South Africa’s medical schemes industry covers more than nine million people and manages hundreds of billions of rand in healthcare spending every year. But beneath the annual contribution increases and benefit changes lies an industry that has been quietly transformed over the past two decades.
Alexforbes’s latest Medical Aid Insights 2024/2025 report analyses 20 years of Council for Medical Schemes (CMS) data, tracking everything from membership growth and demographics to solvency levels and financial performance.
The result is a fascinating snapshot of an industry that is becoming bigger, older, and increasingly dominated by a handful of major players.
Here are seven things you may not know about South Africa’s medical schemes industry.
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Medical schemes are disappearing because bigger has become better
If you think the medical schemes industry is shrinking, think again.
In 2005, South Africa had 131 registered medical schemes. By 2024, that number had fallen to 70. Yet over the same period, the number of principal members increased by 1.3 million and beneficiaries by 2.2 million, reaching 4.11 million principal members and 9.04 million beneficiaries.
The result is that the average medical scheme is now far larger than it was two decades ago. In 2005, the average scheme covered about 52 000 beneficiaries. By 2024, that figure had grown to almost 129 000.
In other words, fewer schemes are serving more members than before.
Why?
Because scale has become one of the industry’s biggest competitive advantages.
Large schemes benefit from broader risk pools, more predictable claims patterns, lower volatility, stronger bargaining power with healthcare providers, and the ability to spread administration costs across a larger membership base. They are also generally better positioned to absorb financial shocks and maintain healthy reserve levels.
Those advantages have helped to drive wave after wave of amalgamations and consolidations over the past two decades, as smaller schemes have struggled to compete with larger rivals.
In South Africa’s medical schemes industry, size increasingly translates into resilience.
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Discovery and GEMS reshaped the industry
Want to understand the balance of power in South Africa’s medical schemes industry?
Look at two names: Discovery and GEMS.
Discovery Health Medical Scheme (DHMS) remains the dominant force in the open-scheme market, while the Government Employees Medical Scheme (GEMS) dominates the restricted-scheme sector. Together, the two schemes account for more than half of South Africa’s principal medical scheme membership.
But the two giants have taken different paths to get there.
DHMS remains the industry’s dominant player. By 2024, its market share had reached 33.1%, up from 26.9% in 2006, cementing its position as the country’s largest medical scheme. Over the years, many members have migrated from smaller open schemes to Discovery, attracted by its brand strength, perceived value, and comprehensive benefit offerings.
Discovery’s market share has remained relatively stable in recent years, holding at about one-third of the market since 2018. That suggests much of its growth came through the earlier consolidation of the open-scheme market.
Yet even the market leader is not immune to affordability pressures. In 2024, Discovery recorded the largest decline in principal membership in the industry, losing 14 485 members.
GEMS, meanwhile, has been the industry’s biggest disruptor.
When it enrolled its first members in 2006, it accounted for only 1.5% of the market. By 2024, its share had grown to 21.4%, making it South Africa’s second-largest medical scheme. Unlike Discovery, GEMS has continued to gain market share in recent years, increasing from 17% in 2012 and 2018 to more than one-fifth of the market today.
In 2024 alone, GEMS added 35 772 principal members and 119 383 beneficiaries, making it the single biggest contributor to industry growth.
The report attributes much of that success to the scheme’s generous employer subsidy and its appeal to government employees seeking affordable cover. Over the years, GEMS also benefited from a number of strategic developments, including the incorporation of Medcor in 2010 and the transfer of approximately 16 000 Medihelp pensioners in 2012.
The contrast between the two schemes says a lot about the industry itself. Discovery’s success reflects the power of consumer choice in the open-scheme market, while GEMS demonstrates the growing importance of affordability and employer-supported healthcare cover.
Together, they have done more than any other scheme to reshape South Africa’s medical scheme landscape.
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The industry’s centre of gravity is shifting towards restricted schemes
One of the most important trends identified in the report is the growing divide between open and restricted medical schemes.
Twenty years ago, open schemes dominated the market, accounting for 67.5% of all principal members. By 2024, that share had fallen to 56.1%, while restricted schemes increased their share from 32.5% to 43.9%.
The shift is continuing.
Between 2023 and 2024, beneficiaries in open schemes declined by 1.2%, while restricted schemes grew by 2.4%. Overall industry growth was driven almost entirely by the restricted-scheme sector.
The contrast becomes even clearer when looking at individual schemes. Not a single open scheme recorded beneficiary growth above 5% in 2024. By comparison, six restricted schemes exceeded that mark, led by LA Health (6.7%), Alliance-Midmed (5.8%), Retail Medical Scheme (5.3%), Umvuzo (5.3%), GEMS (5.2%), and Foodmed (5.1%).
Alexforbes attributes much of this shift to affordability pressures and the increasing appeal of employer-supported cover. For many South Africans, access to a workplace subsidy can make the difference between belonging to a medical scheme and going without cover altogether.
In other words, the future growth of the industry increasingly appears to be tied to employment-linked healthcare cover rather than the traditional open-scheme market.
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Medical schemes are getting older, but not at the same pace
While much of the debate around the future of medical schemes focuses on National Health Insurance, regulation, and healthcare costs, the industry’s demographic profile may be just as important.
The average age of beneficiaries increased from 34.2 years in 2023 to 34.5 years in 2024. Open schemes remain significantly older than restricted schemes, with the average beneficiary age rising from 36.3 to 36.8 years, compared with an increase from 31.8 to 32.1 years for restricted schemes.
The trend has been building for more than a decade. According to the report, the average age of beneficiaries has increased steadily since 2012 and has accelerated since 2017.
The ageing trend becomes even clearer when looking at pensioners. In 2023, pensioners represented 9.6% of all beneficiaries. By 2024, that figure had increased to 10%, meaning one in every 10 medical scheme beneficiaries was aged 65 or older.
Not all schemes face the same challenge, however.
Among the major open schemes, Fedhealth has the oldest membership profile, followed by Bestmed, Bonitas, and Medihelp. Among restricted schemes, Profmed and Bankmed have the oldest memberships.
At the other end of the spectrum, LA Health and POLMED have some of the youngest membership profiles in the industry. GEMS, despite its enormous size, also remains relatively young compared with many open schemes.
Why does this matter?
Because age is one of the strongest predictors of healthcare spending. Older members generally claim more often, require more specialist care, and make greater use of chronic medication and hospital services.
The report notes that healthcare costs typically increase by about 2% for every additional year of ageing in a scheme’s membership profile.
For medical schemes, this creates a delicate balancing act: retaining older members while attracting enough younger members to keep contribution increases manageable.
In many ways, the ability to attract younger members may be one of the most important factors determining a scheme’s long-term sustainability.
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Investment income is keeping many medical schemes in the black
Most medical scheme members assume their monthly contributions are enough to cover healthcare claims and administration costs.
For many schemes, that is no longer the case.
The industry recorded an operating deficit of R11.64 billion in 2024, up from R10.20bn the year before. Restricted schemes accounted for most of the deterioration, with an operating deficit of R8.07bn, while open schemes recorded an operating deficit of R3.57bn.
Only one of the 10 largest open schemes, Thebemed, managed to generate an operating surplus in 2024 before investment income was taken into account. Among the 10 largest restricted schemes, only POLMED, Bankmed, LA Health, Umvuzo, and SAMWUMED recorded operating surpluses.
The gap between the industry’s best and worst performers was striking. POLMED recorded the largest operating surplus in the industry, while GEMS recorded the largest operating deficit by a considerable margin.
The largest operating deficits were recorded by:
- GEMS, at approximately R6.7bn;
- Bonitas, at approximately R1.16bn; and
- Discovery, at approximately R1.06bn.
That does not mean these schemes are necessarily in financial trouble. It simply means that contribution income alone was insufficient to cover healthcare claims and operating costs.
Investment income changed the picture dramatically.
Once investment returns were included, the industry’s overall position improved from an operating deficit to a net surplus of R3.13bn. Open schemes moved from an operating deficit to a combined net surplus of R3.33bn.
The report found that 14 of the 20 largest schemes could not fully cover healthcare claims and non-healthcare expenditure from contribution income alone. Even after accounting for investment income, however, six schemes still reported negative results.
The findings highlight a reality that many members never see: investment returns have become an increasingly important pillar of medical scheme sustainability.
As healthcare costs continue to rise faster than inflation, strong investment performance is helping many schemes balance the books. In an environment of rising claims, ageing memberships, and mounting affordability pressures, investment income is increasingly acting as the industry’s financial safety net.
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Why solvency may be the industry’s most important number
Most medical scheme members never look at a scheme’s solvency ratio.
They probably should.
A scheme’s solvency ratio measures the reserves it has available as a percentage of annual contribution income. In simple terms, it is the industry’s financial shock absorber – money set aside to absorb unexpected claims, economic shocks, or operational problems.
The Medical Schemes Act requires schemes to maintain reserves equal to at least 25% of annual contributions.
At the end of 2024, the industry remained comfortably above that threshold, with an average solvency level of 40.9%. Open schemes averaged 33.4%, while restricted schemes averaged 50.5%.
Among the major schemes, POLMED and SAMWUMED had some of the strongest solvency positions, while Medihelp and CompCare were the only large open schemes below the statutory minimum, at 21% and 21.8% respectively.
Strong reserves matter because they give schemes room to absorb unexpected shocks without immediately passing costs on to members through higher contributions. In some cases, they can also help schemes to improve benefits or moderate future contribution increases.
The most dramatic reminder of solvency’s importance is Sizwe Hosmed.
Many of the report’s 2024 comparisons exclude Sizwe Hosmed. Alexforbes explains that the scheme’s 2024 results were omitted because final audited financial statements were not available when the CMS Industry Report was compiled. Historical analyses continue to include Sizwe Hosmed up to 2023, but year-on-year comparisons between 2023 and 2024 generally exclude the scheme for consistency.
The report notes that Sizwe Hosmed’s solvency ratio deteriorated from 25.59% in 2022 to 15.73% in 2023, and the scheme was placed under statutory management in July 2024.
Subsequent events illustrate how serious solvency deterioration can become. By mid-2025, the scheme’s solvency ratio had fallen to about 6.6%, prompting the Registrar of Medical Schemes to seek curatorship. In October 2025, the High Court confirmed the curatorship, finding that regulatory intervention was necessary in the interests of beneficiaries and the financial soundness of the scheme.
Read: High Court confirms curatorship of medical scheme
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Who are the industry’s strongest performers?
Looking at membership numbers alone can be misleading.
A large scheme is not necessarily a healthy scheme, and a smaller scheme is not necessarily struggling.
To provide a broader picture, Alexforbes uses a Medical Schemes Sustainability Index that combines factors such as membership growth, age profile, solvency levels, operating performance, and reserves to assess the long-term health of schemes.
Among the major open schemes, the strongest performers were Discovery, Bestmed, and Bonitas.
Among restricted schemes, the leaders were, LA Health, Umvuzo, and POLMED.
The rankings suggest that financial sustainability depends on more than size alone. Membership growth, reserve levels, demographics, and profitability all play a role.
The report also highlighted the schemes that improved the most during 2024.
Thebemed recorded the largest improvement in sustainability, with its score increasing by 15.2%. The scheme was one of the few that managed to generate both an operating surplus and a net surplus in 2023 and 2024 while strengthening its solvency position.
POLMED followed with an improvement of 14.1%, while Discovery and Momentum recorded gains of 11.9% and 9.5%, respectively.
While the sustainability rankings highlight the industry’s strongest performers, they also show how quickly a scheme’s position can deteriorate when membership, pricing, reserves, and governance fall out of balance.
The contrast between schemes such as Thebemed and POLMED, on the one hand, and struggling schemes, on the other, illustrates an important lesson from the report: sustainability is not determined by a single number. It is the product of prudent pricing, effective cost management, healthy reserves, membership stability, and sound governance.
In the end, the strongest schemes are not necessarily the biggest; they are the ones that can consistently balance all those factors over time.
