Anyone who dismisses the proposed National Health Insurance (NHI) as a flight of financial fancy need only recall Jacob Zuma’s parting gift to burden our universities with an unaffordable promise of fee-free tertiary education, despite the Heher commission’s recommendations against this.
The ideologues in the ANC have mastered the art of doubling down on fiscally irresponsible policy choices.
However determined the ANC government is to white-ant the health sector into its image, it remains crucial to examine the unanswered questions and fiscal challenges that surround the NHI Bill awaiting assent by the president. This is not to declare oneself anti-inclusivity or anti-progress, but is quite frankly just a reality check.
One of the fundamental issues lies in the lack of transparency regarding the costing and, more importantly, the financial feasibility (which looks at the economics of the proposal) of implementing the NHI.
The WHO acknowledges the significance of costing assumptions and scenarios in assessing the sustainability of such reforms. It’s incomprehensible that parliament could vote in favour of a bill even though the Treasury has yet to provide details on how the NHI will be financed.
As the debate rages about the NHI’s affordability, a perplexing contradiction emerges in the provisions governing the NHI fund’s income.
Clause 49 of the bill reveals that the fund’s lifeblood will flow from the coffers of parliament, fed by tax revenue such as general tax, a payroll tax and a surcharge on personal income tax. But law firm Webber Wentzel reveals a twist. This tax-based funding scheme clashes with clause 2, which touts the concept of “mandatory prepayment” for healthcare services, and clause 55(1)(t), empowering the minister to regulate all fees payable to the fund.
While government aims to redistribute healthcare spending more equitably, it fails to acknowledge that a significant portion of private sector expenditure is private money being spent by individuals on their own healthcare. By seeking to replace this spending with increased taxes, the state would need to raise a substantial amount of revenue — potentially an additional 33% on personal income tax collections by some calculations — placing an impossible burden on a limited and shrinking tax base.
The fog thickens as we delve deeper into the NHI Bill’s murky depths. The specifics of covered benefits and reimbursement rates, critical pillars for assessing affordability and quality of care, remain frustratingly elusive (see clause 10(1)(g) for further vexation).
True to form, the bill relinquishes power to the health minister, who holds the reins in determining regulations on portability, referral pathways, coding systems, the fund’s relationship with medical schemes, and the thorny issue of funding prescribed healthcare services and programmes.
But there’s more. Brace yourself for the seismic tremors shaking the medical scheme world. Clause 33 drops a bombshell, foretelling a grim fate for these schemes once the NHI reaches its zenith. The walls close in on medical schemes as the fund aspires to become an all-encompassing benevolent force, threatening their very existence.
Discovery Health CEO Ryan Noach has adopted a strikingly nonchalant attitude towards the impending demise of medical schemes. In an interview with Newzroom Afrika he dismissively shrugged off concern that the NHI Bill would destroy the private healthcare sector. According to him, such apprehensions are mere panic-induced reactions devoid of substance.
Rather than acknowledging the valid concern of the public, Noach appears content to downplay the imminent effect of the NHI, painting a picture of a distant future where private healthcare will remain largely unscathed. His estimated timeline of 10 to 15 years for full implementation seems to rely on a hope that the NHI will be scuppered in the intervening period. Hope is not a strategy I would be willing to bet my life and health on.
Of course, the demise of medical schemes would make Nicholas Crisp, head of the NHI in the national health department, very happy. Dr Crisp attributes rising costs in the healthcare sector to overservicing, which he blames on fragmented risk pools and multiple medical aid funds. He advocates a single pool of funds, through the NHI Fund, to improve procurement efficiency.
But he conveniently glosses over substantial concern about corruption and the disregarding of the recommendations of the Competition Commission’s health market inquiry (HMI), which suggests implementing a risk adjustment mechanism and a standardised medical scheme benefit package to address fragmented risk pools and promote market competition. Critics argue that the proposed NHI reforms overlook the potential role of medical schemes and the HMI’s recommendations, which could offer viable solutions to the current challenges in the healthcare system.
The administrative costs and capacity required to implement the NHI also warrant careful consideration. The private sector now administers half of all healthcare spending, suggesting that using their existing administrative capacity could be a practical solution. In contrast, the government’s track record with large-scale administration, exemplified by the challenges faced by the Compensation Fund, raises concern about its ability to manage a significantly larger entity such as the NHI fund efficiently. Many are rightly calling this Eskom 2.0 in the making.
While the idea of providing free healthcare for all is commendable, without a clear understanding of the costs, sustainable funding mechanisms, administrative capacity, governance concern and potential economic implications, the NHI risks being another well-intentioned yet poorly executed and ultimately ruinous policy.
In the labyrinth of the NHI Bill contradictions abound, leaving us to wonder who will emerge victorious in this high-stakes battle for SA’s healthcare future.
• Avery, a financial journalist and broadcaster, produces BDTV’s Business Watch. Contact him at Badger@businesslive.co.za.
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