Organised business says it is optimistic that parliament will amend the National Health Insurance (NHI) Bill’s provisions on the future role of medical schemes and soften the proposal to restrict them to offering cover for services not provided by NHI.
The National Council of Provinces (NCOP) is close to finalising its work on the bill, which is the first piece of enabling legislation for the ANC government’s plans for universal health coverage. The bill provides for establishing a central NHI fund to purchase services for eligible beneficiaries from accredited public and private sector providers that will be free at the point of delivery. But how it will be financed and exactly what benefits it will cover have yet to be determined.
“We have certainly been led to believe, including by Nicholas Crisp [health department deputy director-general for NHI] that certain adjustments will be made to section 33. He is well aware of what we believe is necessary. I would be very surprised if it re-emerges as it is today,” Business for SA (B4SA) chair Martin Kingston said at a joint briefing with Business Unity SA (Busa).
B4SA was formed during the coronavirus pandemic, and includes the Black Business Council and Busa, which is the business representative at Nedlac.
Section 33 of the bill says that when the health minister determines that NHI has been fully implemented, medical schemes may offer only complementary cover for services not reimbursed by the NHI fund.
Organised business is urging the government to reconsider its plans, saying that while it supports the principle of NHI it has grave concern about aspects of the bill, including section 33. No other country in the world has legislated against provision of cover for private healthcare in this way. Instead of a single NHI fund purchasing services, it wants to see multiple sources of funding, including medical schemes.
It has repeatedly said the bill’s proposals are unworkable and unaffordable, and pose a significant risk to SA’s economy and the fiscus.
“There is not a homogenous view in government. Part of our aim is to ensure those thinking more pragmatically have backing from business,” said Busa CEO Cas Coovadia.
The ANC is was already campaigning for support in the 2024 general election by promoting the supposed benefits of NHI, and Busa wants to sensitise the public to the pitfalls in the current proposals, he said. “The pragmatic people in government understand this.”
The scale of state funding needed for NHI is completely at odds with finance minister Enoch Godongwana’s position that government expenditure has to be reined in, said Coovadia.
The Treasury announced massive spending cuts over the next two-and-a-half years in its medium-term budget policy statement (MTBPS) on November 1, starting with a R21.7bn cut in the remainder of the 2023/24 fiscal year.
The health department has estimated the NHI fund will cost R480bn to R520bn a year, and require raising additional tax revenue of R200bn. This will require raising VAT to 21% or increasing personal tax by a third, or raising corporate tax 60%, according to B4SA.
Raising R200bn in taxes from a shrinking tax base would not be feasible or sustainable, said B4SA NHI project lead Roseanne Harris.
“A system built entirely on raising that level of taxes would have a devastating consequences on the economy as a whole because increasing the tax burden would have knock-on economic effects,” she said. There are “massive risks” associated with a single fund dependent on public funds, the biggest being that it would run at a deficit.
Even if the government did manage to raise R480bn for the NHI fund, this would cover only very basic healthcare, she said.
A total NHI fund of R480bn a year equates to R680 per capita, which when adjusted for purchasing power parity is a quarter of the funding available to the UK’s National Health Service (NHS), she said. Health minister Joe Phaahla has often referred to the NHS as a model for the government’s NHI aspirations, emphasising that it was created when Britain’s economy was particularly weak after World War 2.
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