The medical scheme industry is under growing pressure as it confronts the triple challenge of rising healthcare costs, an ageing beneficiary base and higher claims utilisation, warns a new report from AlexForbes Health. Its analysis drew on data from the Council for Medical Schemes on the 10 biggest open schemes and 10 largest restricted schemes. Open schemes are available to anyone who can afford the premiums, while restricted schemes are limited to employer or professional groups.“Healthcare costs remain a major challenge, driven by higher utilisation, rising provider fees and continued advances in medical technology. An ageing medical scheme population and a growing burden of chronic disease are also pushing up claims, with contribution increases continuing to outpace inflation,” said Alex Forbes Health head of technical and actuarial consulting Paresh Prema.The financial strain on the sector was apparent in the overall risk claims ratio, which rose from 95.8% in 2023 to 96.2% in 2024. Open schemes recorded a ratio of 91.9%, while the claims ratio for restricted schemes reached 101.3%, indicating they were paying out more than they had received in contribution income. The medical schemes industry recorded an operating deficit of R11.64bn in 2024, up from R10.20bn in 2023, largely driven by the worsening claims ratio in restricted schemes.Many schemes that recorded operating deficits had to rely on investment income to help absorb claims and administration costs.While the number of medical scheme beneficiaries saw modest growth over the period, it was concentrated in restricted schemes, pointing to the growing affordability pressure on members and appeal of employer-supported cover, said Prema.Fewer younger beneficiaries are joining schemes, increasing the proportion of pensioners, who typically are less healthy and claim more than younger members.Overall medical scheme industry membership stood at 9.04-million beneficiaries at the end of 2024, a 0.6% increase on the previous year. Open schemes reported a 1.2% decline in membership year on year. While no open medical schemes recorded a year-on-year increase in beneficiaries of more than 5% in the year to December 2024, six restricted schemes breached this threshold: Alliance-Midmed (5.8%), Foodmed (5.1%), the Government Employees Medical Scheme (5.2%), LA Health (6.7%), Retail Medical Scheme (5.3%) and Umvuzo (5.3%).Business Day