Uncertainty over many aspects of NHI but govt ‘ready’ for corruption

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DoctorsHealth Minister Dr Zweli Mkhize says the authorities are ready to tackle the threat of large-scale corruption to the National Health Insurance scheme, writes MedicalBrief. There is concern also over already escalating medical emigration, differing interpretations of what, if any, role medical schemes will play, the consitutionality of the Bill, and the ethical implications for private medical practitioners.

The NHI Bill, which seeks to embed in law universal health care for all, was introduced to Parliament on Thursday of last week. News24 reports that announcing the introduction, Mkhize did not shy away from the threat of corruption that has seen the crippling of state-owned enterprises.

“I want to make a point that for NHI, corruption will be a threat and therefore we are armed to make sure that we deal with the situation… that we do not run into the problem as though we didn’t anticipate it,” Mkhize said. The Minister added the Health Department would not fear corruption but fight and dismantle it with the help of stakeholders who have no qualms about confronting the government about issues.’

 

The Bill creating an NHI Fund paves the way for a comprehensive overhaul of South Africa’s health system that would be one of the biggest policy changes since the ruling ANC ended white minority rule in 1994, says a Moneyweb report.

The existing health system in Africa’s most industrialised economy reflects broader racial and social inequalities that persist more than two decades after apartheid ended. Less than 20% of South Africa’s population of 58 million can afford private healthcare, while a majority of poor blacks queue at understaffed state hospitals short of equipment.

The report quotes Anban Pillay, deputy director general at the Health Department, as saying that an initial Treasury estimate of R206bn costs by 2022 was more likely to be R256bn by the time final numbers had been reviewed.

 

These wide-ranging powers will create a “capturable governance structure”, according to Wits School of Governance professor Alex van den Heever in a report in The Times. “It concentrates power in the hands of the minister. He appoints everyone to the NHI fund and the Office of Health Standards Compliance.

“To date no minister has been held to account for state capture. So what will be different here?” asked van den Heever, who said the Bill “centralises what it should decentralise, and is fiscally absurd. The pilot projects cost R4bn, achieving nothing. The department of health has a consistent history of failure.”

The report says among the concerns raised are: renewed fears about mass emigration of doctors and other health professionals, which would kill any health plan that relies explicitly on there being more doctors; the refusal to allow the private sector a role in managing what will in essence be a state-owned enterprise at least twice the size of Eskom; the future of private health care, if any, and fears among middle-class South Africans that they, too, could soon be spending hours at a time in long queues at understaffed and under-resourced state hospitals; the estimated additional tax bill; and a nagging worry that the government cannot be seen by its adversaries, including supporters of former president Jacob Zuma, to be backing down on a populist measure.

 

The 2019 NHI Bill once again kicks the can down the road by failing to provide answers to all the key questions on the proposed NHI system, says the Institute of Race Relations (IRR). The NHI will act as “a giant state-run medical aid”, as former health minister Dr Aaron Motsoaledi describes it. Once it becomes fully operative, all health revenues will be paid into a single NHI Fund. This will then purchase and pay for all the healthcare goods and services provided each year to all the country’s people by both public and private health providers and facilities.

Under the NHI, the State will also control every aspect of healthcare. This means the State will decide on the healthcare services to be covered; the fees to be paid to doctors, specialists, and other providers; the medicines to be prescribed; the blood tests to be allowed; the medical equipment to be used; the health technologies to be permitted; and the prices to be paid for every item, from aspirins and ARVs to sutures and CAT scanners.

The government claims these controls will be effective in cutting costs and enhancing quality. But, the IRR says, the huge bureaucracy needed to implement them will be costly in itself. Pervasive regulation will also stifle innovation, reduce efficiency, and promote corruption.

The IRR says low-cost medical schemes and health insurance policies should be encouraged, not restricted. Tax-funded health vouchers should be provided to low-income households so that they can also afford to join these schemes or buy these policies. Medical schemes and health insurers will then have to compete for their custom, which will encourage innovation, promote efficiency, and help to hold down costs far better than a massive and corruption-prone NHI bureaucracy will ever do.

 

Experts have warned that the incoming NHI may be dead on arrival as a large number of doctors plan to leave South Africa or have already left. Business Tech reports that the NHI will rely on a large network of doctors to service patients around the country. However, it says, the Bill has renewed fears about mass emigration of doctors and other health professionals, which would kill any health plan that relies explicitly on there being more doctors.

Dr Chris Archer, CEO of the South African Private Practitioners Forum is quoted in the report as saying that his members are extremely concerned and that the Bill may drive emigration as “those who want to leave see it as a reason to do so”. And Profmed medical aid CEO Craig Comrie said that health professionals are already emigrating. Comrie said Profmed’s members are mainly health professionals, of whom 17% leave each year. This rose to 30% in June and July.

The report says these concerns align with research published by Solidarity, which has previously warned that the introduction of the NHI could lead to a mass exodus of doctors from the country. One of the most worrying findings in the survey was that 83.2% of healthcare workers believed that private health professionals will leave the country if the NHI is implemented. 43% of the respondents said that they themselves would consider emigrating.

There was also a firm belief that the scheme would completely destabilise the country’s healthcare as a result.

 

Mkhize described the Bill’s introduction as taking South Africa “one step closer” to quality health care for all. Engineering News reports that while Mkhize says the introduction of the Bill will be followed by “a number of steps and engagements including public consultation” he confirmed that South African health will be governed by the NHI within the next seven years.

One of the main sources of contention up until this point has been how the NHI will be funded. “The main source of funding (for the NHI) is appropriations which is from parliament into the Fund and the chief sources of income for the appropriations are general tax revenue, funds that may be shifted from the provincial equitable share and conditional grants into the Fund, a reduction of the medical scheme tax credits over time, the possible consideration of a payroll tax as well as a surcharge on personal income tax,” says the Health Department’s, Pillay.

The report says commenting on the “sensational angle” by some saying that the NHI is simply not affordable, Mkhize says: “You’ve got unevenness in a pool that should have been able to service more South Africans or all South Africans, but the way we have managed it, it has actually been a privileged few who have got access to a higher level of health care thus perpetuating inequality and we have to resolve it.”

 

The proposed new law introduces a “gatekeeping” mechanism on referrals to specialist care and is accompanied by a memorandum setting out a timeline for a phased implementation process. According to an IoL report, the memorandum further flags the affordability and sustainability of national health insurance as a legitimate concern. It proposes placing increased emphasis on preventative and primary health care, contending that most health care problems can be diagnosed and treated at this level.
Primary health care must therefore be made the foundation of the national health service.

The IoL reports that under the legislation, the state would introduce a system where patients would access higher level services on the basis of referral networks to keep costs down. A health care user would be denied free treatment should they deviate from the prescribed referral pathway.

The Bill provides for a patient to be denied care should there be “no cost-effective intervention for the health care service” as determined through a technological assessment.

The report says it seeks to extend free health care to all South Africans, permanent residents and refugees. But asylum seekers will only be entitled to emergency health care, and for health conditions of notifiable public concern.

 

Health workers, nurses, doctors, dentists, specialists, physiotherapists, paramedics and hospitals will be subject to price control and guidelines if the NHI Bill is passed, says a report in The Times. These prices will be set by a pricing committee.

The Bill states the fund can refuse to work with establishments or workers that: Have failed to or are unable to adhere to treatment protocol and guidelines; fail to adhere to national pricing regimen for services delivered; or deliver services that are not acceptable to the fund.

Various committees and teams, with medical professors, will decide what protocols doctors can follow, what treatments they can administer and what lists of drugs and technology can be used. And health workers and hospitals will have to be accredited and meet quality standards every year to be paid by the NHI Fund.

The report says more than 10 different Acts need to be amended to allow the Bill to be passed.

 

The Bill’s release has been welcomed by the Hospital Association of South Africa (HASA), an industry body which represents private hospital groups including Netcare, Mediclinic and Life Healthcare. “We are committed to, and supportive of, the core purpose of the legislation, which is to ensure access to quality healthcare for all South Africans,” HASA chair Biren Valodia is quoted in Reuters Health as saying.

The report says it is unclear how long the legislative process will take, with the main opposition party Democratic Alliance (DA) suggesting the NHI, which has been in the works for around a decade, would strain the nation’s coffers.

 

Dr Sibongiseni Dhlomo, the chair of the portfolio committee on health, in welcoming the Bill, said it has not yet been referred to the committee, although it has been tabled in Parliament. “We need to wait for the parliamentary processes to take place before anything can be done. I commend Minister for tabling the NHI Bill to the Speaker of the National Assembly where it will take its process to reach the committee.”

“We are not aware of any country in the world that completed everything else before it started with NHI, either fixing clinics, rebuilding hospitals, employing adequate staff and getting ambulances and everything else that they need,” Dhlomo said.

 

Also welcoming the Bill was the ANC and its coalition partner, Cosatu, but, says a News24 report, opposition parties were less than impressed. Chair of the portfolio committee on health, ANC MP Sibongiseni Dhlomo said: “We are extremely happy about this move. This is one of the equalisers of society, where those who are poor can get access to good healthcare. It is a public good and addresses issues of social solidarity. We cannot wait to deliberate on the NHI Bill and have it before the committee, so that those who are down-trodden can comment,” he added.

The report says DA MP and spokesperson on health Siviwe Gwarube greeted the Bill’s introduction with less enthusiasm. And IFP chief whip Narend Singh said while the NHI will only come into effect in 2026, there have to be identifiable improvements in the healthcare system from now until that time. He said there were far too many dilapidated hospitals and infrastructure, broken down hospital management systems, overworked and underpaid healthcare professionals, nursing and community healthcare worker vacancies, and a shortage of doctors.

The FF Plus said: “The FF Plus can’t see how the NHI will save the country’s health services. It will instead destroy South Africa’s health services.”

But Cosatu’s parliamentary co-ordinator, Matthew Parks, welcomed the introduction of the Bill. “The National Health Insurance remains the best vehicle to usher in universal health coverage,” he is quoted in the report as saying.

 

The DA has questioned the constitutionality of the Bill and vowed to use all legal options to fight what it deems a bad draft law designed to turn the health system into “another State-owned enterprise”, says a Polity report.

DA leader Mmusi Maimane said the Bill would not pass constitutional muster because it undermined the role of provinces in providing health care.

“It undermines the power of provinces and what provinces are able to do when it comes to the provision of health care. It is on that basis that I and the party, as far the DA is concerned, will be taking every measure possible to oppose this Bill. We believe that this Bill may very well be unconstitutional.”

 

Head of Western Cape Health has warned that the Bill introduced deep uncertainty about the role of provincial health departments and could diminish the money available for service delivery. “Our concern is that we will have a fragmented system, that accountability will be a challenge and that the complexity of the administrative processes in a province will be very difficult,”

Beth Engelbrecht is quoted in a Business Live report as saying. She said there was no formal consultation with the provinces in the National Health Council (NHC), a structure that includes the top officials from the provincial and national departments, MECs, the minister and health deputy minister.

However, the Health Minister’s spokesperson, Lwazi Manzi, said: “The NHI Bill was served before the NHC on several occasions where it was discussed during the fifth administration. Provinces were fully aware of the implications of the NHI policy and Bill. It is completely untrue that the NHI policy and Bill were not discussed with provincial colleagues.”

 

Johann Serfontein of the Healthman consultancy group, which advises the SA Private Practitioners’ Forum, says in a City Press report that the provisions for treatment create a tremendous ethical problem for practitioners who are responsible for the effective treatment of their patients.

Although several medical aid funds also have preferred drug lists and protocols for treatment, the doctors are not bound to them. These are funding policies, but the member of the health insurance fund and his or her doctor can still decide which medication they want to take and which treatment is appropriate.

Serfontein says the Medical Schemes Act also specifically provides for cases where members may deviate from these lists and protocols at full cover if the preferred treatment method is not effective.

In fact, the report says, the Bill binds the doctor to treat NHI patients in a specific way, whether or not they agree with it. He says that, if a doctor does not agree with the prescribed referral route as determined by the NHI and has to follow the procedure for a complaint, valuable time can be wasted.

 

An analysis piece in The Times says that one would think, with South Africa fast running out of money and amid mounting speculation about an approach on bended knees to the International Monetary Fund (IMF), that grandiose schemes would be the last thing we need. Yet, it says, in spite of this, the long-suffering taxpayer is being asked, in effect, to sign what could be the biggest blank cheque in South Africa’s history.

The analysis says even this might be fine if one had the slightest assurance that the resulting health-care system will offer free, quality health care to all in South Africa. But the government’s record thus far suggests this is wishful thinking.

The analysis says there is a way out of the logjam, and it doesn’t require fantastical amounts of public money: for a start, improve primary health care, put accountable and competent staff in charge of hospitals, dump policies that deter growth, enlarge the circle of those with medical aid by expanding employment, and make proper use of our existing facilities.

We are a middle-income country with many pressing demands being made on the fiscus. Let’s act like one, the analysis says.

 

Many South Africans took to social media to voice their concerns about the Bill, citing the dire state of state facilities, as well as their worries about taxes increasing and the potential for the impending NHI system to be a failure and waste of public money.

But, City Press reports, the Health Professions Council of SA’s president, Kgosi Letlape, was blunt about the need to reform the currently imbalanced health sector. While there have been many who have criticised the NHI, saying it was an infringement of citizens’ right to choose what kind of healthcare they wanted and whether to be on medical aid or not, Letlape criticised the private sector as being a “mafia land” where everyone could create their own codes for procedures, resulting in a lack of uniformity.

“There can be no NHI if there are two statutory funds. If we are creating the NHI as a single fund then there should be clear communication around the phasing out of medical schemes. There also can be no NHI without social solidarity. We need boldness and we need political leadership that says there are no two funds and there should be no apologies about that,” he said.

 

Business Live opines that Mkhize has thrown the medical schemes industry a lifeline, with provisions in the latest iteration of the Bill that enable them to continue until the ambitious scheme for universal health coverage is fully implemented. At that stage, they will be restricted to offering cover for “complementary” services not covered by NHI.

The report says the development will offer welcome reassurance to medical schemes, their administrators and brokers, which feared they might be legislated out of existence in one fell swoop. The transition is also likely to give comfort to consumers who currently use medical schemes to pre-fund their access to private healthcare services.

“Medical aids will have no trouble adapting to the changing environment, by developing products and services that provide complementary cover,” said Mkhize is quoted in the report as saying. South Africa’s biggest medical scheme administrator Discovery Health said it is studying the implications of the bill for the future role of medical schemes, as these are not entirely clear.

 

A Business Tech report says, however, that the revised Bill shows that there is little space for medical aid schemes as we currently know them in South Africa. It says while Mkhize had previously hinted that medical schemes would play a secondary role to the incoming NHI, the revised Bill shows that there may be little room for these multi-billion rand companies to manoeuvre under the new system.

While the 60-page bill goes into detail in a number of areas, just one sentence is dedicated to ‘the role of medical schemes’ under the new system. Section 33 of the bill states that: “Once National Health Insurance has been fully implemented as determined by the minister through regulations in the gazette, medical schemes may only offer complementary cover to services not reimbursable by the fund.”

The report says in effect, this means that medical schemes will simply not be able to offer members cover for services which are already covered by the NHI. “Under the bill, medical aid schemes will gradually be phased out until they ultimately cease to exist,” said chair of the portfolio committee on health, Dr Sibongiseni Dhlomo. “Once fully implemented, the NHI will cover all health services with exception of services highlighted as complementary cover. “Complimentary cover which will include health services such as cosmetic healthcare will be covered by medical aids,” he said.

Business Tech notes that according to the latest annual report from the Council for Medical Schemes, all medical aid schemes pull in R162.9bn in contributions, while paying out R144.5bn in relevant healthcare costs.

 

Medical aids will eventually be relegated to providing top-up cover under the NHI – or coverage for procedures or treatment that fall outside government’s package of care, a Bhekisisa report on the News24 site says. The government, will in turn, become the single largest purchaser of health services in the country, buying them from accredited private and public facilities with a centralised NHI Fund.

While comprehensive medical aids are still around, they will also be shifting to standardise a basic coverage package across the industry in line with what’s already on offer in the public sector, the report says Mkhize earlier revealed. “We are working with the Council for Medical Schemes to ensure that every medical scheme pays for the same package of primary health care services as that provided by the public sector,” he explained. “This is part of the process to revise the Prescribed Minimum Benefits that the council is working on.”

The report says the changes to PMBs are one of the early signs – at least publicly – that government is moving on recommendations made by the Competition Commission as part of its four-year investigation into the spiralling costs of private healthcare ahead of government’s plans to begin buying services from the sector.

 

Expanding on her analysis of the Bill, Pam Saxby for Legalbrief Policy Watch writes that clauses 4, 5 and 7 of the Bill (respectively dealing with population coverage, user registration and health care services coverage) point to distinct limitations. Together, sub-clauses 4(4), 5(1) and 7(2)(e) make it very clear that only public and private health care facilities accredited over time by the fund will be available to registered fund users. Registration will not be compulsory.

In addition, Saxby writes, sub-clause 7(2)(e) requires the fund to “enter into contracts with accredited health care service providers and health establishments at primary health care and hospital level based on the health needs of users and in accordance with referral pathways”. This tends to suggest that private health care practitioners and facilities will be able to choose whether to contract in or out of the NHI system – at least at this stage of the process.

 

No new taxes will be implemented for NHI for the time being, Business Day quotes  the Health Department’sPillay as saying. “The approach in the initial phase is there will be a transfer of funds from the conditional grants into the NHI Fund, a well as movement of funds from the equitable share,” he said. “Initially government will not be raising taxes to fund the NHI but using the funds that are currently available more efficiently. It is only in the final stages that Treasury will be introducing any form of taxes,” he said.

According to the report, the Bill says there will be an evaluation of new taxation options in the final stages of implementing NHI, provided there is a “a favourable economic environment”. These include a surcharge on income tax and a “small” payroll tax. The Treasury is working on a new financing paper for NHI, but has yet to make it public.

 

Aneria Bouwer, partner, tax at Bowmans writes in a report on the Polity site: “The NHI will be funded by way of: general tax revenue, which will include transferring funds from provincial health budgets to the NHI Fund; taxpayers’ medical scheme fees tax credit will be reallocated to the NHI Fund; a payroll tax (employer and employee); and surcharge on personal income tax.

“There is as yet no indication as to how much this will cost taxpayers. The taxes will be imposed by a money Bill to be introduced by the minister of finance. According to the Memorandum, these tax options will only be evaluated as part of the 6th and final stage of implementation, which will presumably not be before 2022. Interestingly, it refers to the evaluation of the new tax options ‘in a favourable economic environment’.

“It also envisages that the payroll tax will be ‘small’ although there is no indication as to what this means. In the part of the Memorandum dealing with the financial implications for the State, it refers to the various financing options, and then states that ‘due to the current fiscal conditions, tax increases may come at a later stage of NHI implications.’

“It thus appears that further taxes will only be imposed at a later stage after evaluation of the potential impact thereof, taking into account the economic and fiscal environment. However, it seems more certain that taxpayers will no longer receive medical scheme fees tax credits, which for a family of four, currently provides relief of just more than R12,000 per year.

“There is no doubt that taxpayers will find the additional tax burden a bitter pill to swallow.”

 

Business Live reports that investors in healthcare stocks on the JSE have seen value destruction of about R14bn in three days of trading as the market grapples with the possible effect of government reforms to the sector.

The report says shares in the country’s biggest medical aid administrators continued to fall as details of the NHI Bill drove uncertainty in the market around the future of private healthcare.

And, the report says, now the negative sentiment has spread to other healthcare-related stocks. Warwick Bam, analyst at Avior Capital Markets, said the NHI Bill adds uncertainty to the future of the healthcare value chain.

News24 report
NHI Bill
Moneyweb report
The Times report
Business Tech report
Engineering News report
IoL report
The Times report
Reuters Health report
Press release
News24
DA statement
Polity report
Business Live report
City Press report
The Times analysis
City Press report
Business Day report
Full Business Tech report
Bhekisisa report on the News24 site
Legalbrief Policy Watch report
Business Day report
Report on the Polity site
Business Live report


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