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There appears to be an unbridgeable gap between those arguing for and against it. From Moneyweb.

Government is vague on funding, but private sector estimates indicate that personal tax rates may have to increase by nearly 80%. Image: Shutterstock

The National Health Insurance (NHI) Bill, signed into law by President Cyril Ramaphosa on Wednesday, promises free healthcare to all South African citizens at the point of care.

Read: Ramaphosa signs controversial NHI Bill into law

Many see this as a cynical electioneering ploy by the ANC two weeks ahead of national elections, with polls showing it is likely to win less than 50% of the vote.

Cynical because there is very little certainty as to how the government will pay for a healthcare system that will push private medical schemes out of the services the NHI proposes to offer. If the NHI offers hip replacements, private medical schemes would be prevented from covering this service.

The government argues that universal healthcare is not only necessary but affordable.

What is the next step?

The NHI Bill now becomes law, to be followed by the establishment of the NHI Fund as an autonomous public entity and all that comes with that – appointing a board, nominations, interviews, shortlisting, and the appointment of a chair.

The Department of Health will prepare detailed regulations to govern the scope and functioning of the fund.

Read/listen: Litigation an option if NHI Bill is signed and promulgated this week – Busa

This could take six to 12 months, perhaps much longer, as the private sector is cueing potential legal challenges to the NHI on the grounds that it is irrational and unconstitutional.

What is wrong with the current healthcare system?

Government says access to universal healthcare is a human right and believes it has identified inefficiencies in the private healthcare system, particularly when it comes to prescribed minimum benefits (PMBs).

PMBs, a set of defined benefits as outlined in the Medical Schemes Act, include any emergency conditions, 271 medical conditions and 26 chronic conditions. These will be gradually phased in under the NHI over a decade or more.

Nicholas Crisp, deputy director-general for the NHI, has argued that residents in Diepsloot outside Johannesburg should not have to drive past numerous private hospitals to arrive at a public hospital for much-needed medical care.

The NHI aims to make these private hospitals accessible to all.

Crisp also points out that 8.5% of GDP spent on health in South Africa could be allocated far more wisely if placed in a single pool. This compares with an average healthcare spend of 5.6% of GDP in peer nations, often with superior outcomes.

The private sector has been accused of unnecessary medical diagnosis and spending, considering SA has the highest incidence of tonsillectomies in the world, while 72% of all C-sections in the country are performed in the private sector.

How will the NHI be funded?

This is where it gets vague. The government proposes introducing a payroll tax on employees, raising personal income tax, and ultimately capturing much of the roughly R250 billion currently spent on private medical aid.

Last year, Discovery estimated that the NHI would cost R859 billion for PMBs against the 2023 health budget of just R233 billion.

That’s a shortfall of R626 billion.

The government expects to raise about R100 billion from tax credits and government employer medical schemes.

A 1% payroll tax might raise another R30-R35 billion.

That still leaves the NHI nearly R500 billion short of Discovery’s estimates, in which case personal tax rates would have to increase by nearly 80% – a hopelessly unsustainable position.

Discovery CEO Adrian Gore believes medical scheme members under the NHI will be required to pay 31% more tax and receive 69% less benefits in return.

Read: NHI means 31% more tax and 69% less benefits for medical scheme members

Is the NHI open to everyone?

Yes, the NHI is open to all South Africans.

Once the fund is operational, they will need to register with it when attending a clinic, hospital, or general practitioner. They will not need to register again on subsequent visits.

Is the private sector against universal healthcare?

No, just how it is being introduced without proper public consultation (the government has ignored the extensive public comments it received), the uncertainty about the NHI rollout, and – crucially – how it is to be funded without breaking the private healthcare sector and the economy.

If private players are not against universal healthcare, what do they see as the sticking points in the bill?

Section 33 of the NHI Bill, which says: “Once National Health Insurance has been fully implemented as determined by the Minister through regulations in the Gazette, medical schemes may only offer complementary cover to services not reimbursable by the Fund.”

The wording “once fully implemented” – which may be decades away or never – creates monopoly conditions for the NHI.

No private medical scheme will be able to offer services that compete with those provided by the NHI.

This goes far beyond what is allowed in most other countries providing universal healthcare.

Another sticking point is the ‘certificate of need’, where the state effectively dictates where doctors can set up practice or expand their services.

Isn’t the NHI modelled on similar successful schemes abroad, such as the NHS in the UK?

Some consider the UK’s National Health Service (NHS) among the best universal healthcare providers in the world, but a 2023 survey found public satisfaction at a 40-year low of 29%.

That’s a rather abysmal vote of confidence in a model deemed suitable for SA.

However, the NHS is now 70 years old. It has certainly seen better years, with less intense waiting times for doctor and hospital appointments than at present.

How will the NHI impact South Africans?

There is a massive gap between the government and the private sector on this.

The government sees a high-quality healthcare sector open to all citizens free of charge.

The private sector argues that doctors, nurses, and other medical specialists will emigrate to countries where they are not on the state payroll and where the state does not dictate where and how they can earn a living.

The result will be a deterioration in the quality of healthcare, with all hospitals, in theory, open to anyone in need of care.

In the short to medium term, the NHI will not impact members of medical aid schemes.

As previously mentioned, the NHI will only reach full implementation a decade or more from now, so you should continue paying your medical aid subscriptions.

Will the NHI be challenged in court?

Almost certainly. NGOs, opposition parties and private sector healthcare providers have indicated as much. They believe the NHI is irrational, unaffordable and unconstitutional. It is also seen as stifling competition by excluding the private sector from services offered under the NHI.

How will corruption be prevented?

A pamphlet distributed this week by the government attempts to address this. Given the huge funds the NHI will have available for service purchases, it will be tempting to channel largesse to the usual suspects.

The fund will have a board and various governance structures in place – including the Health Sector Anti-Corruption Forum and the assistance of the Special Investigating Unit – to detect fraud and corruption.

The government’s latest promo on the NHI says the design of the NHI “is far less complicated than the present myriad of departments and medical schemes”.

“Everything that the fund does, all the contracts with providers and suppliers, and the common set of funded benefits, will be fully transparent,” it adds.

“Since every person will be entitled to the same benefits and treated the same way, there is far less incentive for fraud and corruption.”

Should we be worried?