Why medical aid costs increase above inflation

Medical aid schemes in South Africa are raising their contributions above inflation rates due to several factors. As members age and the prevalence of chronic illnesses increases, healthcare costs rise significantly, accounting for up to R96 of every R100 paid into a scheme. Utilisation of healthcare services, often driven by an ageing membership and growing chronic conditions, adds another 4% to healthcare costs, according to the Health Funders Association.

Medicine costs have also soared, with funding from medical schemes increasing by an average of 9.7% annually between 2016 and 2026. Older members, who typically have more healthcare needs, are contributing to higher claims costs. Additionally, fewer younger people are joining medical schemes due to economic challenges, leading to higher average age-related claims costs and cross-subsidisation issues.

Prescribed minimum benefits (PMBs), mandated by law to cover specific conditions and illnesses, have also grown in cost, now accounting for about half of total benefits paid. Members are advised to explore alternative benefit options with their schemes before cancelling coverage, considering overall healthcare costs and potential waiting periods when rejoining.