The Council for Medical Schemes (CMS), which regulates South Africa’s medical schemes, has urged the industry to limit next year’s contribution increases to projected inflation of 4.4% plus “reasonable estimates of benefit utilisation” to help people keep their medical aid cover, reports BusinessLIVE.
CMS noted that consumers remained under “serious financial pressure” due to high interest rates, and warned that the cost-of-living crisis combined with high household debt levels could affect members’ ability to afford medical scheme premiums.
BusinessLIVE quoted CMS acting registrar Mfana Maswanganyi as saying in an industry circular this week: “Although private medical inflation generally exceeds the CPI (consumer price index) by 2% or 3%, CMS believes that the annual industry price increase assumptions should be closely tied to the CPI. In the current challenging economic climate, raising contributions above the inflation rate is simply above the budget of most cash-strapped consumers.”
He added: “High medical scheme contribution rates also create a barrier for new entrants looking to join the private healthcare industry, posing a threat to the industry’s long-term sustainability.”
According to BusinessLIVE, Paresh Prema, branch head for technical and actuarial consulting solutions at Alexforbes said it was unrealistic to expect medical schemes to tie their contribution increases for 2025 to CPI, as they faced rising claims costs due to an ageing membership profile and increased usage.
Prema said that, for example, schemes were currently experiencing increased cancer costs due to the delayed diagnosis of some patients during the Covid-19 pandemic, new treatments and an ageing population.
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