Health Minister Aaron Motsoaledi’s statement that no other countries did costing estimations when planning their universal healthcare policies is false, according to Dr Karl le Roux, who writes in BusinessLIVE that the Minister is “being dishonest and displaying some disturbing tendencies”.
Motsoaledi’s belligerent refusal to answer questions about the costing of the National Health Insurance (NHI) Act is “disrespectful to taxpayers and also demonstrates the Department of Health’s magical thinking regarding the funding of the NHI”.
He writes:
The Minister’s statement in Parliament in response to a question from the DA – that no financial estimations were performed in the planning stages of universal healthcare in “any other countries” – is blatantly false.
Not only did the UK, Canada, Thailand, South Korea and Taiwan conduct careful costing exercises before implementing their universal healthcare plans, it was a crucial aspect of the preparation for their programmes and provided a sober understanding of the cost of implementing universal access to healthcare. In some cases, it brought a more moderate approach to implementation, including shared costs and dual insurance, after initial estimates caused some alarm.
Costing of new legislation is essential to allow the fiscus to plan, budget and facilitate proper implementation. It is also important if a section 77 Bill (or money Bill) needs to be introduced by the Finance Minister, as will almost certainly be necessary with the NHI. This makes it all the more surprising that no proper costing of NHI has been performed by the department.
Unlike Motsoaledi, the governments of the aforementioned countries did their financial homework carefully before implementing their national health plans:
• Not only did Sir William Beveridge draft a 300-page report in 1942 for the UK Government about the National Health Service (NHS), but that report contains an estimate of £170m for social security expenditure for health and rehabilitation services in 1945. The Nuffield Trust stated that “in 1946, when the NHS Bill went to Parliament, the estimate of the total net cost annually was £110m”. This rose to £179m by the end of 1947 and £305m by 1949/50. The cost of the NHS rose further to £384m in 1951. Despite the UK’s careful planning and costing, it is no surprise that “the government became alarmed”.
• In Canada, there have been multiple renegotiations regarding the funding of medical care since universal hospital insurance was first implemented in 1947 in Saskatchewan province. In 1961, the Royal Commission on Health Services found that by 1971 the cost of what would become Medical Care would add $466m to the $4,015m health budget, which would “make available to all Canadians the best possible healthcare which we can now foresee”.
• In Thailand, significant medical reform in terms of the Universal Healthcare Coverage Scheme (UCS) was launched in six provinces in April 2001, before expanding to an additional 15 provinces and eventually the whole country a year later. The cost for the UCS for the entire Thai population was an estimated 74.5bn baht (1 202.40 baht per capita), though only about 76% of the population was covered at that time. Coverage has since increased to 99.8% and a cost of 2,693.5 baht per capita.
• Universal health insurance in South Korea was incrementally instituted over 12 years and started in 1977 with the mandatory enrolment of industrial workers for companies with more than 500 employees, covering only 8.8% of the population. Initially, the employers and employees shared the cost of the health insurance premium equally, which was 3%-8% of wages.
• In 2003, the medical insurance landscape in South Korea shifted after the government decided to allow private insurance into the market, to “alleviate the financial strain on the National Health Insurance Service (NHIS) due to excessive medical service usage and to lessen the economic burden on patients suffering from conditions not covered by the NHIS”. Years after universal health insurance was instituted and had relative success, the South Korean government essentially opted for a dual insurance system as its NHIS was unable to provide quality healthcare to its citizens on its own.
• Taiwan’s national health insurance is funded through a premium that is 5.17% of an individual’s wage or salary. It was instituted in 1995 “after nearly a decade of planning”. The country’s fiscus was one of the major considerations when the national health insurance was structured and implemented.
None of these countries decided to adopt systems that enabled universal access to health while remaining blind to the financial implications.
In fact, they explicitly focused on long-term planning and paid careful attention to the state of their national fiscus – the opposite of what Motsoaledi appears to be doing.
For the Minister to claim that these countries, or, for that matter, any other country, would implement such legislation with such a broad societal impact without doing a careful costing beggars belief. As can be clearly seen, the financial estimates performed modified and refined the various implementations of universal healthcare in different countries.
In the absence of a proper costing from the Health Department, Momentum performed an estimation that showed that it would cost R1.3trn to provide every South African with the same quality of healthcare as is now provided by the private sector.
This figure has, however, been rubbished by the Minister, who claims it is as large as the whole government budget, which is again untrue – the complete budget for 2023-24 is R2.47trn.
No numbers are quoted to counter Momentum’s figure, but vague assertions are made that a single payer (the NHI) will be able to push down costs dramatically, thanks to “economies of scale”, and somehow force private (and public) hospitals to keep costs reasonable, when, worldwide, medical inflation is regarded as being out of control – further examples of the Minister’s magical thinking.
Momentum’s approximation, the only plausible estimation of the cost of NHI performed so far, does certainly indicate that the fulfilment of the ANC’s promise when the NHI Bill was signed into law in May – of a “Rolls-Royce” healthcare system in which all citizens can walk into any private or public hospital and have their medical care paid for by the government – is not only practically unimplementable, but is likely to be ruinously expensive.
And yet the Minister holds out, believing that the implementation of the NHI will miraculously resurrect our healthcare system, all the while overseeing a public healthcare sector rife with ruinously poor leadership, lack of accountability, mismanagement, and corruption.
South Africans have experienced how the quality of care in government hospitals has dwindled dramatically, with previous centres of excellence such as Charlotte Maxeke Johannesburg Academic Hospital, Livingstone Hospital in Gqeberha, and Zithulele Hospital in the rural Eastern Cape, reduced to shells of their former selves.
Yet somehow we are meant to believe that the same Health Department that has overseen this dire deterioration in government health services and refuses to cost NHI, will be able to manage and oversee the vastly complex and disruptive NHI.
The public deserves a careful costing of the NHI, and a clear indication about how the funding for it will be raised before any plans can be made to implement it.
This is the international norm, and for Motsoaledi to deny this is dishonest and betrays a disturbing tendency towards a form of magical thinking that insists that NHI will simply be cheaper than what we have now.
Good quality, universal healthcare for all South Africans is a crucial goal of the government of national unity but cannot be achieved without understanding the financial consequences in the harsh light of day and planning accordingly.
• Le Roux is DA deputy spokesperson on health.
See more from MedicalBrief archives:
Motsoaledi slams NHI sceptics and scaremongers
Health Department eyes PIC trillions for hospital infrastructure
Pinning down the real cost of the NHI: SA tax expert