South Africa’s Government Employee Medical Scheme (Gems) is facing mounting financial pressure after paying out more in claims in a single year than one of the country’s largest private medical insurers has paid over decades.
New data released by the Department of Public Service and Administration shows that Gems paid approximately R67 billion in claims, while collecting only about R65 billion in member contributions over the same period.
The shortfall has forced the scheme to draw heavily on its reserves and implement contribution increases for its members.
Gems, which serves more than 2.3 million beneficiaries, is one of the largest medical schemes in the country, covering public sector employees and their dependents.
Rising healthcare usage drives costs higher
The growing financial strain is largely driven by the high utilisation of healthcare services among members.
According to the department, Gems beneficiaries collectively account for around 22,000 general practitioner consultations per day, alongside approximately 600 hospital admissions and 60 births daily.
In financial terms, this translates into daily payouts of about R180 million in claims, with an additional R27 million paid out for specialist services.
Membership continues to expand steadily, with around 100 new principal members and 450 dependents joining the scheme each day.
Officials say this consistent growth, combined with rising healthcare demand, is placing increasing pressure on the scheme’s finances.
contribution hikes spark concern among unions
In response, Gems has implemented contribution increases, raising monthly premiums by 13.4% in 2025, with a further 9.5% increase agreed for 2026 following negotiations with labour unions.
The Federation of Unions of South Africa has criticised the move, pointing out that public sector wages are set to increase by only 4% in the coming financial year.
The union warned that the gap between wage growth and medical aid costs is eroding workers’ real incomes and forcing difficult trade-offs between healthcare and basic living expenses.
The department acknowledged that the scheme’s reserves have fallen below the statutory minimum after drawing down approximately R10 billion to cover claims.
“To ensure continued access to quality healthcare for public service employees, a delicate balance must be struck between financial sustainability and affordability,” officials said.
Comparison with private sector highlights scale
The scale of Gems’ payouts stands in stark contrast to private sector insurers.
For example, Discovery reported R11.5 billion in claims in 2025 for its roughly 3.9 million members.
Over a longer timeframe, Discovery Life paid out more than R67 billion in claims over 25 years, with over half of that amount paid in just the past five years.
Cancer remains the leading driver of claims in the private sector, accounting for around 45% of serious illness claims.
Cost containment measures underway
To stabilise its finances, Gems has introduced a range of cost-containment measures.
These include improving operational efficiencies, strengthening provider networks, and addressing waste and fraud within the system.
The department also confirmed enhancements in governance practices, including stricter supply chain controls, improved vetting of officials, and more robust recruitment processes.
Authorities say these measures are aimed at limiting future contribution increases while preserving benefits and ensuring the long-term sustainability of the scheme.
Source: The citizen
