Paresh Prema, Branch Head: Technical and Actuarial Consulting Solutions at Alexforbes Health
South Africa’s medical schemes industry remains under pressure from rising healthcare costs and declining participation among younger members, while employment conditions ensuring a greater proportion of beneficiaries being members of restricted schemes, according to the latest Medical Aid Insights report from Alexforbes.
The report analyses data from 2000 to 2024, drawn from annual Council for Medical Schemes disclosures and focuses on the 10 largest open and 10 largest restricted medical schemes by principal membership. It highlights changing membership patterns, growing affordability pressure, financial strain and the uncertainty created by regulatory reform.
The findings point to a sector that remains stable in overall size, but is under mounting pressure from higher healthcare utilisation, rising provider costs and an ageing beneficiary base.
These trends suggest that while the sector has remained broadly resilient, it is entering a more complex period in which affordability, membership composition and regulatory uncertainty will all shape future sustainability.
Affordability pressures shift membership patterns
South Africa’s medical schemes industry has remained relatively resilient, but financial pressure and affordability challenges are reshaping the sector. While overall membership has held up, the beneficiary mix is shifting and this is changing the long-term outlook for schemes.
Medical schemes still cover more than 9 million beneficiaries, but growth is increasingly concentrated in restricted schemes while open schemes continue to lose ground. This points to the growing impact of affordability pressures in the industry and the appeal of employer-supported cover in restricted schemes. At the same time, fewer younger beneficiaries are joining schemes, while the pensioner ratio continues to rise.
Healthcare costs remain a major challenge, driven by higher utilisation, rising provider fees and continued advances in medical technology. An ageing medical scheme population and a growing burden of chronic disease are also pushing up claims, with contribution increases continuing to outpace inflation.
The introduction of the National Health Insurance Act and broader regulatory reforms are reshaping the landscape. Ongoing legal challenges, along with significant concerns about the Act’s constitutionality and feasibility, are creating uncertainty, while also underscoring the importance of clarifying the future role of medical schemes.
Membership trends
Despite reductions in the number of medical schemes, the industry has grown by 1.3 million principal members (46%) and 2.2 million beneficiaries (32%) since 2005. Excluding Sizwe Hosmed, the remaining 70 medical schemes operating in South Africa at the end of 2024 had a total of 4.11 million principal members and 9.04 million beneficiaries. Between 2023 and 2024, open schemes experienced a 1.2% decline in membership, while restricted schemes saw a 2.4% increase, resulting in a net growth of 0.6% in total scheme beneficiaries.
Between December 2023 and December 2024, no open medical schemes recorded a year-on-year increase in beneficiaries exceeding 5%. In contrast, six restricted schemes experienced beneficiary growth above 5% during the same period. These included Alliance-Midmed (5.8%), Foodmed (5.1%), GEMS (5.2%), LA Health (6.7%), Retail Medical Scheme (5.3%) and Umvuzo (5.3%).
Financial strain intensifies across the sector
The overall risk claims ratio rose from 95.8% in 2023 to 96.2% in 2024. Open schemes recorded a ratio of 91.9%, while the ratio of restricted schemes reached a significant 101.3%.
Non-healthcare expenditure (NHE) as a percentage of gross contribution income (GCI) declined slightly across the industry, from 7.92% in 2023 to 7.85% in 2024. Open schemes improved cost efficiency with a decrease from 9.64% to 9.51%, while restricted schemes saw a marginal increase from 5.65% to 5.71%.
Solvency levels remained a key focus, with 8 of the top 10 open schemes and all top 10 restricted schemes meeting the statutory minimum of 25% at the end of 2024. The open schemes that failed to meet the 25% statutory minimum solvency were Medihelp and CompCare. Their solvency levels were 21.0% and 21.8%, respectively. The last known solvency level for Sizwe Hosmed was 6.62% in July 2025, according to a CMS media report published on 3 September 2025, down from 15.7% in 2023.
The industry recorded an operating deficit of R11.64 billion in 2024, up from R10.20 billion in 2023. The weaker performance was largely driven by restricted schemes, where claims ratios increased between 2023 and 2024. Thebemed was the only open scheme to record an operating surplus in 2024, while five of the 10 restricted schemes recorded operating surpluses. Many schemes that recorded operating deficits had to rely on investment income to help absorb claims and administration costs. After investment income, seven out of 10 open schemes and seven out of 10 restricted schemes achieved a net surplus.
Sustainability remains a key watchpoint
Significant improvements were observed in the sustainability index for 2024. Thebemed led with a 15.2% increase, followed by Polmed at 14.1%. Both schemes reported operational and net surpluses in 2023 and 2024. Improved solvency levels were a key driver of these stronger results; however, Polmed experienced a 0.4% decline in beneficiaries. Among open schemes, Discovery and Momentum showed the most notable gains, improving by 11.9% and 9.5% respectively.
The findings highlight growing pressure on affordability, sustainability and access to private healthcare cover in South Africa.
You can view the full report here.
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