Business Maverick

PUBLIC HEALTHCARE

National Health Insurance is a big fat empty promise – experts

National Health Insurance is a big fat empty promise – experts

New healthcare legislation is unimplementable, unaffordable, unclear and unlikely to happen any time soon, say the experts.

The National Health Insurance (NHI) Bill has been passed by the National Assembly, but experts believe it is largely “unimplementable” and is unlikely to come into effect any time soon. 

Alex van der Heever, the chair of social security systems administration at the University of the Witwatersrand, says: “From the beginning, the bill was so flawed they [the governing ANC] were in a predicament where they could either try to amend the framework in Parliament, or give the ball back to the Department of Health and ask them to rework it, which would be very embarrassing.”

Peter Montalto, the managing director of financial adviser Intellidex, agrees. He told Newzroom Afrika the NHI was unlikely to happen within any reasonable timeframe as it was “logistically impossible” and there was a lack of clear information about funding.

In a vague reference to funding the NHI earlier this month, Health Minister Joe Phaahla said it “seeks to pool resources of those who can only contribute to the fiscus through indirect means such as VAT and other collections and those of us who are able and are already making fragmented contributions into 81 different schemes into one pool which can purchase services from both the public health system and private providers from lowest level of care up to the highest”.

That sounds similar to what many in the private sector are saying. It seems the Department of Health wants higher-income earners’ contributions to current private medical schemes to be channelled into public healthcare via additional taxes.

Van der Heever says the government appears to have ignored issues raised by industry stakeholders in favour of pushing through impractical legislation. “This talks to capability weaknesses … When you don’t have capacity you … carry on regardless.”

Phaahla says those who say the NHI is unaffordable base their opinions “on highly inflated costs amongst some of the private providers who are under pressure to keep delivering super [sic] profits”.

Let’s look at that. For the six months to March 2023, private hospital group Netcare posted revenue of R11.5-billion. Life Healthcare posted revenue of R10.6-billion for the same period, for the whole of southern Africa. Mediclinic did not post public financial statements as it has been bought out by Remgro.

One has to assume the minister refers to claimed “super profits” of listed private hospitals and not medical schemes. Because, surely, the minister of health understands that medical schemes offer members pooled benefits and are non-profit operations.

Back to costs. The 2023 Budget allocated R259-­billion to healthcare. Of this, R113-billion goes to district health, R49-billion to central hospitals, R46-­billion to “other health services”, R40-billion to provincial health and R11-billion to the management and maintenance of facilities.

So, the problem is not a lack of funding for the public healthcare sector.

“The amount SA spends on healthcare as a proportion of GDP far outstrips that of other developing economies,” observes Van der Heever. “We have a governance problem. There’s a substantial reduction in accountability in the governance framework and people have basically been stealing money from the state systematically. And they’re not being held to account for that.”

The Board of Healthcare Funders (BHF), which represents medical schemes, echoes his sentiment, saying, “to summarily ignore the many who voiced their concerns regarding governance structures and operational efficiency concerns, the concentration of risk in a single-payer system in an unstable economy featuring endemic corruption, and the many other concerns raised by state attorneys is short-sighted and highly unwise”.

The BHF has urged the government to consider a multipayer model to mitigate against the concentration of risk, to have a roll-out based on milestones not dates, and to heed concerns that the proposed NHI is susceptible to corruption by proposing alternative governance structures. 

Unresolved issues

Prelisha Singh, a partner at law firm Webber Wentzel, says that, despite approval by the National Assembly, there are many unresolved questions and concerns about the practical implementation of NHI.

“Many stakeholders and experts have raised concerns that [it] is simply unaffordable, particularly as it would require an extensive administrative apparatus. A related concern is the extent to which the NHI will rely on the public healthcare system to deliver services, and the capacity of that system to provide an acceptable quality of services. 

“Given the dire state of public healthcare in our country, it is surprising the government persists with plans to spend vast resources on implementing the NHI. Those resources would greatly improve the delivery of quality healthcare — and access to that care — if they were deployed directly in the public health sector,” she says.

Singh points out that the bill says the chief source of income will be money appropriated annually by Parliament. 

“This must be appropriated from collections of, among others, general tax revenue, a payroll tax and a surcharge on personal income tax. This… is, however, difficult to reconcile with another clause, which states that the [NHI] Fund will be funded through ‘mandatory prepayment’ (a term defined as ‘compulsory payment for health services before they are needed in accordance with income levels’), and a third clause which empowers the Minister to make regulations on ‘all fees payable… to the fund’.”

Key issues that are unaddressed include:

  • The extent of benefits to be covered by the NHI Fund and the rate of reimbursement — both of which are crucial to assessing the affordability of the NHI and its impact on the provision of quality healthcare;
  • The rules on portability, which will allow patients to be treated by service providers other than those with whom they are registered;
  • The referral pathways between service providers;
  • The coding systems to be employed; and
  • The relationship between the fund and medical schemes.

Singh says a key question is what role medical schemes will play and whether they will continue to exist. As it stands, the NHI Bill stipulates that, once the minister has determined the NHI is fully implemented, medical schemes “may only offer complementary cover to services not reimbursable by the fund”. It also says patients are entitled to “purchase healthcare services that are not covered by the fund through a complementary voluntary medical insurance scheme”.

In other words, medical schemes may not cover services covered by the fund. Since the fund is intended ultimately to cover a comprehensive range of benefits, medical schemes will shrink dramatically or disappear.

Adds Singh: “This regime is likely to face constitutional challenges on the basis that it infringes the right to access healthcare services, by forcing many people who currently access private medical care via medical scheme funding to rely on what is currently a woefully inadequate public healthcare system; the property rights of medical schemes and their administrators; and the right to freedom of trade, occupation and profession.”

Martin Versfeld, another partner at Webber Wentzel, says requirements for accreditation of service providers are onerous, including the submission of a “budget impact analysis” and there is a lack of clarity on how reimbursement rates will be determined.

“One would have expected the bill to make clear that payment rates must be set at a level that allows providers to cover their efficient costs and make a reasonable return. An accredited service provider must procure health-related products according to the fund’s formulary, and suppliers listed in the formulary must deliver directly to the service provider or establishment. This blurs the line between public and private procurement, reduces competition, and unduly restricts private service providers in the conduct of their business,” he says. DM

Gallery

Comments - Please in order to comment.

  • D'Esprit Dan says:

    Looting the public health system should come with a mandatory charge of murder, because people are dying to fund the lifestyles of the scum who loot. There should, over a certain threshold, be a mandatory life sentence, with no option of parole. Instead, the ANC is licking its lips at the prospect of another feeding frenzy that will make the Covid corruption look like a picnic. The Minister, his advisors and the rubber-stamp MPs should all be tried for treason.

    • Jimbo Smith says:

      On the money! The atrocities inflicted on the poor through catastrophic failures of the public health system have undoubtedly accounted for many unnecessary deaths. Not a word from these incompetent “Ministers” and their lackeys slurping away at the feeding trough. If a Commission were appointed there would be a huge number of these “Administrators etc.,” being lined up against the wall for crimes against humanity.

  • Jennifer D says:

    Having worked in the public healthcare environment, one can only despair. Only in the Western Cape can one expect any sort of health care to prevail if the NHI becomes a reality. Anyone with any sense and in need of healthcare would be compelled to save for trips to other countries for healthcare – what is offered in SA is nothing short of disgusting.

  • Gretha Erasmus says:

    Can DM please give us a run down of a couple of different countries ‘ universal or near universal health systems?

    It seems we are trying to copy the UKs NHS which is set in one of the top 5 economies in the world and is beset with problems

    Why are we not trying to copy the Thailand system or the Brazilian system, countries with similar economies, where universal health care coverage is achieved through a multi funder (a mix of medical aid and government payers) system.

    The government keeps throwing out this false statement that u overs heth care can only be achieved by the government as the single payer.
    And that is not true for the MAJORITY of countries who have UHC. The majority of countries with a form of UHC have a multi layer system.
    But the DOH keeps going on these rants that anyone who opposes their particular form of NHI is against UHC and don’t care about the poor, which is not true. It is precisely because we care about the level of care available to the most vulnerable in society that we CANNOT have their disastrous version of NHI

    • Alan Paterson says:

      Indeed the NHS has problems but these are positively miniscule compared to SA. Population of UK is about 10 million more than RSA. At the end of it all medical service is all about doctors (and nurses but leave that aside for now). Medicine is also a labour intensive discipline. There are about 140,000 NHS doctors with 45000 junior doctors striking again shortly. RSA has a total of 30,ooo+, junior and senior. UK, Ireland, Australia, New Zealand, Canada are all hiring. Their governments are relatively stable, we have the ANC. Come next year the ANC promise will surely be one of vote for us and “shortly” you will receive treatment at a hospital near you. And the masses will be fooled, once again.

      • Nicoleen Schuld says:

        We have family in the UK. My sister-in-law must wait 5 years to get a hip replacement. My brother-in-law in Canada was supposed to wait 2 years for back surgery. Luckiky, he knows a director who has a neurosurgeon as a friend and he could squeeze him in. Canada being a 1st world country….

  • Paul T says:

    Not happy just with destroying the public healthcare sector the ANC has their sights set on to private healthcare. They truly do EFF-up everything they touch.

  • Karl Sittlinger says:

    When the ANC tried to implement the etoll fiasco, OUTA was created. I hope we get something similar sorted for this new madness by the ANC. I then hope they tie them up in court for a long time, using every recourse, every step in the legal system, just like the ANC has been doing for everything it is ever accused of, currently as one example the cadre deployment records. Maybe we can get the Stalingrad tactic to finally be used for something good and at the same time have the ANC taste some of their own medicine.
    Its not the concept of free health care I oppose, but the who (the corrupt ANC) and the how (with zero plan and forcing out private Healthcare) of the NHI that I believe we need to fight tooth and nail. If they at least start fixing what is broken due to the ANCs never ending cadre gobbling feeding trough, we can gladly start this conversation again, but till then we need to resist!

  • Richard Baker says:

    All well and good and “the experts” are probably correct, but that’s not going to stop the ANC government forcing NHI through nor preventing the plunder of existing medical schemes reserves and increasing burden on the very small tax-base.
    It cannot be disagreed that the private scheme sector is fragmented and over expensive plus that the private health providers appear very profitable for shareholders (acknowledging their resilience during Covid).
    The medical practitioners also seem well rewarded.
    The public health system has all but collapsed and is riven with incompetence and corruption.
    The ANC government is incapable of resolving its utter failures here.
    Righteous but well reasoned objections are all very well but unless all parts of the private sector come up with a viable solution one can see NHI being forced upon the country and the economy wythe predicted dire consequences.

  • Stephen Jackson says:

    Pure electioneering on the part of the ANC. They will spin it as a wonderful initiative on their part, just to gain more votes. Deep down they probably also know that it won’t work.

  • Jane Crankshaw says:

    I wouldn’t be so sure about failure to launch! It might be a failure in the long run but the temptation of easy pickings in the short term will be too much for the connected to ignore! The Parliamentary pass also adds credibility to the ANC in time for elections…seems like they will make any outrageous comments to garner votes – just like Zuma and his big “free education” promise – where is that now?

  • Vas K says:

    Even though well meant, any discussions and reasoning are futile and a total waste of time. Surely everybody knows by now that NHI Bill is just a pathetic attempt by The Mafia to create a new source for looting, now that all the traditional sources have been looted almost empty. The only discussion should be how to get rid of The Mafia.

  • Rob Blake says:

    The ANC thinks we are going to be lulled into submission by the propaganda being espoused by their puppet Dr Nic Crisp (aka Dr Goebbels). Speaking to my physician recently he said that the medical fraternity do not trust him either. Alex van der Heever also went on record in the KYKNet TV program “In Gesprek” saying that Crisp talks nonsense and is factually incorrect. In any event, anyone in a senior government position like a deputy director general do not get there without being card-carrying members of the ruling party, none of whom can be trusted to be truthful or to have any integrity.

  • Fanie Rajesh Ngabiso says:

    The simple fact that articles like this need to exist is embarrassing.

    It’s like having to justify 1+1 = 2

    Government – for the good of everyone, be brave enough to admit that you do not have the skills to undertake an exercise of this magnitude at this time. Focus on the basics: tackle corruption, provide power, provide clean water, provide decent roads.

    These will empower the economy, allow people to earn money, providing much more option for provision of a solid healthcare system.

  • Rae Earl says:

    The ANC is an organisation the thrives on theft from SOE’s. They’ve plundered colossal amounts of money from Eskom, Denel, SAA, Transnet, SABC, and wherever else they could find more in smaller stats owned enterprise of which there are over 120. Most of them are now either bankrupt or in serious financial trouble. The ANC urgently needs another cash cow to fund the retirement packages of the party’s cabinet ministers. The NHI will tick all the boxes. Huge cash inflows, massive and confusing administrative requirements, all run under ANC control, and, like the already bankrupt SOE’s, no court cases or convictions for those that get caught. This is simply another Free Education or Russian Nuclear Power deal. The 2024 elections better sort this project out and kill it prior to implementation. The Western Cape health system works. That should be enough indicate which party gets their vote rather than once more handing it to the ANC looting machine.

  • Shaheen Mehtar says:

    I don’t think one should throw the baby out with the bath water. A phased approach towards NHI would work very well for lower resourced setting particularly if there is accountability for performance within the public health sector. I agree that there is a need for a “private” scheme, but like several European countries, a national medical insurance scheme works very well, but it does require a certain percentage of the population to pay taxes.
    Having worked in several Global North countries in my life and seen different systems at work, I can see the need for leveling the playing fields as far as health delivery is concerned, especially in South Africa, but one should look at private-public partnerships graduating progressively towards the main goal of the NHI.

  • Johan Buys says:

    Somebody at the medical research council confided that we spend more on administrators than we spend on nurses. National, provincial, metro, district are stuffed with very highly paid pen-pushers. We don’t have a budget problem (R260 billion), we have a problem with efficacy of spend problem. We spend far more per GDP or per Capita than our comrades at China or India but whereas they are having results (life expectancy at birth), we are not.

    I had TB in 2021, it wasn’t fun but thankfully all fine now. TB is fought by state clinics, not private sector. In the nine months of treatment I never visited a private provider. Nurse Betty at the clinic soldiered on despite the absence of visiting surgeons general that are supposed to review in person.

    If we reduced TB deaths by 10% it would be a greater impact than ENTIRELY eliminating all road deaths in SA. Which do you think is easier? If we fed R200b more to national health I expect ¾ will be spent on R2m per year administrators instead of eight R250k per year Nurse Betty.

  • Confucious Says says:

    Please god it never happens. its probably the biggest single death knell possible for SA, short of jellybaby coming to any sort of power.

Please peer review 3 community comments before your comment can be posted

X

This article is free to read.

Sign up for free or sign in to continue reading.

Unlike our competitors, we don’t force you to pay to read the news but we do need your email address to make your experience better.


Nearly there! Create a password to finish signing up with us:

Please enter your password or get a sign in link if you’ve forgotten

Open Sesame! Thanks for signing up.

We would like our readers to start paying for Daily Maverick...

…but we are not going to force you to. Over 10 million users come to us each month for the news. We have not put it behind a paywall because the truth should not be a luxury.

Instead we ask our readers who can afford to contribute, even a small amount each month, to do so.

If you appreciate it and want to see us keep going then please consider contributing whatever you can.

Support Daily Maverick→
Payment options

Become a Maverick Insider

This could have been a paywall

On another site this would have been a paywall. Maverick Insider keeps our content free for all.

Become an Insider
Elections24 Newsletter Banner

On May 29 2024, South Africans will make their mark in another way.

Get your exclusive, in-depth Election 2024 newsletter curated by Ferial Haffajee delivered straight to your inbox.