The government may not need to raise new taxes for National Health Insurance (NHI) for almost another decade, according to a health department presentation to parliament on Tuesday.
NHI is the ANC’s controversial plan for universal health coverage, which aims to ensure all eligible patients have access to healthcare services that are free at the point of delivery, paid for by a government-controlled NHI Fund.
The plan proposes sweeping reforms that have run into fierce opposition from doctors, organised business, medical schemes, trade union Solidarity and the Western Cape government.
Legal challenges
There are now eight legal challenges to the NHI Act, which was signed into law by President Cyril Ramaphosa in May 2024 but has yet to be implemented.
Many of the litigants have questioned the lack of detailed costing for NHI and argued that it is not financially feasible in the current economic climate.
Addressing parliament’s standing committee on appropriations, the health department’s deputy director general for NHI, Nicholas Crisp, sketched a picture of the potential sources of funding for NHI over 15 years to 2037/38 but stopped short of setting out the detailed mechanisms required to implement these measures.
If all the potential funding sources were realised, the total amount raised for NHI by 2037/38 would be R458bn, according to his presentation to MPs.
The first step would be to phase out medical scheme tax credits and redirect conditional grants and provincial health budgets to the NHI Fund. Medical scheme tax credits could raise as much as R34bn for the NHI Fund by 2027/28, according to the presentation.
Crisp said tax credits would first be phased out for high-income earners, but the threshold had yet to be determined. The extent to which Treasury supports such a move is unclear, as it has yet to comment on the proposal.
The next stage involves scrapping the medical scheme subsidies provided by the state to civil servants, redirecting the funds spent by correctional services on health, and moving the money that currently resides in the Road Accident Fund and Compensation Fund to NHI.
Last of all would be raising new taxes, which the document suggests would only start in 2033/34, and at a more conservative level than previously indicated: the target is initially R136bn, rising to R150bn in 2037/38. The health department has previously suggested NHI would require raising an extra R200bn in taxes.
It is unclear how some of the funds the health department hopes to redirect to NHI — such as the tax credits or medical scheme subsidies for civil servants — could be ring-fenced for this purpose, as the Treasury may give weight to other competing priorities.
Current expenditure ‘sufficient’
Crisp said SA’s current healthcare expenditure, which ran to about R600bn a year, was “more than enough to run a proper healthcare system”.
“The private sector currently spends R21bn on administration and [loses] R30bn to fraud annually. If we just remove that R50bn and stop subsidising the sector, we could already make a huge dent [in the provision of healthcare],” he said.
The presentation also states that NHI could take “10, 15 or more” years to implement, one of the longest projected timelines yet for the plan.
The first iteration of the NHI policy, set out in a green paper published in 2011, aimed for full implementation by 2025, while the NHI Act says it should be implemented in two phases by 2028.
More recently, health minister Aaron Motsoaledi said in court papers that NHI could take 10-15 years to implement.
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