An analysis of the membership demographics, the financial health and especially the sustainability of the South African medical schemes industry is presented. From the financial and in particular the actuarial analyses it is obvious that the current system is unsustainable, and if a private health care sector is to survive at all it will have to contain costs far more effectively than it has in the past. It is suggested that medical schemes (and other mechanisms of funding health care) review their funding policies and move towards advance funding of pensioner benefits, and also that the schemes be actuarially valued on a regular basis.