While legal challenges are being lined up against the National Health Insurance Bill – which last week passed through the final parliamentary steps – the country's largest medical scheme has come forward with proposals on how to make the plan work. But it will be a hard sell, writes MedicalBrief, as government buckles down on the controversial legislation.
Discovery CEO Adrian Gore says that regardless of what happens with the Bill, the national government will have to face the reality that there is simply no money for its “irrational” foundation of universal healthcare – and cutting out private sector funding makes the whole thing unimplementable.
Gore said instead of litigation, Discovery was trying to appeal to rationality and offering to work with the government to turn the NHI Bill into something that could work.
In a Business Tech report, Gore said that the core problem with the NHI Bill in its current form is that its goals of universal healthcare will hit an unavoidable funding wall.
There is too little funding for the NHI to work, too few doctors to make it viable, and insufficient investment to keep the scheme going. This is a big problem because the NHI desperately needs all three but is instead built to deter this.
To this point, the Discovery CEO laid out the math:
With public healthcare spending at around R233bn, the government will be able to secure an additional R28bn by redirecting medical aid tax credits to the NHI Fund. It could add a further R70bn from government employees’ medical scheme subsidies.
But even with these sources, the Department of Health estimates that another R200bn in funding will have to be found – with additional taxes being the only practical source.
If everything works out perfectly – and assuming that taxpayers are happy to foot the estimated 30% tax increase needed – the NHI would have access to R531bn, Gore said. This works out to be around R715 per person, per month when split among South Africa’s 62m people.
Current spending for those not covered by medical aids is at around R400 a month – so this would be a significant boost. However, for those on medical schemes – where spend is around R2 332 a month – this would be a 70% reduction in health coverage. A massive cut.
The bigger problem, Gore said, was that the NHI promised “comprehensive” medical cover for everyone in the country – but R715 is nowhere near enough to do this.
To cover the government-mandated prescribed minimum benefits alone would require over R1 000 a month – and R530bn a year more in additional tax revenue (R860bn in total).
Even if such a scenario were possible, taxes would have to be hiked by 80%, and taxpayers on medical aids would still have to be satisfied with a more than 50% reduction in their health coverage, Gore said.
“This is irrational. The NHI does not have enough money to give comprehensive coverage and threatens to destabilise taxpayers who are already funding public healthcare. The fundamental problem is a lack of funding,” he said.
According to Gore, while the passing of the unworkable NHI Bill is a significantly negative mark for South Africa, he believes that the reality of the funding problem will win out in the end.
He said that there has been a serious “negative sentiment” effect caused by the NHI, which could deter investment and push doctors and healthcare skills out of the country – but the reality is that the NHI is still decades away from happening, and the government will have to face the truth eventually.
“I think (the negative sentiment) will settle – the reality is that this is a multi-decade process, and the realities will drive the outcome. It’s a missed opportunity (by the government) to do something more pragmatic and better,” he said.
Discovery’s approach is to keep its people focused on the positives, he said. For doctors, the message is more difficult – but “we have to work hard to let them know they will be funded and that this is a slow process”.
Core to this is the fact that the clause in the NHI that would ostensibly “kill” medical aids in the country – section 33 – would only kick in once the system is “fully implemented”.
For now, Discovery is pushing for changes to section 33 to allow for medical aids to work with the NHI through more flexible terms.
Discovery said that there are big, complex implementation components that have to be achieved, including legal (passing the Bill and repealing many integrated, standing laws), operational (developing the complex systems needed to take over funding and control of the private healthcare system built over decades) and financial (the funding issues which remain unaddressed by the government).
“The 2026 horizon is completely unrealistic,” it said.
Government's plans 'distorted'
But Deputy Minister of Health Dr Sibongiseni Dhlomo has hit back at Gore and other critics, saying that the private healthcare industry was widely consulted, and no amount of lobbying will change the government’s stance.
Responding to data presented by Gore, Dhlomo said that the government’s plans were being “distorted”, according to a second Business Tech report.
He denied that the Bill passed by the National Council of Provinces last week was unchanged from the Bill’s beginnings, and he also dismissed Gore’s calculations – particularly around the tax hikes that would be needed to fund the government’s scheme.
Most notably, however, he said that there was no intention from the government to back down – despite the lobbying from the private sector.
“Claims that the private sector was disregarded during the NHI Bill’s development are inaccurate,” Dhlomo said.
“From 2019 to 2023, Parliament conducted extensive consultations with communities and stakeholders, including private sector hearings, to gather diverse opinions. I was privileged to chair 36 public hearings meetings in the country attended by close to 36,000 people and had just under 1,000 people who came and spoke. Over 800 supported the Bill, and another 120 did not support the Bill.”
Dhlomo said that the government amended “some areas” of the Bill based on inputs, adding that the voted Bill by the National Assembly was not the same product sent to the Portfolio Committee on Health by the Ministry of Health and the Cabinet.
“Concerns about insufficient resources for NHI are unfounded. The Bill clearly outlines funding sources, including appropriations, general tax revenue, medical scheme tax credits, payroll tax (2%), and a surcharge (2%) on personal income tax,” he said.
Dhlomo said that the “key issue” with NHI funding lies in “allocative inefficiency”, not a lack of funds.
“By redirecting current funding sources to NHI, the country could immediately access substantial resources, as outlined in the White Paper on NHI.”
He did not elaborate on which “funding sources” would be redirected but restated that a payroll tax and personal income surcharge would be used.
He said that private healthcare also carries a 15% “administrative cost” that makes it excessively expensive, whereas the NHI would only carry a 3% cost.
“The resounding support for NHI from the majority, especially those who lack access to quality healthcare, influenced Parliament’s decisions, despite private sector suggestions not gaining favour,” he said.
“The focus was on prioritising the needs of the underserved. For that, we remain committed, and no amount of lobbying or distortion of the narrative will change that.”
“The NHI Bill is a crucial step towards ending healthcare inequality in South Africa. A closer examination of the Bill’s provisions reveals a well-thought-out plan for sustainable funding and transformative changes in healthcare service delivery.”
In the same vein, Dr Olive Shisana, UCT honorary professor and special adviser to President Cyril Ramaphosa, said it was crucial to dispel misinformation surrounding the NHI. Writing in the Daily Maverick, she said the NHI, classified as a Schedule 3 Public Entity, aligns with reputable entities like the Council for Scientific and Industrial Research and the Medical Research Council. "These entities have demonstrated unqualified audits, and the NHI is expected to operate similarly, fulfilling specific economic and social responsibilities mandated by the government."
"Contrary to misconceptions, the NHI, as a Schedule 3A entity, won’t lead to the collapse of the private sector. Operating under the Public Finance Management Act, the NHI Fund will accredit both public and private facilities, reimbursing them for services. This ensures that the NHI covers reimbursable services without impeding the private sector’s operation. The inefficiency and unsustainability of the private sector make a compelling case for the NHI.
"Critics argue that the private sector is more efficient, but evidence suggests otherwise. The Health Market Inquiry exposed the private health sector’s lack of competition and efficiency, resulting in exorbitant costs. In contrast, the NHI’s administration costs are expected to be less than 3%. Concerns about the potential collapse of medical schemes under the NHI are unfounded, as the NHI aims to offer year-round coverage at a reduced cost, addressing the failures of the current system.
"Addressing concerns about healthcare quality, the NHI emphasises certification and accreditation standards. By linking reimbursement to certification, the NHI incentivises establishments to enhance compliance and improve service quality, benefiting both the public and private sectors.
Acknowledging the historical context of apartheid policies contributing to healthcare challenges, the NHI aims to rectify disparities in access. Despite claims of insufficient funds, other countries with fewer economic resources have successfully implemented NHI. The key lies in optimising resource allocation to ensure effective NHI implementation and improved healthcare access for all South Africans."
However, several organisations are gearing up for legal action, while according to trade union Solidarity, numbers of specialists and general practitioners have announced that they would rather close their surgeries than work under the NHI.
As reported in MedicalBrief, the NHI Bill was approved by eight of the nine provinces last Wednesday, with only the Western Cape voting against it. Parliament is now expected to send the Bill to Ramaphosa, who can either sign it into law, refer it back to Parliament on legal or technical grounds, or refer it to the Constitutional Court to gauge its constitutionality, reports Business Day.
Daily Maverick reports that Health Minister Dr Joe Phaahla, in a carefully worded statement issued on Wednesday, said: “Continued collaboration with all stakeholders, transparent communication and a phased approach to implementation are crucial components of our strategy.”
Business unity South Africa (Busa) and B4SA have said they will petition Ramaphosa, asking him to refer the Bill back to the National Assembly for amendment, and saying that in its current format, it is not only unworkable, unimplementable and unaffordable, but also unconstitutional on substantive and procedural grounds, while Solidarity said it would launch a full-on legal assault against the Bill and has urged the public to support its actions against “a destructive scheme”.
B4SA Steering Committee chair Martin Kingston said Busa and B4SA have concerns, recommendations, research, data and inputs, apart from those made by a wide range of experts and affected stakeholders, reports Polity, but that these has all been ignored by the Parliamentary Portfolio Committee on Health and the NCOP.
Inputs not considered
The business grouping noted that Parliament’s socio-economic impact assessment process was inadequate, that the National Economic Development and Labour Council (Nedlac) process in respect of the Bill was not followed through, that public participation inputs were not properly considered, and that multiple constructive inputs from business and other stakeholders had been ignored.
Cas Coovadia, CEO of Busa, told Business Day: “We have not rejected the Bill in its entirety, and have consistently supported its policy direction towards universal health coverage.
“Our inputs have been intended to remedy the constitutional, funding and practical deficiencies in the Bill … For these reasons, it is our strong belief that the President must refer it back to the National Assembly for amendment.”
The Health Funders Association (HFA) will also petition the president, saying there is still time to fix the Bill. Chairperson Craig Comrie said Parliament had failed to take proper cognisance of the implications for citizens’ constitutional rights, healthcare as a whole and the South African economy.
“In short, it has failed South Africa and its citizens.”
The South African Health Professionals Collaboration, a national group of nine medical, dental and allied healthcare practitioners’ associations which represents more than 25 000 dedicated private and public sector healthcare workers, is also urging the President to refer the Bill back to Parliament for reconsideration, according to The Mercury.
SAHPC said the Bill is “unconstitutional” and “unworkable”, and lacks clarity on key elements. If implemented in its current form, it will have “a devastating impact on the country’s ability to deliver quality healthcare”, the group said.
“While we support the fundamental principle of universal health access …it seems the Bill has been rushed through the legislative process without substantive engagement with healthcare professionals or due consideration of our submissions,” Caroline Corbett, a spokesperson for the SAHPC, told The Citizen.
There is also concern that treatment protocols under the NHI will favour cheap and basic care. “It is essential to strike a balance that considers both affordability and the best interests of patients.”
Medical exodus
A recent research study conducted among doctors by the Solidarity Research Institute (SNI) found that doctors would leave the country in large numbers if NHI were to be implemented, reports PoliticsWeb.
The study found among other things that:
• 94% of respondents believe private health practitioners may decide to work abroad because of NHI;
• 47% indicated they would start the emigration process as soon as NHI is accepted;
• 19% said they had already initiated the process to emigrate; and
• 0% of medical practitioners are optimistic about the NHI.
Peirru Marx, network co-ordinator: Solidarity's medical networks, said although the Bill’s unworkability and unaffordability provide more than enough reason to abandon NHI plans immediately, this is not the end of concerns.
“We (South Africa) do not have the human resources for it either. There has not been a significant increase in the number of doctors produced during the past ten years. Moreover, we are now producing 58% fewer nursing students than in 2012.”
Conversely, meanwhile, the National Education, Health and Allied Workers’ Union (Nehawu) has welcomed the passing of the Bill and condemned the delay in passing it.
Nehawu said the Bill had gone through extensive debate and scrutiny and almost two decades of refinement, clause-by-clause deliberation and comprehensive public participation processes across all nine provinces.
“The influence of capitalist, private sector medical health insurance companies in delaying this Bill must be condemned – these companies have no interest in the health and well-being of workers and society at large, their sole motivation is driven by profit, not our people,” it said.
The South African Communist Party (SACP) has also welcomed the passing of the NHI Bill and said it marked a significant milestone towards aligning South Africa’s healthcare system with the principles of equality and social solidarity, reports Polity.
However, it stressed the importance of redistributing more from high incomes so the “surplus that the wealthy appropriate from the economy” delivers quality universal healthcare coverage.
Welcoming the passing of the Bill, the Congress of South African Trade Unions (Cosatu) said that government cannot continue to place the profit margins of private industry above the needs of society.
The Mercury PressReader article – Business Unity SA slams ‘unconstitutional’ NHI Bill (Open access)
Daily Maverick – The NHI debate revisited — accurate information and understanding the potential impact are essential
Business Tech – Big NHI reality check from Discovery CEO Adrian Gore
Polity article – Mixed reactions to passing of NHI Bill (Open access)
PoliticsWeb article – Doctors to close practices when NHI implemented – Solidarity (Open access)
See more from MedicalBrief archives:
NHI now closer to becoming law after passing NCOP hurdle
NHI heading for ‘Eskom-level stuff-up’
One step closer for NHI as NCOP committee adopts Bill, unchanged