Monday, 15 April, 2024
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Fiscal reason versus NHI fundamentalism

There are “irreconcilable messages” within the ANC government over National Health Insurance (NHI), writes Financial Mail editor Rob Rose. So the legislative tweaks proposed by Business Unity South Africa (Busa) and Business for South Africa (B4SA) come at an important point. While they don’t answer “swirling questions” — such as where the money will come from — they do illustrate that organised business supports an implementable universal healthcare plan, subject to “practical alternations” by government.

Rose writes:

The irreconcilable messages within government over NHI illustrate that the chasm between what politicians say will happen, and what actually can happen, has never been so vast.

Speaking at the UN in New York last week, President Cyril Ramaphosa said: “We remain committed to implementing universal health coverage, through the establishment of NHI.”

It sounds resolute – yet it came days after finance minister Enoch Godongwana spoke of how the NHI Bill, now being debated by National Council of Provinces (NCOP) lawmakers, has “a lot of things missing”.

Godongwana, speaking at News24’s On The Record summit, said: “The mechanics proposed in the Bill create tension between [the] National Treasury and the national health department. For example, [the Treasury] assumes it’s the only institution that can tax anybody.”

Actually, it is. Section 77 of the constitution says any legislation which “imposes national taxes”, as NHI will do to get the extra R500bn needed each year, must be approved in parliament as a “money Bill”. And money Bills can only be introduced by the “cabinet member responsible for national financial matters” – not the health department.

Yet the ANC caucus, which voted to approve the NHI Bill in parliament in May, ignored this requirement.

Instead of ploughing billions into NHI, Godongwana said he’d rather invest in upgrading our hospitals and infrastructure to “make them more attractive to everybody”.

It’s the voice of fiscal reason, in contrast to a chorus of NHI fundamentalists – many in ANC circles – who wield breathtaking economic ignorance as if it were a weapon

Last week, for instance, ANC Youth League president Collen Malatji said Godongwana must be hauled into line and “start making sure that there is money for NHI because we have committed to South Africans that we will give them quality universal health care, whether rich or poor”.

If Malatji sounds like a power-crazed simpleton, he’s not the only one who believes in an evergreen magic money tree, with no sense of the trade-offs needed to make NHI happen.

What would he say, you wonder, if the government does what the Solidarity Research Institute says is needed to fund NHI: hike VAT from 15% to 22%, or add on a 40% income tax surcharge?

But those trade-offs don’t seem to matter to the NHI-at-all-costs brigade, who have cynically reframed any critique of the legislation as a de facto objection to universal health care. If you don’t like this version of NHI, they say, you despise the poor.

That façade is beginning to crumble. In part, this is because business groups have now tabled version of this NHI they could live with, but which includes tweaks that still allow for universal health care without setting fire to the entire economy.

In a 45-page submission to NCOP lawmakers, Business Unity South Africa (Busa) and Business for South Africa (B4SA) say the NHI Bill will “cause much harm to the country’s overall health-care system” and economy.

They say the Bill strips R196bn from provincial health departments and reassigns it to the NHI, making it harder for provinces to maintain already-crumbling public clinics.

B4SA’s submission also recommends changing section 33 of the NHI Bill, which stipulates that medical aids will have virtually no place in the country’s new healthcare dispensation.

Speaking last week, Discovery CEO Adrian Gore said section 33 “takes private health care out of the [system] because private health care is funded by medical schemes”.

B4SA recommends tweaking it to say that once NHI has been implemented, the health minister “may make regulations regarding the role of medical schemes consistent with the objective of the progressive realisation of access to sustainable, quality health-care services”.

It’s a small tweak, but one that will allow medical aids to stay alive.

Overall, Busa’s submission doesn’t answer all the swirling questions – such as where the money will come from – but it does illustrate that business is willing to work with the NHI plan, subject to practical alterations.

B4SA chair Martin Kingston says the business sector realised it couldn’t close its eyes to this, since NHI is central to ANC policy and will be a pillar of its manifesto in next year’s election.

“It’s true that NHI as it stands is a theoretical construct which probably doesn’t withstand scrutiny, is unimplementable and unfinanceable, unless there is full collaboration with the private sector,” he says. “But we are fully committed to a workable NHI, which takes the issues we raised into consideration.”

Roseanne Harris, who led the team that wrote the B4SA submission, says business is being constructive. “Everyone realises that for economic growth we need everyone to have quality health care, and we need to do better with what we’ve got, to realistically enhance our health-care system,” she says.

She is, however, worried by the expectations created by politicians. “It’s frustrating to see promises that NHI will deliver comprehensive, private-sector level unlimited care to everyone. Obviously, that would be ideal but it isn’t realistic, even in a wealthy country.”

It’s a point made by Wits University academics, including former Treasury budget office head Michael Sachs, in a paper called “Austerity without Consolidation: Fiscal Policy and Spending Choices in Budget 2023”.

“You don’t need to choose between NHI and a defence force — India and Ghana both have an NHI, but it is much more limited than what’s on the table here,” said Sachs. “You’ve got to cut your suit according to your cloth.”

Again, it’s about the trade-offs. As Gore pointed out last week, people who pay for private health care (about R2 300 a month, on average) would have to pay 31% more tax for this iteration of NHI, while getting 71% less medical cover.

Lawmakers ought to heed this warning, since South Africa can hardly afford a tax revolt, but it’s unclear if they’re even listening.

In 2019, B4SA sent a similar presentation to parliament but was ignored. Harris hopes it will be different this time.

“We’ve shown that we’re willing to be constructive. So we’re hoping our message, that we need to work together to build a feasible model, will get traction this time,” she says.

Republished with the kind permission of Financial Mail

See more from MedicalBrief archives:

 

NHI may not be best solution, Finance Minister says

 

NHI tax ‘ask’ unaffordable, says organised business

 

Harness private sector help for best possible NHI – HFA CEO

 

‘No way to fund the NHI’ – Discovery CEO

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