Business Maverick

South Africa Says Health Plan Is Affordable, Won’t Add to Debt

By Bloomberg 29 August 2019
In the context of the raging debate around the latest NHI Bill, we should remain vigilant of the considerable risk that NHI slips down the same slippery slope to over-privatisation of our public healthcare system, say the writers. (Photo: Leila Dougan)

South Africa’s government will roll out a national health insurance plan at an affordable pace and ensure it doesn’t add to the nation’s debt or place its finances at risk, Health Minister Zweli Mkhize said.

“We are going to be very cautious in the way that we do it,” Mkhize said in an interview in Johannesburg on Wednesday. “We are not going to suddenly throw something here that bankrupts the country.”

The ruling African National Congress decided in 2007 that the controversial program was needed to broaden access to medical treatment in a country where 84% of the population of 58.8 million lacks private insurance and relies on a public system with too few doctors and dilapidated facilities. The government outlined the framework for its implementation in a draft law published earlier this month.

The National Treasury initially assessed the cost of the program at 256 billion rand ($16.7 billion) a year by 2026, a figure that’s now being revised upward. The plan’s critics say it isn’t affordable and the government lacks the capacity to operate it.

The Treasury backs the prudent implementation of NHI, Nicholas Crisp, a consultant to the health department, said in the interview.

“This is not going to break the bank,” Crisp said. “The 250 billion rand is not new money, it’s 220 billion rand that’s currently in the system plus, depending on how Treasury rejigs the levers, about another 30 billion in five years time. That’s the size of the envelope that we are looking at.”

Inequality Gaps
In power since the end of apartheid in 1994, the ANC has struggled to ignite economic growth and narrow one of the world’s widest income-inequality gaps. Disgruntled communities frequently stage violent protests at a lack of government services, housing and jobs. The unemployment rate stands at 29%, the highest in more than a decade.

The inequitable access to health care is untenable, according to Mkhize.

“Sixty-six percent of the specialists are in the private sector serving 15% of the population,” he said. “If nobody can see the disparity in that situation, then it’s a real problem because it means that we have a South Africa that is happy to have gotten rid of apartheid but it still doesn’t want to correct inequality. That is the fundamental issue of the NHI.”

Read more about NHI

While many of the details of the plan have yet to be finalized, it does signal a diminished role for private insurance funds, which will only be able to offer complementary services once the NHI is fully implemented.

The government intends procuring services from private hospitals and doctors at rates to be determined by the state. It also wants more accountability, transparency and tighter regulation of the private health-care industry, Crisp said.

‘More Money’
“We can’t go on with a situation where people are getting less and less care for more and more money,” he said.

Mkhize said the government will introduce measures to ensure funds designated for the NHI aren’t looted, having learned some hard lessons from the plunder of billions of rand from state entities, including cash-strapped power utility Eskom Holdings SOC Ltd. The NHI won’t be funded through debt and its finances will be ring-fenced, with an anti-corruption unit supported by the police’s Special Investigating Unit and the National Prosecuting Authority helping ensure they aren’t misappropriated, he said.

“We must accept the criticism on the maladministration at Eskom, South African Airways and other state entities,” Mkhize said. “I think it’s a painful lesson for the country, but the plus side of it is that we know such a thing can happen and we need to work to prevent it.”

–With assistance from Antony Sguazzin, Janice Kew, Prinesha Naidoo and Gordon Bell.

To contact the reporter on this story:
Amogelang Mbatha in Johannesburg at [email protected]

To contact the editors responsible for this story:
Benjamin Harvey at [email protected]
Mike Cohen, Paul Richardson


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