Gems: Is the medical scheme in financial distress?

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JIMMY MOYAHA: The Government Employees Medical Scheme, more popularly known as Gems, has put out a warning around its solvency as the solvency ratio of the business briefly dips below the 25% statutory threshold that needs to be maintained. Yes, Gems is indeed a business and does operate as such.

We are going to look at this and some of the other factors around the business’s financial status with the principal officer, who also is the chief operating officer at the Government Employees Medical Scheme, Dr Stanley Moloabi. He joins me on the line now to see what we make of this.

Dr Moloabi, thank you so much for taking the time. Lovely to have you on the show. Perhaps let’s start our conversation with an overview of the financial position of the medical scheme as it stands today.

Dr STAN MOLOABI: Well, I think we are still in a very good financial position because the sustainability of the scheme from a financial point of view is always a very important aspect of how we do business.

Gems is a big medical scheme. At the end of 2025, we had 896 000 principal members with 2.4 million beneficiaries.

The revenue, which is basically the contribution income of the scheme [was] at about R65 billion for the year.

However, why a concern would be expressed from people looking at our numbers would be the fact that we paid claims to the value of R67 billion [in 2025]. So the [additional] R2 billion would have come from our reserves. That is why there is pressure on our reserves from a regulatory point of view.

We ended the year at a 24.7% reserve ratio. That is slightly below the regulatory requirement of 25%. However, being a big medical scheme, our reserves at 24.7% are adequate. So Gems is in a very strong financial position.

JIMMY MOYAHA: Doctor Moloabi, can we look at the medical premiums? From a medical aid perspective Gems was one of the few medical schemes that hasn’t increased its premiums at the rate of some of the other medical schemes in the market.

Take us through the premium increases over the past couple of years, and how those lower increases have impacted on the financial position of the business today.

Dr STAN MOLOABI: Well, the lower increases, as you say, happened in previous years. We have been in the news in that we started the year with a premium increase of 9.8%, which we reduced to 9.5% from February [2026].

At the moment we are dealing with … a revised increase, that would be applied from 1 July 2026, subject to regulatory approval, of 7.5%.

Now, if you look at all of that, we were in the middle of a range of increases. Some of the medical schemes had increased at about 6%, some had gone as far as I think 11.9% at the upper end. So we are sort of in the middle.

However, the issue is that our members were of the view that the 9.8% at the beginning of the year and the subsequent 9.5% are still steep, because, as we all know, under the current economic conditions all family budgets are under strain.

And the recent petrol increases, and today the CPI that was announced of around 4% – all of these are putting a big strain on family budgets. So our members were not happy.

However, we have come to an agreement that that should be revised from 1 July to 7.5%, as I’ve indicated. It is important to stress that that 7.5% will be implemented only if the regulator approves it.

JIMMY MOYAHA: Doctor Moloabi, can we look at the reserves that you alluded to earlier? You mentioned that the shortfall for this particular financial period was covered out of reserves that the medical scheme has on hand.

Are you able to give us a sense of the size of the reserves that remain, and perhaps where that puts the medical scheme in the event of another shortfall in subsequent years?

Dr STAN MOLOABI: Well, let me start with the last part of your question. The fact is that we already dipped below 25% – albeit slightly – at [ 24.7%] and we are watching the reserves and already introducing interventions to ensure that we don’t dip too much below the 25%. That’s the first part of your question.

As to monetary value, I’m not going to give you an exact figure because it varies depending on what we are projecting – [for example] how many members the scheme will have by the end of the year.

But the reserves we hold are anything around R18 billion to R20 billion – thereabouts. That is what we are holding. It is also because of the size of the scheme.

But we do need to know that the 25% requirement is a statutory requirement in terms of the current legislation.

JIMMY MOYAHA: The Government Employees Medical Scheme is sitting in a healthy position from a balance-sheet perspective, despite slightly dipping below the required solvency ratio in the current period.

The business is still servicing all its members and not having any issues where it relates to that aspect of the business.

We’ll leave the conversation on that note. Thanks so much to the principal officer of the Government Employees Medical Scheme, Dr Stan Moloabi, for joining us to look at their financial position and what the medical scheme is doing about premiums.