NHI – What You Need To Know

Healthcare Funding Overview

While it was generally assumed this bill will be put on the back burner for a few years, the recent signing of the National Health Insurance Act by the President has focused a lot of attention on this issue.

Opinions are divided between those who decry the fact that access to decent healthcare is limited to those who are able to afford private medical aid and those who are alarmed that their current access to healthcare may be compromised.

While the advent of the elections raised the profile of this issue, some perspective has been lost with regard to the South African environment.

It is well documented that South Africa has a very unequal society and many interventions have been implemented in an effort to address this. However, to provide some context of the healthcare system a comparison to similar countries is useful.

In a recent webinar, Boshoff Steenekamp, a Health Strategist with Momentum Health Solutions compared South Africa with 20 countries with a similar GDP as well as with our fellow BRICS countries.

With current health expenditure as a % of GDP of over 8%, South Africa ranks second highest compared to the countries with a similar GDP and second only to Brazil when compared to the BRICS countries.

The natural response would probably be to try to explain this by the high amount that is spent on private medical aid but to put this into context we need to consider the following:

• When we compare government spending on healthcare, South Africa ranks 4^th highest with countries with a similar GDP and joint highest (with India) when compared to the BRICS countries
• When comparing the amount spent of private health expenditure to GDP of similar countries, South Africa ranks 7^th lowest and joint second lowest (with Algeria) when compared to the BRICS countries.

In summary, the amount of funding allocated to healthcare in South Africa compares very favourably with similar countries and the level private health expenditure does not represent a disproportional amount.

 

Budget allocation

The delivery of healthcare services in South Africa is the responsibility of the various provinces, through provincial hospitals, clinics etc. Funds allocated in terms of the national budget are allocated (via the Appropriations Bill) to the provinces in terms of an equitable share formula.

The individual provinces then have their own budget allocations for healthcare which may or may not equate to the national budget e.g. Gauteng and Western Cape have a higher allocation – reallocating funds from other areas to address their specific priorities.

The environment that has prevailed over the past 15 years has seen endemic corruption becoming entrenched, together with the public health sector becoming increasingly incapacitated which has resulted in the stifling of service delivery.

While the abolishment of the private healthcare sector is a populist notion, it is apparent that it is unlikely to resolve the issues being experienced in the public healthcare sector.

 

Challenges to the implementation of the NHI

The way the NHI bill is structured raises several fundamental obstacles that relate to its  implementation.  Some of these include

• The establishment of a national database.
  • A database of all South Africans needs to be created so that they are able to register with the NHI to receive benefits. Part of this process requires every individual to nominate their preferred healthcare facility in their district.
  • This database may be compared to setting up a sub-version of the department of home affairs where additional levels of control are required
  • It is not known how this database will accommodate foreign nationals who are also entitled to NHI benefits
  • This process will probably take a number of years to implement.
• Reorganisation of the healthcare section
  • All healthcare facilities and practitioners will have to register with and be contracted to the NHI to receive payments for services provided.
  • Private medical aids have taken years to implement and refine these systems which accommodate a mere fraction of the capacity intended for the NHI.
  • All government/provincial facilities need to be reorganised into autonomous legal entities so that they are able to register and contract with the NHI and be accountable. This requires hundred of agreements, each of which requires sign off from multiple government departments.
• Funding of the NHI
  • The NHI Act provides for:
    • The appropriation of general tax revenue as is currently done; however, the allocation will need to be increased significantly. With the increased requirement to service the national debt in the future, there will be fewer funds available to appropriate.
    • A payroll tax (a new tax)
    • A surcharge of personal income tax (a new tax).
  • The Act also provides for a reallocation of the current medical scheme credits (MSC) which does not make sense as the current MSC system is structured as a tax rebate and no revenue is generated that may be reallocated!
  • The burden on the small base of current taxpayers has been well-documented and extracting additional revenue from these taxpayer is limited.
• Conflicts with the constitution
  • There are several provisions in the constitution which are compromised by the current NHI bill which are already being challenged in the courts.

 

Low-cost benefit Options

While the improvement of access to an acceptable level healthcare for all South Africans is imperative the current NHI bill is highly unlikely to achieve this objective and represents a significant risk of creating chaos in the healthcare sector.

Currently between 9 – 12 million people rely on some form of private healthcare while between 45 – 51 million people rely on the public healthcare system.  Private medical aids have been advocating for the government to allow more access for people to what are referred to as Low-Cost Benefit Options. These are schemes which provide access to private healthcare for employees at lower income levels. This process could possibly see another 5 million people moved out of the public system.  Removing approximately 10% of potential claimants from the public system will also relieve a certain amount of pressure as well as allowing more funds to be applied to improving the service provided.

 

Summary

The fundamental challenges related to the NHI will take years to resolve.

The signing of the NHI bill has moved the focus from providing better service levels in the public sector to trying to ensure that the private healthcare is not sacrificed. The huge gap that currently exists between the private and public healthcare systems makes the effective merging of these systems practically impossible.

Significant potential and funding exist to improve the level of public healthcare, and this has to be the focus for the foreseeable future. If the public healthcare system could improve to an acceptable level the restructuring of the healthcare sector becomes more viable – if it is required at all.

It is apparent that the current NHI system is highly unlikely to be implemented in its current form (if at all) and the status quo will remain for at least several years.

Now that that the elections have concluded, if is hoped that attention will now be given to improving service levels and the healthcare system needs to be a priority.

 

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