.9% during this time.
It had corrected its pricing for the 2024 financial year and experienced an increase of 13.79% in its insurance revenue pabpm, compared with the average CPI of 4.4%.
The scheme submitted the required business plan in terms of Regulation 29, which was subsequently approved by the registrar of medical aid schemes.
The ‘death spiral’
The report noted that: “Schemes with higher demographic profiles are at particular risk of the so-called ‘death spiral’, where adjustments to price appropriate for the profile of its members might result in the unaffordability of contributions and the subsequent loss of its younger members… exacerbating the effect.”
It said Compcare was a smaller medical scheme with a very poor demographic profile, and thus exposed to significant claims volatility risk.
The scheme had restructured its benefits for the 2025 financial year in efforts to address its underlying membership risks, and the registrar approved its Regulation 29 business plan.
Medihelp
Medihelp said it was financially fit, stable and (sufficiently) well-positioned for the future to give its members and advisers reassurance that it remains reliable, resilient and responsibly run.
“The Global Credit Rating (GCR) has … affirmed Medihelp’s financial strength rating of A+ with a stable outlook, confirming our ability to meet our obligations and pay claims now and in the future,” it said.
Last week, Compcare said the figures reflected in Moneyweb’s article were from the CMS annual report for calendar year 2024, which, although published in 2025, reflects data that is now more than a year old.
It said it was important to note that Compcare operates “with full regulatory support” and the CMS approved its comprehensive five-year recovery plan in 2024.
Industry outlook and actions
The report concluded that the medical schemes industry remained under-priced in the 2024 year, and it was anticipated that this would be incrementally addressed through pricing adjustments over time.
The report added that the CMS and the Department of Health are working on the introduction of a standardised benefit package and the review of prescribed minimum benefits.
Alignment between the two entities’ primary healthcare packages is also taking place.
News24 article – GEMS slammed for 9.8% increase in 2026 member contributions (Restricted access)
Moneyweb article – Two medical schemes fail to maintain prescribed solvency ratio (Open access)
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