South Africa's health insurance inflation (medical scheme premium inflation) has consistently outpaced headline inflation, except during the COVID-19 period, according to the South African Reserve Bank (SARB).
In its “Monetary Policy Review April 2026” report, SARB emphasises in a section titled “‘Unhealthy’ insurance inflation”, that understanding the drivers of this pressure is critical for assessing the overall inflation outlook.
Inflation for medicines, medical products and services has broadly tracked headline inflation. However, medical scheme premiums have escalated at a rate well above it.
An important driver is overutilisation: high admission rates and rising care intensity are pushing up expenditure. Between 2014 and 2024, intensive care unit admissions increased by 32.5% and high care admissions by 27.8%, while medical scheme beneficiaries grew by only 4%.
Utilisation, as measured by hospital admission rates and lengths of stay, exceeds that of comparable Organisation for Economic Co-operation and Development (OECD) countries.
Healthcare spending in South Africa is amplified by demographics and design failures. Medical schemes have an older risk pool, while the absence of risk equalisation weakens cross-subsidisation and reinforces adverse selection. Market inefficiencies then compound costs, diluting cost containment and enabling fraud and abuse.
Meanwhile, inadequate oversight of prescribed minimum benefits and practitioners, together with inefficient price-setting, limits value-based purchasing. Additionally, the third-party payer model entrenches moral hazard and erodes cost discipline.
The report also said, “Health insurance price pressures may also reflect weak competition. Both funder markets (medical schemes and administrators) and the hospital market are highly concentrated. The three largest hospital groups account for about 90% of admissions and the three largest administrators cover nearly 80% of all beneficiaries.”
Sharp increases in health insurance premiums shift the adjustment burden to the wider economy and entrench inefficiency. Reforms to curb unnecessary utilisation and fraud, and to strengthen competition, should reduce the relative price of health insurance and further support overall inflation control.