Healthcare funders body calls on regulator to speed up healthcare reforms

The Board of Healthcare Funders (BHF), which represents many medical schemes, has said households cannot keep absorbing the rising costs of medical scheme increases or moving to lower benefit options that cost less indefinitely. 

Each year, medical aid increases are above consumer price inflation (CPI).

“We also need reforms that address what schemes pay for healthcare,” says BHF managing director Katlego Mothudi.

The BHF is calling for long-term structural reforms that would allow medical aids to spend less and therefore charge less, and has recently written to the regulator, the Council for Medical Schemes (CMS), urging reform.

Mothudi says it has received a response and is awaiting a meeting.

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The CMS did not respond to Moneyweb’s question, but its newly released annual report for 2025/26 notes that it is anticipated that “higher contribution increases will continue in the foreseeable future to address the misalignment between the benefits provided and their pricing”.

Momentum Health chief marketing officer Damian McHugh says the cost of healthcare is driven by both annual inflation-linked cost increases and utilisation – with the latter including the growing use of hospitals and doctors by scheme members as they age and their healthcare needs become more complex. 

Review of prescribed minimum benefits needed

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To address structural issues, the BHF has called for the long-running review of prescribed minimum benefits (PMBs), which began in 2017, to be concluded. 

PMBs require that medical aids cover the full cost of treatment for 271 specified conditions, emergencies, and 26 chronic conditions (although medical schemes can insist on certain generic drugs and certain procedures).

PMBs are intended to shield members from catastrophic health expenditure and prevent them from stopping treatment for chronic conditions.

PMB regulations should, by law, be reviewed every two years but the rules have remained the same since 2003.

In 2023, the CMS said the health minister did not accept its review as it had not devised a primary healthcare element, which would look at providing cover for GPs and basic healthcare.

The latest CMS report says the costs of PMBs were around R1 242 per beneficiary in 2024, up 9% from the prior year – with the highest expenditure observed among those aged 85 and above.

“These trends highlight the growing concentration of resources among a shrinking older cohort.”

The BHF is calling for PMBs to focus more on “primary healthcare, prevention, essential medicines and diagnostics”.

This would create a medical aid package that would be more affordable and allow for earlier intervention, so people are treated before they end up needing hospital care. 

The CMS’s new report says it is reviewing PMBs and has developed a proposed primary health package that would focus on preventive healthcare services, including screening and vaccination programmes, mental healthcare, basic dental services, and rehabilitative services.

McHugh says “there is a strong case for continued reform of the PMB framework” and that “any reform needs to balance the principle of protecting members against catastrophic health events with the financial sustainability of medical schemes”. 

“Reform should also … encourage prevention and early intervention, rather than focusing only on treatment once someone is seriously ill.” 

Collective bargaining

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The BHF is also calling for collective bargaining among medical schemes, hospitals, and specialists to reduce costs.

Until 2003, the South African Medical Association and the BHF negotiated tariffs centrally. Under the Competition Act, the Competition Commission then prohibited this collective bargaining, so tariffs are now set between hospitals, doctors and individual medical aids. 

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Mothudi says, “one priority is allowing medical schemes to negotiate tariffs collectively with willing providers, under clear regulatory oversight and with transparent pricing”.

“At present, providers, particularly large hospital groups, have considerable influence over prices, leaving schemes and their members with limited bargaining power.”

South Africa’s competition regulator is now moving to let healthcare funders and providers negotiate tariffs collectively again.

In February 2025, the minister of trade, industry and competition published draft rules in a government gazette that would exempt medical schemes from the law preventing collective bargaining for three years.

The CMS says in its report that it backs the plan, arguing that it could improve transparency and protect scheme sustainability. 

However, neither the PMB review, which started a decade ago, nor the collective bargaining exemption proposed last year has been finalised.

“The Competition Commission’s 2019 Health Market Inquiry recognised the need for a more transparent approach to tariff determination,” says Mothudi. 

“Seven years on, the reform needed to put this into practice remains outstanding.”

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