The CMS supports sustainable Prescribed Minimum Benefits (PMBs)
The Council for Medical Schemes (CMS) welcomes renewed public attention to the reform of prescribed minimum benefits (PMBs). This response engages not with the motives of any party, but with the evidence, legal framework and health-financing principles that bear on the arguments advanced in recent public commentary, and it sets out what any proposed reform would require in order to be legally coherent, economically sustainable and equitable.
Background
The critical questions in this debate extend well beyond what a revised benefit package would contain. They include who would be entitled to the package, how it would be financed, how risks would be pooled across different income and health-risk groups, and whether the reform would strengthen or dilute the principles of solidarity and equity that underpin medical scheme regulation.
The Medical Schemes Act 131 of 1998 requires the CMS to protect the interests of beneficiaries at all times, rather than to secure the commercial viability of particular scheme products. The CMS therefore cannot endorse any proposal that would contract or differentiate statutory benefit entitlements without a clearly specified and costed benefit package, an assessment of affordability and financing, and rigorous analysis of the effects on equity and on different groups of beneficiaries. The appropriate response is to move the debate beyond institutional positions and to examine the substantive policy proposal on its merits.
Prescribed Minimum Benefits (PMBs)
The concerns raised in recent commentary are not new and were documented more than two decades ago. In 2004, an international review panel observed that no medical scheme marketed or sold the PMBs as a distinct package, that the benefit was defined almost entirely through diagnosis and treatment pairs centred on hospital admission and specialist care, and that the PMBs would need to become a marketable package. The panel recommended a basic benefit package combining the PMB conditions with a primary care layer, which was an attempt to correct the design at its foundation before the hospital-centric structure became entrenched in regulation. That recommendation has not been implemented in the two decades since it was made.
The CMS began a formal review of the PMBs in 2016, issued an update and call for inputs in 2018, and consulted on draft primary healthcare services in 2019. The Health Market Inquiry, which reported in 2019, similarly criticised the hospital-centric orientation of the PMBs and recommended a standardised base benefit package. More recently, industry commentators have argued that the existing benefit structure is outdated, hospital-centric, inefficient and costly, and they now present a narrower compulsory package as the appropriate response to these shortcomings.
In the regulatory view of the CMS, this position overlooks the fact that many of the weaknesses now attributed to PMBs have been recognised for more than two decades and have been accompanied by repeated recommendations for reform that were never fully implemented. Treating these unresolved deficiencies as evidence for narrowing the package creates a circular argument, in which the failure to implement longstanding reforms is used first to show that PMBs are inherently deficient and then to justify a reduced minimum entitlement.
The appropriate regulatory response is therefore to ask why the longstanding recommendations to reform and expand the PMB framework have not been implemented, rather than to accept the asserted deficiencies as justification for a smaller package. On that basis, the CMS calls on stakeholders who advocate a reduced package to demonstrate precisely what problem a reduced minimum package is intended to solve that cannot be addressed through the implementation of the previously recommended reforms to PMBs, including the incorporation of primary healthcare and the development of a standard base benefit package.
The statutory nature of PMBs
A reduced minimum package cannot reasonably be regarded as an established solution to deficiencies that may themselves be the result of two decades of incomplete PMB reform. PMBs are not features of an insurance product that can be removed or substituted according to what consumers are willing to pay. They are a regulatory minimum that applies to all medical scheme beneficiaries, determined by the Minister of Health under section 67(1)(g) of the Medical Schemes Act and given effect through regulations that require schemes to pay for PMB conditions in full, without co-payments or deductibles, and not from members’ medical savings accounts.
The courts have reinforced this statutory protection in recent years. In KeyHealth Medical Scheme v Ngoepe NO and Others, decided in 2022, a full bench of the High Court held that a scheme must pay PMBs from its risk pool and may not use members’ savings accounts to avoid that obligation. The judgment confirms that the statutory minimum entitlement must be financed through pooled resources, which is what gives the entitlement its solidarity and redistributive character.
Any proposal for a lower, differentiated tier of minimum protection must therefore establish its evidentiary case. It would need to show what the package would cover, how its contents would be determined, what it would cost, how excluded healthcare needs would be financed and, critically, how the resulting benefits, costs and financial risks would be distributed across lower-income beneficiaries, medical schemes and the public health system.
What the evidence shows
The CMS Industry Report 2024 does not identify the PMB entitlement as the driver of rising costs. Total healthcare benefits paid by medical schemes rose by 8.52% to R259.3 billion in 2024, and the cost per hospital admission increased by 9.88% even as admission rates declined slightly, which indicates rising prices and intensity of care rather than an expansion of covered conditions. Out-of-pocket payments by beneficiaries reached approximately R46.3 billion, about R3 billion more than in 2023. The CMS has attributed claims growth to utilisation, demographic change and ageing, and supplier-induced demand, and it regards the regulation of provider tariffs as an area requiring structural reform. Reducing PMBs would not remove these pressures; it would shift costs from the common risk pool to individual members and, ultimately, to the public health system.
Regulatory cohesion
The late Dr Clarence Mini, who chaired the Council of the CMS until he died in 2020, urged the medical scheme industry to pursue reform through “inclusive solutions and consensus”. His appeal remains directly relevant to the debate now under way.
Sustainable reform of the medical schemes environment cannot be achieved through the unilateral preferences of any single constituency, whether medical schemes, healthcare providers, industry associations, the CMS or government. It requires a process capable of reconciling competing interests within a coherent public-interest framework, while keeping affordability, access, equity and the protection of beneficiaries at the centre of the reform agenda.
Consensus does not require agreement on every policy choice, but it does require an inclusive and transparent process in which interests, evidence and trade-offs are weighed openly before a defensible reform position is adopted. This principle applies in both directions, because inclusive reform can be achieved neither through regulatory prescription without adequate engagement nor through changes to statutory benefit entitlements secured principally by sustained advocacy or litigation.
The CMS shares the view, expressed by several stakeholders, that PMBs must be modernised, that prevention and primary care deserve greater emphasis and that provider pricing requires reform. The CMS remains committed to constructive engagement with all stakeholders on a reform programme that modernises benefit design while strengthening solidarity, equity and access to healthcare.
The full article discussion document is attached here:
