Sunday, 26 May, 2024
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‘No way to fund the NHI’ – Discovery CEO

Critics say while there is a need to change South Africa’s abysmal health system, there were far better options for doing this than the National Health Insurance scheme, and warn that doing away with private medical schemes would “lead to a revolt”.

Discovery Health CEO Ryan Noach said wiping out the private healthcare sector and “nationalising it in a Communist-like approach” was just not feasible, although he agreed that the current healthcare situation was inequitable.

Speaking to Biznews, he said that although the NHI has strengths and could be worked with, there was concern about Section 33, with medical schemes being prohibited from providing cover provided by the NHI.

“Stopping medical aids from providing private healthcare to its members is not smart” and “will cause a revolt among the current people whose healthcare spending will drop by more than 70% per capita”.

He added that there was “no way” to fund the NHI. “You cannot raise enough taxes for NHI. It is economically not feasible.

“There is such brilliant support from the private sector. We have a national asset. The smartest way is to work with the private sector,” he said.

The Discovery Health CEO said numerous constructive proposals had been put on the table, and that tens of thousands of pages of submissions had been received by the Parliamentary Portfolio Committee on Health, reports Daily Investor.

Yet no changes of substance were made to the Bill over four years, he said, “which is hard to explain”.

In fact, wrote Busi Mavuso, CEO of Business Leadership South Africa, in Moneyweb, “the NHI risks doing precisely the opposite of what is being promised to South Africans.”

Mavuso wrote that the scheme would “end up in no improvements to healthcare quality, in fact, the risk is precisely the opposite”.

She said if the government were serious about delivering improved healthcare, there were better ways to do it, involving partnerships with the private sector that have been demonstrated to work.

A “fact sheet” written by the Department of Health “had many positive things to say about the upsides of an NHI but little about the practical implementation”.

“The 27-page document has 198 words on how it will be funded,” she wrote. “It refers to a payroll tax on employers and employees and makes the astounding statement that this ‘must not create an increased burden on households compared to the current system’.

“It contains no analysis on what the proposed system will actually cost, referring only to South Africa spending 8.5% of GDP on healthcare. It has pages on what kind of health services South Africans can expect, but no calculation of what these will cost.

“It makes no reference to the pilot projects for the scheme having failed dismally nor to the fact that the existing healthcare system has been deemed woefully inadequate.”

“The biggest farce in this charade is the funding story,” she added.

“While the fact sheet declares the current mixed system to be ‘inefficient’, it seems to believe that removing the private element … is key to creating wider efficiency. That is impossible unless huge funding is allocated, the kind of funding the private system currently enjoys. And this is the other fabulous element – that payroll taxes will somehow do this.”

The current system sees half of health expenditure from the private sector, which also employs 79% of doctors, she added, but only 16% of the population is covered by medical schemes allowing access to the private sector.

“If we were to expand health insurance, as it exists, to the rest of the population, we would need to increase the amount spent by about six-fold. That would imply that the current 4.3% of GDP spent on the private sector would need to become about 26% of GDP. That is obviously impossible, but perhaps a slimmed-down form of insurance cover is more feasible.

“Discovery has calculated that a modest NHI would cost R200bn, which would require personal taxes to go up by a third or VAT to rise to 21.5%, or a mix of the two.

“The NHI fact sheet makes many claims that the national scheme would be more efficient than the status quo, but what evidence do we have? I can only see the reality of a very inefficient state sector, and a private sector that has many checks and balances, including patient choice over providers and a balance between healthcare funders and providers.”

She wrote that the idea “that somehow NHI can emerge without a serious imposition of additional taxes is simply untenable”.

“There are just 50 000 people who earn more than R2m and therefore pay tax at the top 45% income tax bracket (which starts at more than R1.7m). That is out of a total of about 5.5m taxpayers, yet the scheme envisages that all 60m South Africans will be covered.”

Already the number of taxpayers assessed in 2021 was about 13% fewer than in 2012. Corporate income tax has also been suggested by some as being able to fund it, but there is a direct relationship between corporate profits and investments.

“The NHI is a cynical attempt to win votes without the hard work of creating a real workable plan,” she wrote.

Supporting the Bill’s lack of feasibility was an evaluation of the NHI’s pilot programme, which, said sceptics, showed little to get excited about, despite a R500m budget

The report, compiled by a government-contracted consortium, found there was no way to tell just how effective these pilots were in evaluating the health system’s strengthening interventions, said health and social security systems specialist Professor Alex van den Heever, adding that the review “provides no clear indication of what the pilots – which had a budget of R4 46 220 000 between 2012 and 2017 – really sought to test”.

The consortium comprised consulting firm Genesis Analytics with support from PricewaterhouseCoopers (PwC) Advisory, the Centre for Health Policy at the University of Witwatersrand and Insight Actuaries and Consultants, reports News24.

Van den Heever said the review referred solely to health systems at the primary care level, the focus of the NHI pilot sites, meaning they did not test the NHI policy framework, but rather looked at an array of specific projects, “with no clear overall concept in mind”.

These included primary care outreach, GP contracting, chronic medicine dispensing, ideal clinic realisation, health patient registration systems, and integrated school health and district specialist teams.

The review struggled to make definitive findings, due to “the absence of clear control groups and consistent data”.

“Since interventions were scaled up beyond the pilot districts, it is difficult to identify major differences in performance between the pilot and non-pilot districts,” read the report.

“…Data varied. In some years, indicator performance appears to have increased significantly in one year; however, these showed little to no improvement in the following year. Moreover, the assessment of indicators depends on the availability of accurate denominators… not always available and varied from year to year.

“While the quality of data provided improved over implementation, there was still a quality challenge with the final dataset obtained. All of the …factors contribute to the challenge in assessing health outcomes and the impact of the interventions.”


Moneyweb article – Biggest farce in the NHI charade is the funding story: Mavuso (Open access)


Daily Investor article – NHI killing medical aid cover will cause a revolt (Open access)


News24 article – NHI pilot evaluation report finds little to get excited over, despite R500 million budget (Restricted access)


See more from MedicalBrief archives:


Income tax hike and payroll tax proposed for NHI funding


Correcting the misconceptions about NHI


NHI pilots point to critical fault lines








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