PRETORIA, Gauteng — The Council for Medical Schemes (CMS) has officially rejected an application by the Government Employees Medical Aid Scheme (GEMS) to lower its contribution increases for the year, leaving millions of public servants facing higher monthly deductions. GEMS Principal Officer Dr. Stan Moloabi confirmed that the regulator declined the proposal despite the scheme submitting all required information to cap the average adjustment at 7.5% effective from July 1.
For millions of public servants, including nurses, police officers, and teachers, medical aid represents one of their most significant monthly expenses. The rejection of the proposed lower increase has sparked frustration among trade unions and members seeking answers regarding the scheme’s financial management.
According to Dr. Moloabi, the medical schemes industry is strictly regulated under the Medical Schemes Act, meaning any changes to member contributions or benefits require formal regulatory approval. GEMS initially submitted its request to reduce the contribution increase to 7.5%. Following a review, the CMS requested further information on June 11 to make a final determination.
After assessing the additional documentation, the regulator highlighted two primary areas of concern that led to the rejection.
Firstly, the CMS noted that its approval processes are fundamentally based on historical claiming trends rather than a scheme’s anticipated future savings. While GEMS argued that it had implemented measures to achieve savings following high claims in 2025 that exceeded the budget, the regulator maintained that it cannot approve contributions based on projected savings rather than actual historical utilization data.
Secondly, the CMS raised significant concerns regarding the scheme’s solvency and reserve ratio. GEMS’s reserve ratio was reported at 24.72%, which falls below the statutory legal minimum of 25%. The regulator expressed concern that implementing a 7.5% contribution increase would further deplete the reserves, potentially driving the ratio down to between 21% and 22%.
Addressing the solvency concerns, Dr. Moloabi pushed back against the notion that GEMS was asking the regulator to approve a breach of the law. He clarified that the Medical Schemes Act contains specific provisions for when a scheme’s reserves dip below the 25% threshold. Under these circumstances, the scheme is required to report on a quarterly basis and submit a comprehensive business and recovery plan to demonstrate how it intends to restore its financial health.
Explaining the root causes of the depleted reserves, Dr. Moloabi pointed to the lingering financial effects of the COVID-19 pandemic. During the pandemic, hospital utilization dropped significantly, causing medical aid reserves across the industry to surge. In response to member needs at the time, GEMS implemented very low contribution increases—2% in one year and 5% the following. However, Dr. Moloabi explained that these suppressed increases created a “snowball effect.” Post-pandemic, claiming patterns not only rebounded to pre-COVID levels but actually exceeded them, ultimately pushing the reserve ratio below the 25% mark.
Currently, GEMS pays out approximately R180 million in claims every day, serving more than 2.3 million beneficiaries. The scheme’s utilization rates remain significantly higher than those of many private medical schemes, exerting continuous pressure on its finances.
To counter these pressures and protect the scheme’s long-term sustainability, GEMS has implemented several strategic interventions. Dr. Moloabi noted that the scheme had to adjust its “Tanzanite One” benefit option, which was previously deemed overly generous compared to similar industry offerings and resulted in excessive “buying down” of benefits.
Furthermore, GEMS is deploying new managed care interventions and utilizing advanced methods to identify and combat fraud, waste, and abuse. Dr. Moloabi noted that these anti-fraud measures have been carefully adjusted to align with the outcomes of the recent Section 59 inquiry.
Looking ahead to the 2027 benefit design, the scheme is also reviewing its underwriting practices and beneficiary definitions to ensure that future savings targets are met. While the immediate rejection by the CMS presents a challenge for members’ monthly budgets, GEMS maintains that these structural adjustments are vital for the scheme’s ongoing financial stability.
