Funding for the proposed National Health Insurance (NHI) fund will come from various sources, including surcharges on personal income tax, payroll tax, and reallocating funding for medical scheme tax credits, Deputy Director-General for the NHI Nicholas Crisp told Parliament this week.
These are just some of the “chief sources of income” for the NHI, and “every person in South Africa will contribute via the ‘tax collection mechanism’ in exchange for health benefits, including services and care, free of charge”. Services would be provided at the point of care (hospital) when needed, and no pre-authorisation, gap cover, or top-up payment would be required.
Crisp told the parliamentary Portfolio Committee on Health on Tuesday (29 March) that the country “needs to spend as much on healthcare as it decides to”, reports News24.
Crisp said Section 49 of the Bill provided for general tax revenue, including shifting funds from the provincial equitable share and conditional grants into the NHI fund.
There’s also the reallocation of funding for medical scheme tax credits paid to various medical schemes, which could go towards the funding of NHI. In the 2019-2020 financial year, the medical scheme tax credits topped R27bn.
Payroll tax was another option, given that the state already contributed around R50 billion to public service employees' medical aid contributions to a scheme (GEMS) he said.
In his presentation, Crisp also highlighted a surcharge on personal income tax as an option. This would be introduced through a money Bill by the Minister of Finance and earmarked for use by the fund, he said.
"Once appropriated (by Parliament) the revenue allocated to the fund must be paid through a budget vote to the fund as determined by agreement between the fund and the minister and subject to the provisions of the Constitution and the Public Finance Management Act," he said.
When reforms like accredited public and private service providers are ready and the NHI covered benefits are announced, none of the NHI covered benefits would be covered by private schemes.
“There will be no need for voluntary spending on these services. Medical scheme premiums will be for only those benefits not covered by NHI. NHI funding is expected to cover all necessary healthcare and to exclude very little, but this will be progressive (over time) as the reforms are rolled out,” Crisp said.
Private financing through medical schemes would be unnecessary. “It is then that a payroll tax will be considered (as one alternative collection method) since it replaces our need to buy care through medical schemes.”
Crisp said the NHI fund would not function as a medical scheme and fee-for-service (FFS) would not generally be used as a mechanism for provider payment at the primary healthcare level.
This was because, by its nature, payment was limited to one provider for one interaction, he added.
“The NHI fund will pay providers in a way that creates appropriate incentives for efficiency and for the provision of quality and accessible care. In consultation with the minister, the fund will determine its own pricing and reimbursement mechanisms using a uniform reimbursement strategy.” According to Crisp, South Africa spent around 8.4% of GDP on healthcare.
“South Africa is the 33rd largest economy in the world. The current spending is high compared with peers. The problem is inefficiency (including fraud, corruption and medico-legal claims) in both public and private sectors.
“The question must rather be: ‘How do we reform the health system so that we spend no more than 8.4% of GDP to achieve a health system that ensures all people have access to the health services they need, when and where they need them, without financial hardship?’,” he said.
Crisp rejected accusations highlighting perceived issues with the fund’s governance proposals, denying that too much power would be vested in the minister of health.
BusinessLIVE,reports that Crisp said the Constitution gives the minister of health executive responsibility for health in SA. “He should therefore have the power to make key appointments to the NHI fund, just as the minister did for statutory bodies like the Council for Medical Schemes and the Health Professionals Council of SA.
“The NHI fund will also be accountable to parliament, but this does not imply that the role of the minister in exercising oversight over the NHI fund must be diluted or removed,” he said.
But public-interest law organisation Section 27 said the governance proposals are the most problematic element of the Bill.
Sasha Stevenson, head of health at Section 27, said: “The approach of the health department is really regrettable, particularly given the alternative governance options proposed by various stakeholders.”
In its submission on the Bill, Section 27 said it failed to provide adequate checks and balances for the exercise of power.
News24 article – Surcharges on income tax? Govt lays out proposal to fund NHI (Restricted access)
BusinessLive article – Health department defends governance plan for NHI fund (Restricted access)
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