CHRISTOPHER W MPEHLE | A fund without a strategy 

In May I argued in these pages that the National Health Insurance (NHI) Act’s real weakness is not its ambitions and intentions but its architecture. That its financing had been deferred rather than designed. Nearly four months on, I want to extend that argument, because the deferral is no longer only a financial one. It has become a strategic one.

Consider where we stand. The Constitutional Court heard the public participation challenges that were brought by the Board of Healthcare Funders and the Western Cape government from May 5 to 7 and reserved judgment. At the time of writing, no ruling has been handed down and no date has been announced.

Before that hearing, the president and health minister undertook not to proclaim or implement any section of the act pending judgment, an undertaking made an order of court in February. The act is law, and the act is frozen. We have been standing still for six months.

Standing still is not in itself an act of failure. Litigation on this scale was entirely predictable. What should concern us is what is being done with the pause. The health department has budgeted a staggering R74m to defend NHI litigation in the current financial year, spread across roughly 15 cases at R2.5m-R3m each.

That is a legitimate use of public funds; the state is entitled to defend its own statute. But there is an imbalance that is worth highlighting and naming plainly. We have a fully costed litigation strategy and yet no comparable funding strategy. We know what it will cost to defend the act, but we do not know what it will cost to operate it.

That distinction is one our debate continues to miss. A statute confers authority, but it does not confer capability. The act creates a fund and instructs it to purchase healthcare “strategically” — the phrase appears in the legislation — but strategic purchasing is not a legal construct. It is an operating function and a demanding one.

The performance of this requires the responsible parties/individuals to be able to accredit and contract many thousands of providers, set and defend prices, design payment mechanisms that do not simply reward volume, register and verify a population, adjudicate claims at a national scale and detect fraudulent activity in something close to real time. Every one of the above-mentioned capabilities takes years to build. None of them is created by a commencement notice.

Here is the part that ought to concentrate minds: not one of them depends on the outcome of the court case. If the act is upheld, the state will need these capabilities immediately. If it is set aside and returned to parliament for a proper participation process, the policy does not die with it. Section 27 does not go away, and no serious party in this country has abandoned universal health coverage.

The state will require the same capabilities under whatever instrument follows. Capability is the part of the plan that is indifferent to the actual ruling, which is precisely why it should be under construction now rather than later.

Some of this work is happening, and it is instructive where. The Council for Medical Schemes has folded the NHI into its 2025-2030 strategy, positioning itself to guide schemes on benefit design, contribution models and operating arrangements under a reformed system. The regulator of the private funding industry is doing institutional design while the principal legislation is stayed.

I do not raise this as a criticism of anyone; I raise it because it is indicative of a particular pattern: preparation is furthest advanced where an institution already has an operating capability and a mandate to use it. Capability preceded authority. It is a poor idea to sequence them the other way round.

There is a further reason contracting capability now matters more than it did a year ago. On May 18, the Constitutional Court confirmed that sections 36 to 40 of the National Health Act — the certificate of need provisions — are unconstitutional. That judgment concerns a different statute, and the health department is correct that it does not bear directly on the NHI Act. Yet it does carry a strategic consequence that has been almost entirely overlooked.

The state’s most direct instrument for dictating where health professionals may practise has been removed. Whatever geographic distribution of clinical capacity we want, we will now have to purchase it, rather than compel it. The lever that remains is the contract.

The private sector has a strategic gap of its own, and I say this as someone who works in it. It has litigation strategy in abundance. What it does not have is a published cost proposition for what it would actually do under a national provider: which districts, which services, at what price, on what terms and with what government.

The capital is there. About 71 registered schemes cover more than 9-million people (roughly 15% of the population). They move something in the order of R250bn a year and hold reserves at an industry solvency of about 43%, against a statutory minimum of 25%.

A sector with that balance sheet and no participation offer is not protecting itself. It is deferring, exactly as the state has deferred. A procedural victory in Braamfontein would settle nothing; it would simply buy time in which to lose the argument again.

Then there is the fiscal signal, which currently points in two directions at once. February’s budget allocated about R7.8bn to NHI indirect grants. Real money for preparatory work, while also restoring inflationary adjustments to medical scheme tax credits, the very subsidy most NHI funding proposals contemplate redirecting.

Each decision is defendable on its own terms. Together, they tell you that health policy and fiscal policy are being run on different timelines. That is a sequencing failure, and sequencing is the substance of strategy, not a detail of it.

The question I would put to the ministers of health and finance is not one they are usually asked. It is not whether we can afford NHI. It is this: what are we building this year that we will need under every possible outcome, who owns it, and what does it cost?

A fund is not a strategy. A statute is not a strategy. A strategy is a sequence, with an owner and a price attached. The medium-term budget statement later this year is the obvious place to demonstrate that one exists.

I still want NHI to succeed. This is precisely why I would rather we spend this interregnum building the capability rather than waiting for permission to use it.

• Mpehle is CFO at Ultra Focused Medical Technologies, head of finance at Dr Mpehle Obstetrics and Gynaecology Suites and a board member and chief of strategy at Luminary Kora. He writes in his personal capacity.