The Board of Healthcare Funders (BHF) has called for structural reforms to contain healthcare costs, saying lower medical scheme contribution increases cannot be achieved through contribution guidance alone.
The call follows the Council for Medical Schemes’ recommendation that contribution increases and cost assumptions for 2027 be anchored at 3.8%, in line with the South African Reserve Bank’s 2027 inflation forecast. The benchmark is not a cap: schemes may propose higher increases, but these must be supported by financial and actuarial evidence having regard to the circumstances of each scheme.
In a statement issued on 22 September 2026, the BHF said it supported the objective of keeping contribution increases as low as possible but argued that the focus must extend to the underlying costs of healthcare. It called for reforms to address healthcare utilisation, provider costs, and structural issues affecting affordability.
In Circular 20 of 2026, which sets out guidance on contribution increases and benefit changes for 2027, the CMS said schemes applying for increases above the benchmark must submit comprehensive business plans. The Registrar of Medical Schemes will consider each scheme’s financial position, solvency requirements, and demographic risk profile, and may require a second independent actuarial opinion where the assumptions underlying an above-benchmark increase are not adequately substantiated.
The CMS acknowledged that private medical inflation generally exceeds consumer inflation by two to three percentage points. However, it said cost-increase assumptions should remain linked to inflation because above-CPI contribution increases place financial pressure on members and can discourage younger beneficiaries from joining schemes.
The BHF said that, without greater clarity on reasonable utilisation and underlying healthcare costs, the 3.8% headline figure could create unrealistic expectations among members.
The BHF, which represents medical schemes, administrators, and managed-care organisations across Southern Africa, also referred to WTW’s 2026 Global Medical Trends Survey.
The survey projects medical costs to increase by 10.3% globally and by 11.3% in the Middle East and Africa in 2026.
BHF managing director Dr Katlego Mothudi (pictured) said the focus should be on identifying which cost pressures can be influenced.
“Our task should be to identify which of these pressures we can influence and then implement the reforms required to bend the cost curve. Affordable medical scheme contributions require affordable healthcare. That is the bottom line,” he said.
Gap between tariff guidance and contribution assumptions
The BHF referred to the difference between the CMS’s tariff guidance for 2026 and the overall contribution increase assumptions subsequently evaluated by the regulator.
In its guidance for the 2026 benefit year, the CMS recommended that tariff increase assumptions be limited to 3.3%. Circular 21 of 2026 subsequently showed that the overall industry-weighted tariff assumption was 3.97%, while the demographic and utilisation assumption was 4.18%. Together, these produced an overall contribution increase assumption of 8.15% before reserve and other loadings. After those loadings, the overall industry-weighted contribution increase assumption was 8.1%.
In the overall 2026 contribution increase assumptions, the industry-weighted increases for specialist and hospital costs were 8.61% and 8.51%, respectively.
“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,” Mothudi said.
Utilisation adds to expenditure pressure
The BHF said total healthcare benefits paid by medical schemes increased from about R218.4 billion in 2022 to R239bn in 2023 and R259.3bn in 2024. This represented an increase of almost 19% over two years.
Over the same period, beneficiary numbers grew by 1.04% in 2023 and 0.45% in 2024. The BHF said the figures pointed to increased utilisation among a largely stagnant beneficiary population.
The CMS also identifies utilisation as a principal driver of medical scheme expenditure, influenced by factors including an ageing beneficiary population, the increasing prevalence of chronic diseases and multiple medical conditions, advances in medical technology, and greater demand for specialist and hospital services.
It requires schemes to base their utilisation assumptions on credible, scheme-specific experience and actuarial evidence, including changes in hospital admissions, specialist consultations, pharmaceutical use, chronic disease prevalence, and overall claims experience.
BHF proposes collective tariff negotiations
A key intervention proposed by the BHF is a framework that would enable medical schemes and willing healthcare providers to negotiate tariffs collectively through a regulated and transparent process.
The BHF said healthcare providers and large hospital groups were effectively price-setters, while medical schemes and their members were price-takers. It argued that collective negotiations could improve purchasing discipline and transparency and help to contain healthcare costs.
The need for a transparent tariff-negotiation framework was identified by the Competition Commission’s Health Market Inquiry in its final report in 2019, the BHF said.
The BHF also called for prescribed minimum benefits to be modernised to reflect South Africa’s current disease burden and for medical schemes to be allowed to offer low-cost benefit options, which it said would create more affordable routes into medical scheme cover.
Schemes expected to demonstrate cost control
Before seeking contribution increases above the benchmark, trustees should show that reasonable measures have been implemented to improve operational efficiency, strengthen preventative care, optimise provider contracting, manage utilisation, and reduce avoidable expenditure.
Reliance on industry-wide cost pressures alone will not be sufficient. The Registrar will consider whether a scheme has taken reasonable steps to control fraud, waste, abuse, and error, and to protect beneficiaries against avoidable contribution increases.
The CMS also recommended that increases in non-healthcare expenditure, including administration and managed-care costs, be limited to 3.8% for 2027.
The circular noted that the industry’s solvency ratio was 40.87% in 2024, compared with the statutory minimum of 25%. It said schemes with adequate reserves should consider using accumulated funds to mitigate the effect of healthcare inflation on members where this is financially justified, rather than immediately passing all cost increases on through above-CPI contribution adjustments.
However, the CMS said any use of reserves must be balanced against the need to maintain long-term solvency and comply with statutory requirements.
The BHF has asked the Registrar for structured engagement involving the CMS, the National Department of Health, the Competition Commission, National Treasury, healthcare funders and professionals, hospitals and other facilities, organised labour, employers, and consumers.
For the BHF, the longer-term answer is broader than contribution increases. It calls for a health system that prevents more disease, purchases healthcare more effectively, broadens risk sharing, removes structural inefficiencies, and delivers better outcomes from healthcare spending.
“This should not become a battle between CMS and medical schemes over a percentage,” Mothudi said. “CMS is right to place member affordability on the agenda. BHF is saying let us now broaden that agenda and deal with the factors that determine affordability.”
