Young South Africans are increasingly dropping out of medical aid schemes, putting serious financial pressure on the remaining members and threatening the long-term sustainability of private healthcare in the country.
This problem was first highlighted by one of the largest private medical aids in South Africa last year, Discovery.
Discovery CEO and founder Adrian Gore expressed concern over the trajectory of medical aid inflation, evident in the group’s Discovery Health Medical Scheme (DHMS) demographics.
Gore explained that the company’s medical aid scheme and the broader industry face an age squeeze.
The DHMS, the largest private open medical aid in the country, has seen the average age of its members rise from 32.3 years in 2008 to almost 38.
At the same time, the number of members suffering from chronic disease has more than doubled to almost 32% in 2024.
Gore highlighted that this was due to an increasing trend of young people dropping medical aid while they were still healthy.
He added that this increased the age profile of schemes and consequently burdened them with a disproportionate number of chronic illness claims, driving up medical aid prices above inflation.
This trend has continued in 2026, with expert Luyanda Njilo, senior equity research analyst for healthcare at Nedbank Corporate and Investment Banking, warning that it’s going to get worse.
According to Njilo, the private healthcare system is facing structural strain because younger, healthier members can no longer afford to stay in medical schemes.
Njilo explained in an interview with Hot Business that medical aids rely on younger members to subsidise the healthcare costs of older, higher-claim members.
“The issue is that the way the medical aid schemes are designed is that the younger people help subsidise the cost of the older high claim members within a medical aid scheme,” he said.
However, South Africa’s worsening youth unemployment crisis is eroding that support base. Njilo noted that youth unemployment stood at around 36% in 2015, but had climbed to 45.8% in the first quarter of 2026.
“So young people are not joining the medical aid scheme, and the ones who are in the medical aid scheme are dropping out,” he said.
GDP growth and more jobs are the answer
This is creating what Njilo described as a spiral effect, where shrinking membership among younger people forces schemes to raise premiums further to cover the rising claims burden from older members.
He warned that medical aid contributions have historically increased above inflation, making coverage steadily less affordable for middle-income households.
Discovery highlighted that annual medical inflation for the last 10 years amounted to CPI plus six percentage points.
Njilo believes the situation could become critical within the next decade if current trends continue. “In my view, it’s going to take around about another five to 10 years,” he said.
“If we continue on this trajectory, it’s going to become increasingly unaffordable for people to maintain a medical aid scheme.”
He added that the middle-class segment is particularly vulnerable. According to SARS data cited by Njilo, around 52% of all beneficiaries earn between R200,000 and R500,000 per year.
“If you continue to increase premiums at around about 10%, whereas their salaries are growing at inflation, 3%, 4%, then it becomes increasingly unaffordable for them to maintain a medical aid scheme and as a result, they will drop out.”
Njilo said the National Health Insurance (NHI) debate does not solve the immediate affordability crisis facing private healthcare.
“NHI is still going to be funded by the same people because it’s funded through the tax base. So it’s not necessarily a solution to the current problem,” he said.
Instead, he argued that South Africa needs stronger economic growth and more formal employment opportunities to rebuild the medical aid risk pool.
“We need to grow jobs, formal employment specifically, at a macro level. So we need GDP growth for that,” he said.
Njilo also called for a rethink of the healthcare model itself, with a greater focus on prevention and early diagnosis instead of expensive hospital-based treatment.
Ultimately, Njilo said the ageing risk pool remains the biggest driver of rising medical aid costs in South Africa.
“People aged over 65 within a medical aid scheme account for 10% of members, but they account for 30% of the expenditure,” he said.
“And as a result, if you have an older risk pool, the percentage increase year on year is north of 10%, and that is the problem that we have.”
