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After the Bell — the election hoax that is the NHI Act

This government hasn’t yet earned the right to try to implement a system as huge and complicated as free healthcare. I for one would be so much more inclined to support the government’s intention here if it could run a post office, for example, but it can’t.
After the Bell — the election hoax that is the NHI Act President Cyril Ramaphosa after signing into law a national health bill that aims to provide universal coverage to South Africans, at the Union Buildings on 15 May 2024. (Photo: Reuters / Siphiwe Sibeko)
Tim Cohen
By Tim Cohen
15 May 2024
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At last, very late in this election cycle, we have a real policy debate; it’s just a pity it is only a few weeks away from the actual vote and therein lies the problem.

The debate around the National Health Insurance Act puts a free-at-the-point-of-use (I’ll shorten this to “free” for the rest of this article) national health service directly on the agenda. It’s a great debate to have, partly because the issues involved are very complex and have an enormous impact and, as it happens, cost.  

At root, however, there are only three issues to consider: 

  1. Does free healthcare work?;
  2. Will it work in South Africa at this moment in history?; and
  3. Will the NHI Act, as legislated, bring about the desired result?

The answer to the first question is, I think, on balance, yes. Take a look at the graph below.  

NHI

This is a recent comparison of national health systems; the key figures to compare are the US, which has a mostly private system, and any number of European countries, which have largely free systems. The US is spending just below 17% of its GDP on healthcare and getting results that are notably poorer than Italy, for example. But of course, it’s not as simple as this. 

One of the questions people never ask is whether it would be possible for European countries to get the healthcare results they do if the US healthcare system was also generally free at the point of use. One of the main reasons Americans pay more for healthcare is because medicine is hugely more expensive there — pharma companies recoup their enormous research budgets mainly in the US. However, the benefits of US medicinal research, which has a more entrepreneurial system, are utilised all over the world. So in a sense, European systems are freeloading off US entrepreneurial progress. 

It’s also worth noting that even between free systems, there are very big differences in outcomes. When I lived in Europe, my German friends said they would never go to a British National Health Service (NHS) hospital, and you can see why in the health outcomes. The NHS is a fabulous system, from a South African perspective, but the maternal mortality ratio is double that of Germany’s, so it has its problems too. It shows that implementation is key. 

But, for the sake of argument, let’s give the free systems the thumbs-up in a general sense. There is a good reason from economic theory to do so, because when it comes to making choices about healthcare, we the public are at a huge informational disadvantage.  

A market economy, ie, the kind that works, is based on free choice, but free choice requires more or less equal knowledge between buyers and sellers. In a healthcare system, we don’t and really can’t second-guess our doctors.  

But above all, the free at the point of use system is just fairer. Even for me, a dedicated believer in free markets and entrepreneurship, I’m happy to accept the utility of wealth disparity if it’s based on fair competition and is an outcome, not an initial condition. But conceptually, healthcare inequality is unacceptably grievous. 

Read more in Daily Maverick: Understanding the National Health Insurance Bill – Six articles to read

So, the second question: Can SA introduce free healthcare now? The answer to that is clearly “no”. Most of the Western free systems were introduced in the shadow of war when there was a huge public consensus on the need for fast, effective healthcare systems. Populations were willing to make enormous sacrifices to ensure that these systems were established. They are today massive, massive systems.

The question that the SA situation poses is the opposite: can you go from an established dual system with some free healthcare at the point of use, and a private health insurance-based system, to a single, free-at-the-point-of-use system? In other words, you are asking everyone benefiting from the existing healthcare insurance system and paying for it, to give that up in favour of a system where they will get worse service. Really? That’s going to work? 

Enormous hypocrisy

I don’t think that is realistically feasible and you can see that in the enormous hypocrisy of the politicians who voted for the NHI Act, even though they are all using private healthcare. The reason is understandable: the government system sucks. 

SA’s child mortality rate is about 24 per 1,000 live births, and there are 88 maternal deaths per 100,000 live births. The flip side of this statistic is that SA’s child mortality rate is improving rapidly — and here is the irony — as more people join the private system. SA’s infant mortality rate is down by about 20% in the past decade. Will degrading the private system increase or decrease this figure? That depends, obviously, but my guess is it will make things worse.

And question three: Will the NHI Act bring about a free system? Obviously, that’s the intention, but sadly the Bill itself is gobbledygook. Just for a start, it doesn’t define healthcare, and because it doesn’t, its cost is unknowable. If the intention is an allopathic system, then it will cost at least an extra R200-billion a year, on top of the existing R250-billion the government spends on the current generally free system.

Read more in Daily Maverick: 2024 elections

That will be a bit less than the R270-billion South Africans spend on private healthcare. If implemented now, it would bankrupt SA, but knowing that, the intention is to implement it incrementally. However, the general assumption is that private systems are going to reduce their fees as the government allocates to itself, progressively, a monopoly on specific healthcare functions handled now by the private sector. Really?

Even the name is a misnomer: it’s not an insurance-based system — it would be great if it were. It’s really just a taxation-based system, with the money piled into a fund controlled by an institution essentially separate from the government. Does that not scream at you: “This is going to be a huge, corrupt mess”?

The ways it seemingly violates the Constitution are multitudinous. For example, it essentially designates healthcare as an exclusively national function (very ANC, BTW), in contradiction to the Constitution, which considers healthcare a joint national-provincial function. Leon Louw from the Freedom Foundation calls it “the biggest, most idiotic, most unconstitutional, most counterproductive and most corruption-prone law in history”.

The fact is that this government hasn’t yet earned the right to try to implement a system as huge and complicated as free healthcare. I for one would be so much more inclined to support the government’s intention here if it could run a post office, for example, but it can’t. So forgive me, but until we have a little more track record for something as important as our healthcare, I’m going to continue paying those extortionate private healthcare fees. DM

Comments (10)

Bruce Sobey May 16, 2024, 12:05 PM

Interesting that Israel is omitted on that table of comparisons. From what I understand Israel also has universal health care which is one of the cheapest in the world. From Wikipedia "The Israeli healthcare system is based on the National Health Insurance Law of 1995,[1] which mandates all citizens resident in the country to join one of four official health insurance organizations, known as Kupat Holim (קופת חולים - "Patient Funds") which are run as not-for-profit organizations and are prohibited by law from denying any Israeli resident membership." I suppose it is too much to ask that the ANC to look at some of the best in the world systems first before trying to implement something like NHI.

mfswan@live.com May 16, 2024, 01:03 PM

Ah but it is Israeli.

Hari Seldon May 17, 2024, 09:10 AM

Israel doesnt have a tiny% of the population paying tax! Their tax base is huge.

Wilhelm Boshoff May 17, 2024, 06:38 AM

I suspect this might be a more humbling experience to the government than eTolls. Resistance will be on a national scale and from all fronts simultaneously.

Steve Davidson May 17, 2024, 07:24 AM

One thing. Excuse my ignorance, but how can it be called "free-at-the-point-of-use" when you're being forced to pay for it one way or the other, but just in advance?

William Nettmann May 19, 2024, 01:14 PM

That is pretty much what free at point of use means. Another example would be tolled roads vs untolled roads. Untolled roads are paid for through force one way or another, and tolled roads are pad for at the point of use. No free lunches!

Stephen Mcbride May 17, 2024, 08:23 AM

A point missing from the above is that the act does not specify what is offered by the NHI, what is not offered by the NHI and what will be the extra cost. The nitty gritty of how much it will cost each person, how much it will pay service providers, how many people will be needed to service anyone is not addressed at all in the bill. It is like making a law that everyone must get adequate food everyday but not addressing how. How about a more practical "law" there will be 1 nurse per 2000 people at the cost of R25000 per month per nurse who house visit at least once per week and refer people to doctors where necessary. Everybody charged 0,1% of their salary. Now we can criticize the bill as to not enough money, too few/much nurses, not enough trained doctors etc. But as it is the bill says nothing.

clive87@gail.com May 17, 2024, 08:30 AM

Just look at the most basic stat from that list: expenditure per capita. It comes to approx US$ 5 000 in PPP dollars. SA per capita INCOME hovers around US$ 13 000 PPP. So more than a third of our INCOME must go into this scheme IF we can achieve West European efficiencies.. Currently entire state expenditure is a third of GDP. There is a problem with the math somewhere.

Hari Seldon May 17, 2024, 09:07 AM

Just to add though that the "extortionate" private healthcare fees are not extortionate. Our private healthcare system needs better regulation but its a lot more efficient and cost effective than most other private health systems. A little story to illustrate this: a friend from the US developed acute kidney failure in Cape Town and was admitted to Mediclinic for 2 nights for treatment. He walked out much better. He said the level of care was excellent, the doctors superb but the nursing care a little patchy. His bill was R22,000. For equivalent treatment in Nevada he reckoned the bill would be close to 40,000 USD. Just take that in for a moment - thats 700,000 rand compared to 22,000 rand. Yes the US is expensive but our private healthcare is cost-effective.

mally2 May 17, 2024, 04:27 PM

My son and grandson are MDs in Canada. They get paid by the government and not the patient and people can visit any doctor of their choice. However Canada is a far cry from SA in every aspect of life. Also because of a shortage of doctors Canada has recently doubled the fees paid to doctors per procedure or visit.

Water Buffalo May 18, 2024, 09:22 AM

You are my fav writer here Tim. I really enjoy your writing.

Bevan Jones May 19, 2024, 11:15 AM

It's going to be a toss-up between who is most corrupt.... a) The medical aid schemes, who charge insane rates and receive discounts from the medical profession versus cash customers. Whose profits go to their shareholders. b) Or the government, who no doubt will squirrel some of the fund's profits to friends and family. Practically, with demand far outstripping supply, one would expect rates to rise. But government will cap rates, and thus no incentive to invest in more and better healthcare facilities to meet demand. Thus, the queues for even the simplest of procedures are going to be decades long. And with doctors no longer able to print money as they have in the past, most will emigrate and ply their trade overseas.

John v Gottberg May 19, 2024, 04:33 PM

With reference to Germany and the UK - both countries are mixed Private/Public health systems, with residents having a choice as to whether they would like to opt out of the National Health program and join private health care. In both countries about 8 million people are privately insured (about 10% of the German population and 12% of the UK population). In Germany you need to earn above a certain threshold before you can choose to go Private. And tenured civil servants ("Beamten") are typically privately insured. IF you are privately insured in Germany, you have certain privileges, such as prioritised appointments, free doctor choice, no waiting lists, no queues, better rooms in hospitals. Is all of this sounding familiar? Germany and UK are not much different to South Africa in some respects. The big difference is that everyone earning an income and not privately insured is required to contribute to the GKV in Germany and NHS in the UK. In Germany 58 million people contribute to public health insurance. In South Africa, there are only 7 million tax payers - and this is where the NHI logic fails. We do not have enough economically active people in SA to support NHI. Government should rather focus on creating infrastructure to broaden the economy. But sadly the political elite have chosen rather to enrich themselves at the expense of everyone else, and cynics are probably correct that NHI may become just another enrichment scheme.