Health Minister Aaron Motsoaledi says there was no section in the NHI Act forcing medical aid members to drop their schemes, and that the removal of the tax credits had been written into the NHI laws approved by Parliament.'
Asked recently by DA MP Dr Karl Le Roux whether the Department of Health had performed its own assessment of the removal of medical aid tax credits – in its bid to fund National Health Insurance (NHI) – Health Minister Aaron Motsoaledi avoided a direct response, reports BusinessTech.
He was specifically asked if the department knew the “total number of South Africans who would be forced to abandon their medical aids and access medical care through the public health sector after the removal of such subsidies and tax credits”.
Motsoaledi attempted to shrug off questions and concerns on plans to remove the credits for about a third of medical scheme members.
‘Savings’
In October, Deputy Director-General Nicholas Crisp said that the department was in conversation with Treasury to phase out the rebate, believing that R33bn could then be directed to the NHI – the tax credit, it said, serving only those who are “well off” at the expense of the poor.
While no strict timelines were given, the issue sparked deep concerns in the healthcare industry.
The Board of Healthcare Funders (BHF) warned that this would harm low-earning medical aid members in particular, making membership unaffordable for them.
Its own research showed that axing the rebate could force between 430 000 and 690 000 members off their medical aids.
Many others would be forced downgrade their cover, remove dependants or exit the system entirely, thus placing an extra burden on an already overstretched public healthcare sector.
But Motsoaledi said that “nobody without a medical tax credit will be forced to access medical care through the public health sector”.
“Scheme members and their beneficiaries will continue to choose between accessing private or public providers as they do now,” he added.
His response appeared to miss the crux of the question, which was whether or not the department had conducted any study or assessment on the removal of medical aid tax credits and the resultant impact on medical aid scheme members.
He also neglected to draw focus to the highly controversial Section 33 of the NHI Act, which prevents medical aids from covering the same services covered by the NHI.
The removal of medical aid tax credits “will be done through a Money Bill to be published by the Minister of Finance, where all the relevant factors will be determined and taken into consideration”, Motsoaledi said.
Last month, while presenting the medium-term budget policy statement, Finance Minister Enoch Godongwana had said that the people currently benefiting from medical tax credits form the core of the personal income tax base – largely middle-class earners who already shoulder a significant portion of the tax burden.
Eliminating the credits, he warned, would effectively penalise this group at a time when households are already under severe financial pressure.
He added that while Treasury was in discussions with the Department of Health about possible funding options for the NHI, no alternative mechanism was yet in place.
See more from MedicalBrief archives:
Ditching medical aid tax credits will burden state health system
Richest medical aid members first to lose tax credits – Crisp
Income tax hike and payroll tax proposed for NHI funding