The Institute of Race Relations (IRR) think-tank has called on health minister Aaron Motsoaledi to repeal the National Health Insurance (NHI) Act, saying its restrictions on medical schemes will increase the emigration of SA’s biggest taxpayers and dent the corporate tax take, reducing the funds available for government spending across the board.
SA has only about 862,000 individual taxpayers with an annual income above R750,000, who contribute 58.6% of all personal income tax paid to the fiscus, said the IRR, citing Treasury estimates for 2024/25.
NHI also posed a threat to corporate income tax, as a flight of skilled mid to higher-level staff would cause corporate profits to plummet, said the IRR. Only 842 companies in SA generated an annual income of more than R100m, and they contributed almost three-quarters (72.4%) of corporate income tax, it said.
One of the most controversial aspects of the act is its restrictions on the future role of medical schemes. Section 33 of the act reads medical schemes will be reduced to providing “complementary cover” once the NHI is fully implemented, which means they will be unable to offer cover for services that the NHI provides.
Medical schemes are used to prefund access to healthcare services, almost entirely in the private sector. The act was signed into law by President Cyril Ramaphosa in May, but has yet to be brought into effect.
Most people in SA’s highest tax brackets belong to medical schemes. If they quit SA in response to diminished access to private healthcare, the state will no longer collect enough revenue to maintain current spending on social grants and civil servant wages, nor have enough money for infrastructure investments in water, electricity, and transport, said the IRR.
“We would like to see the … act revoked … and the adoption of low-cost benefit options [for medical schemes], which the government through the council for medical schemes has been blocking,’ said IRR campaign manager Majone Maja. “There are various solutions on the table for universal health coverage. NHI in its current form is not one,” she said.
The minister’s comments in an interview with Bhekisisa last week that he would not compromise on Section 33 even if it meant the demise of the government of national unity, were at odds with his offer to consult stakeholders in a national roadshow on NHI, said Maja.
Disregarding grievances about Section 33 would reduce the road show to a tick-box exercise, with no genuine discussion or negotiation, she said. “Dialogue is effectively defeated. There is no point in continuing the road show if NHI will be jammed down the throats of stakeholders,” she said.
The DA’s health spokesperson, Michele Clark, said at the weekend that Motsoaledi’s remarks were shocking.
“[It] is a clear indication that the health minister prizes his unimplementable and destructive ideological idea over a stable government — crucial to reinvigorate the economy to address huge unemployment and the cost of living crisis — and the people of SA,” she said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.