Statement Calling for Immediate Reform of Gems, Elimination of Corporate Influence, and Rooting out Internal Corruption

The Economic Freedom Fighters (EFF) has reviewed the 2024 GEMS Annual Integrated Report and the concerning presentation by the Public Servants Association (PSA). We see a Scheme that has strayed from its original, transformative goals, morphing into a parasitic system that prioritizes the interests of private corporations and a limited number of insiders over its members.

GEMS was designed to provide affordable, quality healthcare to public servants and to tackle past healthcare disparities. However, it has devolved into a stark example of state capture within the healthcare sector, marked by the systematic misappropriation of public funds via outsourcing and the unethical enrichment of its board members.

The Scheme’s financial reports indicate an alarming diversion of member contributions to corporate monopolies. In 2024, over R2.9 billion was disbursed to just two firms, Medscheme Holdings (Pty) Ltd and Metropolitan Health Corporate (Pty) Ltd, for administrative and managed care services, reflecting an increase of nearly R274 million from the previous year, all while GEMS asserts it cannot provide sufficient healthcare without imposing steep, above inflation contribution hikes on its members.

This extensive outsourcing raises serious concerns regarding GEMS’ adherence to National Treasury Regulation 9, which requires that 30% of such contract values be subcontracted to BEE compliant entities and SMMEs. The EFF demands clarification on whether this R2.9 billion has contributed to the development of black businesses or merely reinforced the dominance of white-owned healthcare monopolies.

At the same time, millions of members experience exclusion and financial hardship. GEMS operates restrictive hospital networks that overlook rural areas, imposes burdensome co-payments on the low-income, and suffers from administrative inefficiencies that delay claims processing for months. This situation is a direct result of prioritising outsourcing companies’ profits over member health.

To compound the problem, this corporate exploitation is accompanied by internal corruption and a blatant neglect of public service ethics. Reports indicate that GEMS Board members who are also full-time public servants, such as Ms. Ntshane and Ms. Khumalo, have received nearly R3.1 million in trustee fees collectively. This “doubledipping” likely contravenes the Public Service Act, as these individuals seem not to have obtained the legally mandated permission from their primary employer, the Department of Health. While they profit, the members they are supposed to support struggle to obtain basic healthcare.

In light of these issues, the EFF lays out the following demands:

1. We call for an immediate forensic audit of all administration and managed care contracts at GEMS, with particular attention to compliance with BEE and SMME subcontracting mandates. A full accounting of the R2.9 billion in outsourcing is essential.

2. We insist on the immediate suspension of all Board members who are public servants lacking the legally required written permission to serve. All payments made to these individuals must be recovered, and they should face disciplinary measures.

3. We demand that GEMS cease all excessive contribution increases immediately and utilise its significant reserves to subsidise members, abolishing all anti-poor co-payments and dramatically expanding its network in rural and township regions.

The EFF will file detailed parliamentary inquiries directed at the GEMS Board and the Department of Public Service and Administration to uncover the truth behind this situation. We refuse to be passive while a public scheme, funded by the contributions of black and working class public servants, is exploited for corporate gain and compromised officials benefit. GEMS must be restored to its rightful purpose, for a healthier community, not for a wealthier scheme or a corrupt board.

Mbuyiseni Ndlozi is a key figure in the party, known for his eloquent speeches and activism.

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