The NHI conundrum – and the provision of universal healthcare to South Africans – should not just boil down to either one option or the other, argues law professor Ziyad Motala in a News24 opinion article, arguing that the real challenge is to use the existing institutions and infrastructure while making them serve the broader public interest.
Motala writes:
The legal challenge to the National Health Insurance (NHI) Act has exposed a dilemma that South Africa has avoided confronting honestly. Almost everyone agrees that universal healthcare is a constitutional imperative. Many also agree that the South African state currently lacks the administrative capacity, institutional credibility, and financial resources to implement a comprehensive single-payer system on the scale contemplated by the NHI.
Critics point to collapsing public hospitals, chronic staff shortages, corruption, procurement failures and a bureaucracy that struggles to perform many of its existing functions. They ask how a government that cannot consistently provide basic municipal services can suddenly manage one of the world's most ambitious healthcare projects.
These concerns cannot simply be dismissed. South Africans have lived through too many scandals and too many failures to place blind faith in promises from their government. The record of state-owned enterprises, municipalities and provincial departments provides ample grounds for scepticism. It would be foolish to pretend otherwise.
Yet, none of this means that the objective of universal healthcare is wrong. It merely means that the route to achieving that objective may be more complicated than originally imagined.
Other avenues
I do not advocate scrapping the NHI Act. Universal healthcare remains the correct destination. The problem is not the destination. The problem is whether the South African state presently possesses the capacity, resources and institutional competence to get there.
If the answer is no, and there is overwhelming evidence suggesting that it is, then the sensible response is not to abandon universal healthcare but to explore transitional mechanisms capable of moving the country closer to that objective while the state develops the institutions necessary to assume a larger role in the future.
If that takes another decade, then so be it. South Africans cannot be expected to wait another decade before meaningful steps are taken toward expanding access to healthcare.
The debate has become trapped between two false choices. On one side are those who insist that only a state-run NHI can achieve universal healthcare. On the other side are those who defend an increasingly unaffordable private healthcare market and present market outcomes as though they were natural facts beyond democratic control.
Both positions overlook a practical middle path. South Africa already possesses a sophisticated private healthcare infrastructure. The challenge is not to destroy it. The challenge is to harness it in service of broader public objectives rather than private privilege.
South Africa remains the most unequal society in the world. A small elite resides in multimillion-rand homes, drives luxury vehicles and enjoys lifestyles comparable to those found in the wealthiest parts of Europe and North America. At the same time, millions of South Africans live in informal settlements, overcrowded townships and conditions of persistent poverty.
Focused on the affluent
Many households survive on less than R100 000 a year, while a small minority earn millions. Yet our healthcare system is largely priced around the expectations and lifestyles of the affluent. Consider a specialist consultation fee of R1 500. For a corporate executive earning R2m a year, that amount may be little more than an inconvenience. For a domestic worker earning R500 a day, if she is lucky, it represents three days’ wages before transport, food or any other household expenses are taken into account.
The question is not whether the specialist deserves high compensation. The question is whether a healthcare system intended to serve an entire society can be built around prices that are affordable only to its wealthiest members. In a country as unequal as South Africa, healthcare pricing cannot be calibrated to the lifestyles and expectations of a small affluent minority. It must be calibrated to the economic realities of the overwhelming majority of the population.
Compulsory health insurance
The first reform should be compulsory health insurance on an income-related basis. The worker earning R5 000 a month should pay a minimal premium. The teacher earning R25 000 a month should pay more. The professional earning R100 000 a month should pay substantially more. The executive earning millions of rands annually should contribute even more.
Contributions should be linked to income and, where appropriate, wealth. This principle is neither radical nor unprecedented. In the US, many employers structure employee health insurance contributions according to salary bands. Higher earners contribute more. Lower earners contribute less. Healthcare financing should reflect the ability to pay rather than the ability to suffer.
Any universal system will also require careful consideration of the obligations imposed upon employers. Large and medium-sized employers should be required to contribute toward employee health insurance as part of the social compact underpinning broader healthcare coverage.
Smaller businesses may require reduced contributions or phased implementation to avoid undue hardship. The precise thresholds will require careful policy design, but the principle is clear. Employers benefit from a healthy workforce and should bear part of the responsibility for ensuring access to healthcare.
No one should be excluded
Equally important, the unemployed, pensioners, persons with disabilities and indigent households should receive state-funded subsidies for their premiums. No South African should be excluded from healthcare because of poverty. Every person should be insured and enjoy substantially greater access to healthcare than exists today.
Insurance alone will not solve South Africa’s healthcare challenges. Expanding infrastructure, training healthcare professionals and increasing healthcare capacity will remain essential long-term objectives. Nevertheless, a system of universal insurance would immediately expand coverage and improve affordability without creating an entirely new healthcare bureaucracy.
The second reform should be the prohibition of exclusion by medical schemes. No insurer should be permitted to refuse coverage because an applicant is elderly, chronically ill, disabled or financially unattractive. Private healthcare cannot be allowed to function as a luxury club catering to the healthy and wealthy.
Every insurer should be required to accept all applicants and participate in risk equalisation mechanisms that spread costs across the entire insured population.
At the same time, the system should abandon the punitive late-joiner penalties that currently discourage many South Africans from participating. These penalties are premised on the assumption that individuals consciously choose to remain outside the healthcare system and then seek to join only when they become older or ill. That assumption may make sense in affluent societies.
It makes far less sense in a country where millions of people do not purchase health insurance because they simply cannot afford it. A worker struggling to pay rent, transport costs and food expenses is not gaming the system by remaining uninsured. They are responding to economic necessity.
The third and most important reform concerns pricing. Every meaningful price in the healthcare system should be regulated by law. No private hospital should be permitted to charge above the prescribed tariffs for covered services. No specialist, surgeon, radiologist, pathologist or general practitioner should be permitted to charge above prescribed tariffs. No healthcare institution should be allowed to reject approved insurance. The private ownership of healthcare facilities should not exempt them from public obligations.
Critics will immediately object that such regulation amounts to an attack upon the market. Yet what is being proposed is standard practice throughout much of the democratic world. Canada regulates physician reimbursement through provincial fee schedules.
Germany relies on detailed statutory reimbursement frameworks that govern payments to healthcare providers. France similarly operates extensive tariff systems that regulate what providers may charge and what insurers may reimburse.
Across much of Europe, governments regulate healthcare pricing because healthcare is recognised as fundamentally different from ordinary consumer markets. Nobody suffering a heart attack behaves like a rational consumer comparison-shopping for bargains.
Nobody rushing a child to an emergency room is negotiating market prices. Healthcare is different because human life and dignity are different.
Fragmentation
South Africa’s own experience demonstrates the dangers of treating healthcare as an ordinary market. In 2004, the Competition Commission withdrew the exemption that had permitted collective tariff determination in the healthcare sector. The theory was that collective tariff setting constituted anti-competitive conduct inconsistent with competition law principles.
In practice, however, the result was increasing fragmentation, opaque pricing and escalating costs. Medical schemes negotiated separately with providers. Hospital groups exercised growing market power. Patients found themselves trapped within a system that was neither genuinely competitive nor effectively regulated.
Ironically, the Competition Commission’s own Health Market Inquiry later acknowledged profound market failures and recommended more structured mechanisms for determining prices and reimbursement. After seven years of research, hearings and evidence gathering, the inquiry concluded that the private healthcare market was neither effective nor competitive. It found rising costs, inadequate transparency, highly concentrated hospital markets and persistent failures that undermined affordability and access.
Significantly, the inquiry did not conclude that healthcare should simply be left to market forces.
On the contrary, many of its recommendations pointed toward stronger regulation, greater transparency and structured mechanisms for determining tariffs and reimbursement. In this respect, the inquiry reached a conclusion remarkably similar to the one advanced here: the problem was not the existence of private healthcare, but the absence of sufficient regulation to ensure affordability and access.
The debate over healthcare in South Africa has too often been framed as a choice between a state-run NHI and an unregulated private market. That is a false choice. The real challenge is to use the existing institutions and infrastructure while making them serve the broader public interest.
Universal healthcare may remain a long-term aspiration. But affordability, broader coverage and meaningful reform need not wait for the emergence of a perfect state bureaucracy.
Ziyad Motala is a Professor of law at Howard University School of Law in Washington, DC.
See more from MedicalBrief archives:
Private sector ‘should not fear NHI’, say senior officials
‘Transitional’ private healthcare reforms punted ahead of NHI
NHI not being built on any one country’s model – Crisp