Budget ‘protects’ NHI from cuts but Treasury hints at implementation delay

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The National Health Insurance (NHI) is protected from government-wide budget cuts, according to the National Treasury. But there is also a hint in the Budget of implementation delays, says Russell Rensburg of the Rural Health Advocacy Project (RHAP), in an Health-e News analysis.

Health-e News reports that Finance Minister Tito Mboweni said his 2020 budget speech that the health budget gets a slice of close to R230bn from R1.95trn of the public purse. But, although the health budget has increased by over R7bn, this is a decrease in actual terms, says Rensburg, who is director of Rural Health Advocacy Project. “The budget for health usually increases by 7.5% but this year we are seeing a 5% increase.”

In the budget review, Treasury has reprioritised R55.6m to the Health Department to increase its capacity to phase in the NHI. This amount will be reviewed once the proposed policy is implemented. An amount of R25m has been set aside for the National Quality Health Improvement Plan that is a project of the Presidency to improve the quality of healthcare facilities to ensure that they can be accredited for the NHI.

However, according to the budget review, the national Health Department spending is reduced by R3.9bn. “This implies that some activities related to national health insurance will be phased in over a longer timeframe,” the document states.

Rensburg says that Treasury may be hinting that there will be a delay in the implementation of the NHI. “It is unlikely that the NHI will be fully implemented by 2026 as outlined in the bill,” he remarked. But, the report says, Treasury was reluctant to comment on the possibility of the NHI being fully implemented in the projected year.

“The rollout of the NHI will be done in a fiscally responsible manner,” the department is quoted in the report as saying. “The key activities of the NHI have been protected from government-wide cuts. NHI pilot activities such as the Health Patient Registration System, electronic stock surveillance and health professionals contacting and serves such as oncology and mental health as well as infrastructure development of health care facilities will not be affected.”

In his Midterm budget speech in October of 2020, Mboweni estimated that rolling out the NHI would require an additional R33bn annually from the beginning of the 2025/26 financial year. “National Treasury will work with the Health Department to develop a strategy to align changes to health conditional grants with national health insurance reforms. These changes include accelerating the delivery of improved infrastructure for hospitals and clinics,” says Treasury.

Meanwhile, the human resource capacitation grant will be merged with the health professions training and development grant, the report says. About R3.3bn is allocated for this purpose over the next three years for “sufficient medical internships and community service posts for medical students to complete their training.” Previously, provincial health departments have struggled to place doctors and nurses for their community services citing austerity challenges.

“We’ve been under tremendous pressure to cut expenditure right across government because of the size of the (budget) deficit,” said Treasury’s chief director for health and social development Mark Blecher. The Treasury had targeted underspending programmes for cuts to try to protect service delivery, he said.

A report on the Health Funders’ Association site says that the Treasury has shifted R1.4bn out of the NHI indirect grant, managed by the national health department, due to slow spending on contracting with GPs, mental health and oncology services.

Blecher said the underspending was due to limited capacity in the Health Department. The Treasury has consequently set aside R56m over the medium term to strengthen its capacity to phase in NHI.

The first piece of enabling legislation for the NHI reforms planned by government are contained in the NHI bill, being processed by parliament. It proposes establishing a central NHI fund that will purchase services on behalf of eligible patients, but details of how it will be financed have yet to be spelt out.

The report says the Treasury declined to be drawn on why it has still not released its financing proposals for NHI, which Health Minister Zweli Mkhize previously said would be published by the time the Bill was submitted to parliament on 8 August, 2019.

Mboweni has given the Health Department billions of rand to ramp up infrastructure projects for the NHI scheme. According to a Cape Times report, the NHI is a key programme of government, which wants the scheme to be implemented soon.

Mkhize has indicated in the past that his department would need to improve infrastructure at state healthcare facilities ahead of the roll-out of universal health coverage. In the Budget, government allocated more than R55.6m to do the groundwork for the NHI.

Meanwhile, medical tax credits that medical scheme members enjoy have been increased slightly in this year’s Budget, but the increase is a mere 2.8%, amounting to R6 or R9 for each person whose medical contributions members are paying. Business Day reports that this is despite the increase in contributions typically outstripping inflation.

The Budget Review notes that the below inflation increase is in line with an announcement two years ago that the tax credit would be adjusted by less than inflation, in line with the plan to phase out these subsidies ahead of the rollout of NHI.

The tax credits have typically only been increased by the inflation rate and not by medical scheme contribution inflation, but in 2019 the tax credit was not increased at all, and the year before the increase was below inflation. This brought in an additional R1bn for the government at the expense of members of medical schemes.

Full Health-e News report

Full report on the Health Funders’ Association site

Full Cape Times report (subscription needed)

Full Business Day report

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