Medical schemes must keep premium hikes near inflation rate says regulator

Motheo Khoaripe interviews Mondi Govuzela, the Council's senior manager for Benefits Management.

South Africa's industry regulator has asked medical schemes to keep their premium increases for 2025  to 4,4%, plus 'reasonable utilisation estimates'

That's in line with the Reserve Bank's inflation outlook, with headline inflation expected to average 4.4% and 4.5% in 2025 and 2026, respectively

The Council for Medical Schemes (CMS) says because the country doesn't have an official medical price index, it uses the consumer price index (CPI) to estimate the annual price increases in the private healthcare sector.

This is also used as a proxy measure for the affordability of annual contribution rate increases. 

In its annual circular, the CMS makes the point that the cost-of-living crisis could impact members' ability to afford medical aid premiums.

"To insulate members of medical schemes against further financial hardship and the risk of losing health insurance, medical schemes are hereby advised to limit the contribution increase and cost assumptions for tariff increases for the 2025 benefit year to 4.4% plus reasonable utilisation estimates."

Council for Medical Schemes

Mondi Govuzela, the Council's senior manager for Benefits Management, says they expect that medical schemes will respond positively to the proposal.

While they also accept that there are factors that might push costs higher than CPI, they recommend that schemes then follow a prudent approach of ensuring that these utilisation factors are kept to a bare minimum.

"When we receive applications we will assess the reasonableness of the assumptions... and where the assumptions hold we'll approve; where they do not we'll reject."

"It's important to mention that medical schemes are not for profit organisation; they're run in the interest of beneficiaries and members.  Therefore we expect that they will not pursue making a profit but ensure that members are adequately covered and make their choices accordingly."

Mondi Govuzela, Senior Manager: Benefits Management - Council for Medical Scheme

For more detail, listen to the interview audio at the top of the article