The Council for Medical Schemes has set out why it declined the Government Employees Medical Scheme’s request to reduce its weighted average 2026 contribution increase from 9.5% to 7.5%, saying the lower increase would have undermined the scheme’s long-term financial sustainability and ultimately disadvantaged members.
The explanation follows calls from organised labour for greater transparency after GEMS announced that the CMS had not approved its proposal to reduce the contribution increase. Unions questioned whether the scheme had presented a sufficiently compelling case to the regulator and demanded that both GEMS and the CMS disclose the reasons for the decision.
Read: CMS rejects GEMS bid to cut 2026 contribution increase as unions demand answers
In a media statement issued on 6 July 2026, the CMS said it is required under the Medical Schemes Act (MSA) to ensure that medical schemes remain both affordable and financially sustainable while protecting members’ interests. The Registrar of Medical Schemes concluded that GEMS’s proposed reduction would not adequately address the financial and solvency risks facing South Africa’s largest restricted scheme.
“The proposed amendment reducing the contribution increase to 7.5% is not fair to members, is inconsistent with the Act, and does not adequately support the scheme’s ongoing financial soundness and sustainability,” Registrar Dr Musa Gumede (pictured) said.
According to the CMS, approving the lower contribution increase would merely defer current financial pressures, increasing the likelihood that members would face steeper contribution increases in future years.
“The Registrar’s assessment found that approving the proposed 7.5% increase would likely defer current financial pressures into future years. This could result in the need for more significant corrective measures in future contribution cycles and may place additional financial pressure on members over time,” the statement said.
Balancing affordability and sustainability
The CMS acknowledged the financial pressures facing GEMS members but said affordability could not be considered in isolation.
It said the Registrar is required under the MSA to ensure that contribution levels are sufficient to meet expected claims and expenses, comply with solvency requirements, and protect members’ long-term interests.
GEMS originally announced a weighted average contribution increase of 9.8% for 2026 before reducing it to 9.5%, effective from 1 February, following engagements with stakeholders. The scheme later sought to reduce the increase further to 7.5%, saying cost-containment initiatives, operational efficiencies, and savings had created an opportunity to provide additional relief to members, subject to the Registrar’s approval.
When assessing applications for contribution increases, the Registrar considers factors including actuarial reports, financial projections, option-level performance, affordability considerations, solvency requirements, and the scheme’s long-term sustainability.
The CMS said it engaged relevant stakeholders throughout the assessment process but emphasised that the Registrar’s decision was ultimately guided by the statutory requirements of the MSA and the obligation to protect beneficiaries’ interests.
“The decision to retain the previously approved 9.5% contribution increase reflects the Registrar’s responsibility to balance affordability, financial sustainability, and member protection,” the CMS said.
According to the regulator, approving the lower increase would have increased the risk of future solvency deterioration, required greater reliance on reserves to fund operational deficits, and ultimately shifted today’s financial pressures onto members in future contribution cycles.
GEMS’s 2025 annual integrated report showed that the scheme’s solvency ratio declined to 24.72% at the end of 2025, marginally below the statutory minimum reserve requirement of 25%. The scheme attributed the decline to higher-than-expected healthcare expenditure, together with several years of deliberately restrained contribution increases introduced to support members during and after the Covid-19 period. Despite this, GEMS said it remains financially stable, with accumulated reserves of more than R18 billion and an AA+(ZA) national-scale financial strength rating with a stable outlook.
CMS responds to calls for transparency
The Public Servants Association (PSA) argued last week that if GEMS had genuinely sought to shield members from higher contribution increases, it should have presented “a far more compelling and comprehensive motivation” to secure regulatory approval. The union also called for both GEMS and the CMS to disclose the reasons for rejecting the proposal.
The CMS’s latest statement provides the regulator’s rationale while also noting that GEMS has accepted the decision and committed to pursuing future contribution adjustments that balance affordability with financial sustainability.
The regulator welcomed the scheme’s commitment to strengthening cost-containment initiatives and improving operational efficiency.
“Effective cost management remains an important component of ensuring affordable and sustainable healthcare cover for members,” Gumede said.
The CMS said it remains available to engage constructively with GEMS and other stakeholders on initiatives aimed at improving affordability, strengthening financial sustainability, and safeguarding members’ access to healthcare benefits.
