Medical scheme members will soon find out how much more they will have to pay for their healthcare cover in 2027.
October is when the annual round of contribution announcements starts, with schemes setting out what their options or plans will cost from January next year. Members will be watching closely, particularly after several years of above-inflation increases.
The global outlook for medical costs has improved slightly. Aon’s 2026 Global Medical Trend Rates Report is based on a survey conducted across more than 100 Aon locations that broker, administer, or advise on employer-sponsored medical plans. It forecasts that the global medical trend rate will fall from 10% in 2025 to 9.8% in 2026 – the first time since 2023 that the global rate has fallen below 10%.
South Africa’s rate is already below the global average, but it is not expected to fall further.
Aon puts the country’s medical trend at 9.5% for 2026, exactly where it was in 2025. General inflation is forecast at 4.5%.
The medical trend figure is not a prediction of medical scheme contribution increases. Aon uses the term to describe the expected annual increase in the cost of treating patients and providing healthcare services, taking account of inflation, utilisation, prescription drugs, and medical technology.
The five largest open medical schemes – Discovery Health Medical Scheme, Bonitas Medical Fund, Momentum Medical Scheme, Bestmed Medical Scheme, and Medihelp Medical Scheme – already showed that contribution increases can come in below the underlying medical trend.
Discovery’s weighted average contribution increase for 2026 was 7.2%, Bonitas’ 8.8%, Medihelp’s 8.46%, and Bestmed’s 6.8%. Except for Momentum, which increased contributions by 9.9%, compared with 9.4% in 2025, these increases were generally lower than the increases announced for 2025.
The medical trend figure does, however, provide a useful indication of the cost pressure facing schemes as they prepare their 2027 contribution increases.
What does the CMS want schemes to do?
The Council for Medical Schemes’ Circular 20 of 2026: Guidance on contribution increases and benefit changes for 2027 puts affordability firmly on the agenda.
It has recommended that schemes anchor their contribution increases and cost assumptions at 3.8%, based on the South African Reserve Bank’s July 2026 CPI forecast.
The regulator is not suggesting that medical costs will rise by only 3.8%. Its guidance acknowledges that private medical inflation generally runs 2% to 3% above CPI. The 3.8% figure is being used as an affordability benchmark.
Schemes that propose higher increases must provide financial and actuarial justification. The CMS says that where the assumptions supporting an above-benchmark increase are not adequately substantiated, the Registrar of Medical Schemes may require a second independent actuarial opinion.
The regulator also wants schemes to look for savings before relying on higher contributions. Its guidance points to measures including improving efficiency, strengthening prevention, optimising provider contracting, managing utilisation, and reducing avoidable expenditure.
It specifically warns that contribution increases should not be used as a substitute for effective cost management.
Fraud, waste, abuse, and errors are also identified as sources of avoidable expenditure that schemes should address.
The CMS says industry solvency stood at 40.87% in 2024, compared with the statutory minimum of 25%. It has asked schemes with sufficient reserves to consider whether accumulated funds can be used to mitigate healthcare cost inflation where this is financially justifiable.
It has also called for regular reviews of third-party contracts to assess efficiency, effectiveness, and value for money.
South Africa is not getting the global reprieve
Aon expects the medical trend in Europe to fall from 8.9% in 2025 to 8.2% in 2026. Seventy percent of the European countries surveyed expect their rate either to fall or remain flat. Aon attributes the decline partly to lower general inflation and changes in healthcare utilisation. In the United Kingdom, for example, the post-pandemic surge in utilisation is beginning to level off. Other European markets continue to face upward pressure from increased demand for private healthcare, limitations in public healthcare systems, and an ageing population.
Latin America and the Caribbean is also expected to see a decline, from 10.7% to 10.2%. Aon says this is largely driven by lower trend rates in Brazil and Colombia, where changing patterns of care are easing some of the pressure from high-cost claims, including hospitalisations.
Parts of Asia-Pacific (APAC) are also seeing some easing. About one-third of the markets surveyed in the region, including China, Singapore, the Philippines, and India, expect their medical trend to decline slightly. Aon points to moderated healthcare utilisation and well-being initiatives as some of the factors behind the lower rates. Overall, however, APAC’s medical trend is expected to increase from 11.1% to 11.3%, as higher rates in the remaining markets more than offset these declines.
In the Middle East and Africa (MEA), gross medical trend is expected to ease only slightly, from 15.5% to 15.3% in 2026. General inflation is forecast to fall from 8.2% to 7.7%, meaning the medical trend after allowing for inflation rises from 7.3% to 7.6%.
More than half of the markets surveyed in the region expect their medical trend to fall. South Africa and the United Arab Emirates are among those where Aon expects the rate to remain unchanged.
Aon does not give a specific reason for South Africa’s unchanged rate. It says that in MEA markets where medical trend is increasing, the factors cited include greater demand for healthcare services, reliance on imported medical goods combined with currency depreciation, and chronic disease.
Hypertension is a major cost driver
Hypertension is the medical condition expected to have the biggest impact on medical plan costs in South Africa, according to Aon’s survey. South Africa is among 18 countries where hypertension ranks as the most impactful condition.
It is not, however, the biggest cost-driving condition globally. Cardiovascular disease remains at number one, followed by cancer/tumour growth and hypertension. These rankings are unchanged from 2025, although musculoskeletal conditions have entered the top five, which Aon links to the large increase in the proportion of the population affected by these conditions.
Cardiovascular disease is a top condition in every region covered by the survey, with more than 20 countries reporting it as their most impactful condition. Cancer is also among the top five in every region, with 20 countries identifying it as their most impactful condition.
Aon also looks at the risk factors behind these conditions. Hypertension is by far the leading risk factor, followed by physical inactivity and poor nutrition. Obesity has moved up to fourth place.
Import dependence and currency movements can also add to healthcare cost pressures. Aon identifies reliance on imported medical goods combined with currency depreciation as factors being cited in markets where medical trends are increasing in the Middle East and Africa. More broadly, it notes that countries dependent on imports can feel the effects of inflation, currency fluctuations, and tariffs more acutely.
Healthcare utilisation is another important part of the equation. Aon points to higher utilisation rates as one of the factors keeping medical inflation elevated, alongside the adoption of advanced medical technologies and growing demand for private healthcare services. Ageing populations are another key driver of increased medical costs, particularly in Europe, APAC, and Latin America.
How are other markets responding to rising costs?
Aon’s survey provides an indication of how employers and medical plans in other markets are responding to rising healthcare costs.
Cost management was the first strategic priority for 70% of respondents in 2025. About three-quarters planned to negotiate with vendors, while about two-thirds expected to conduct requests for proposals.
Well-being programmes were the most widely used cost-mitigation measure. Eighty-six percent of countries surveyed reported well-being initiatives as their most prevalent measure. Aon says these programmes can help to contain costs by encouraging preventative care, potentially avoiding more expensive treatment later, while also addressing factors that can worsen other health conditions.
Plans are also looking at how members use healthcare services. Measures aimed at reducing or controlling overuse include deductibles, co-payments, and referrals, while some employers are considering changes to plan design, including restrictions on access and how care is delivered. The intention is to encourage members to use care in a more cost-effective way.
Flexible benefits are becoming more common too. Two-thirds of countries surveyed expect to use flexible benefit plans in 2026, making them the third most prevalent cost-mitigation mechanism globally. Aon says they give employers greater control over costs while allowing benefits to be adapted to individual needs.
There is also a focus on what employers are buying and from whom. Negotiating with vendors and putting contracts out to tender are among the measures being used to seek better value, while changes to high-cost or lower-value benefits can reduce expenditure without necessarily applying the same increase across the entire plan.
Aon’s findings suggest that these measures do not eliminate medical inflation. Rather, they are ways of managing how much of the underlying increase in healthcare costs is ultimately reflected in what employers and members pay.
The question for South African schemes is how much of those rising costs they can absorb, rather than pass on to members.
