Gems Premium Hike: Unions Demand Single Digits
South Africa’s largest medical scheme for public servants, Gems, is facing mounting pressure from unions. They want to limit its 2026 premium increase to single digits. This follows a controversial 13.4% hike this year.
Following several years of modest increases, the double-digit rise for 2025 drew strong opposition from public sector unions. These include the Public Servants Association (PSA) and the National Education, Health and Allied Workers’ Union (Nehawu). Now, these unions are making it clear that a repeat performance for 2026 is unacceptable.
Stan Moloabi, Principal Officer for Gems, acknowledged the pressure in an interview. He indicated that unions do not want another double-digit increase. He added that the scheme will work hard to come up with an increase that considers the interests of the member. Meanwhile, management will protect the financial sustainability of the scheme.”
Moloabi noted that members hope for an increase aligned with medical price inflation, projected to be around 8.5%.
Post-Pandemic Financials Squeeze Gems
The current tension follows a period of unusually low increases in contributions. Like many medical schemes, Gems accumulated substantial cash reserves during the COVID-19 pandemic. Lockdowns and public apprehension caused a sharp decline in medical claims.
With a solvency ratio at a high of 47% at the end of 2021, Gems deliberately kept premiums low to run down these excess funds. This resulted in a minimal 2% increase in 2022 and a 3% rise in 2023.
However, the scheme has since shifted its strategy to balance its books. This led to an average increase of 9.5% for 2024 and the contentious 13.4% hike for the current year.
Gems’ Premium Hike Must Protect Solvency and Sustainability
Gems is now navigating a tight financial path. Its solvency ratio stood at 26.45% at the end of May. It is projected to fall to just 25.06% by the year’s end, barely above the legal requirement.
According to Moloabi, this precarious position is due to two main factors: lower-than-expected contribution income and higher-than-expected claims.
The scheme now projects its 2025 contribution income will be R65.5 billion. This is short of the R66.7 billion budgeted. The shortfall is attributed to a slight decline in principal members. Additionally, a significant number of “buy-downs” occurred, with almost 65,000 members switching to cheaper options in January alone.
Meanwhile, claims expenditure is expected to hit R66.4 billion, exceeding the R65.7 billion budget.
What is Driving Up Costs for Gems Members?
The rise in claims is not due to a single issue, but a combination of challenges familiar across the healthcare industry. Moloabi cited several key drivers:
- An ageing member population with a growing burden of chronic disease.
- Supplier-induced demand, where healthcare providers may encourage more services than are strictly necessary.
- Ongoing problems with fraud, waste, and abuse.
The Strategy to Contain Costs
In response to these financial pressures, Gems has already begun implementing cost-control measures. In May, it introduced stricter rules for waiting periods and late-joiner penalties. This is to prevent members from joining only when they need immediate, expensive care and leaving afterwards.
Looking ahead to 2026, Moloabi stated that the scheme will not be enhancing its benefits. He said the scheme also plans to strengthen its managed care interventions. This signals a clear focus on managing expenditure to maintain stability and, if possible, heed the unions’ call for a lower premium increase.
