South Africa:Medical cost inflation outpaces CPI increase

The Council for Medical Schemes has recommended that Medical Aid schemes in the country limit their price increases in 2025 to 4.4% plus reasonable utilisation estimates, notes WTW, a leading global advisory, broking and solutions company.

In its Global Medical Trends Survey document, WTW says that it is widely reported, however, that Medical Aid inflation outpaces headline inflation and Consumer Price Index (CPI) in South Africa, running between 3% to 4% above CPI. Annual CPI was 2.9% in November 2024, up from 2,8% in October 2024, according to Statistics South Africa. 

The primary cost drivers fuelling this trend in South Africa includes rising prices of health services and treatments, driven by an aging workforce and increasing demand for healthcare services, says the WTW report. Additionally, there has been an increasing burden of chronic diseases such as diabetes and hypertension, requiring ongoing chronic disease management.

Recent advancements in medical technology and new medicines also add to the rising trend, with costs being passed through to members. Insurers are aiming to keep rate/contribution increases in line with medical inflation and expected member claims, in an effort to keep plans sustainable.

The medical cost trend projected for South Africa by insurers and WtW brokers is a gross increase of 8.5% in 2025.

South Africa - Medical cost trend

Medical Aid schemes in South Africa provide financial cover for medical expenses (such as hospitalisation, medical treatment and medicine) for members who pay a monthly contribution for the coverage.