The latest iteration of the National Health Insurance (NHI) Bill was tabled in Parliament on 8 August 2019. The government’s dream is to create a free universal healthcare system by combining the public and private healthcare sectors into a single Soviet system directly controlled by the minister of health. Like magic.
Don’t believe the spineless private sector actors who mouth lip-service to the government in support of the NHI, only because they know the danger of offending the government is that they will be frozen out when it gets implemented.
Wits’ Professor Alex van den Heever, who was a lead economist on the Health Market Inquiry, told Business Day that most schemes and medical aid administrators informed him in private conversations that they did not think NHI would work, but they support it publicly because it is the right thing to do politically.
Don’t believe the journalists who are socialists at heart, and believe the NHI is a “fabulous idea”, if only it weren’t so vulnerable to corruption. Yes, it is extraordinarily vulnerable to political patronage and crony corruption, and said journalist makes an excellent argument in this regard. In fact, this alone is an excellent reason to oppose the NHI. Some private sector companies would love another government teat to suck on, and the NHI will be a bountiful provider.
But it is certainly not a “fabulous idea”. It is a terrible idea that will have dreadful consequences, not only for the 15% of the population that benefit from private healthcare, but also for the poor for whom the government notionally means to give free access to high-quality healthcare, and indeed for the country’s economy as a whole.
A World Bank study on universal healthcare systems in 24 developing countries found that they create elaborate new complexity, and demand sophisticated technical and political capabilities. They also found a gap between promises and outcomes, including that implicit rationing of the promised benefit package occurs due to inadequate provider availability, geographic access issues, crowding at facilities offering these services, quantitative restrictions at healthcare providers, and long waiting periods. It also raised red flags about the fiscal risks a universal healthcare system implies.
South Africa’s track record suggests all these risks will loom large. It cannot manage the fiscal risk it already faces, with most state-owned enterprises (SOEs) already black holes for regular multibillion-rand bailouts. Adding a vast new SOE, which is what the NHI Bill does, can only make things worse. According to the SA Institute for Race Relations (SAIRR), it could cost R1-trillion per year, every year, by its full implementation date of 2025.
In the latest inspection report by the Office of Health Standards Compliance (OHSC), only seven out of 851 inspections (0.8%) resulted in an unqualified “compliant” rating. Fully 85% of inspections either raised serious concerns (23%), reported non-compliance (36%), or reported critical non-compliance (26%). Overall, the OHSC report concludes, there were no improvements in performance scores over time.
Half of the eight NHI pilot sites that were inspected were non-compliant, which means these sites did not perform any better than average. In fact, according to Business Day, a report on the 11 pilot sites found no measurable improvement in health outcomes. Children needing healthcare did not get it, computers couldn’t be connected to the internet, upgrade projects were not completed, staff positions could not be filled, medicine stocks could not be monitored, contracting doctors was much more expensive than anticipated, it overworked government-employed specialists who were already overburdened, and health measures among children and pregnant woman did not improve because there weren’t enough paediatricians and gynaecologists.
Doctors and other healthcare workers are already leaving the country in their droves, and the exodus is growing as the NHI looms ever closer.
The NHI Bill does not make registration for the NHI Fund mandatory, as previous versions of the bill did. However, it does propose to raise funding from general taxes, payroll taxes, a surcharge on personal income tax, and a repeal of tax credits for medical scheme contributions. It is mandatory to pay for it.
In addition, private medical schemes may only cover services not reimbursable by the NHI Fund. That means all basic healthcare services that are considered medically necessary as prescribed by a Benefits Advisory Committee, and all treatments that are included in the Formulary established by said committee, are off-limits to private providers.
All routine medical care will be for your own account, unless you “voluntarily” avail yourself of NHI services. You can only be insured for services and treatments that the NHI does not offer, deems not medically necessary, or for which it considers intervention not to be “cost-effective”.
If you happen to have a condition for which treatment is very expensive, tough luck. Accept your lot. Go blind. Suffer. Die. Do whatever you want, but the government won’t help you, and you won’t be able to afford what little remains of the private healthcare market.
The NHI is likely to destroy the private insurance market, as the SAIRR warns. Discovery Health’s share price took a 20% tumble after the new NHI Bill was tabled, and a brief recovery proved to be a dead cat bounce.
There is a potential loophole in the Bill, however. It says a user “is not entitled to healthcare services purchased by the fund if he or she fails to adhere to the prescribed referral pathways,” which means turn up at a primary healthcare clinic and patiently wait for the government bureaucracy, in its mercy, to direct you elsewhere. Does this mean that one could sidestep the NHI simply by not following the “prescribed referral pathways”, and remain in private healthcare with full private insurance? I doubt it, and in any case, I doubt this loophole will survive, since it undermines everything the NHI project is trying to achieve.
As one might expect when the government establishes a vast new monopoly, the enabling legislation explicitly exempts it from the provisions of the Competition Act. The NHI, of course, will determine exactly what treatments can be offered to whom and under what conditions, as well as what prices healthcare providers, doctors, nurses, specialists, pharmaceutical companies and equipment makers may charge. This means the NHI directly contradicts the Competition Act’s purpose, which is to “achieve a more effective and efficient economy in South Africa,” and “provide for markets in which consumers have access to, and can freely select, the quality and variety of goods and services they desire”.
Professor Van den Heever has himself penned a great article in which he declares the NHI to be “pie in the sky”. He writes that unlike in most countries, South Africa’s NHI does not seek to offer free healthcare only to those who cannot afford their own, but also to those who can.
The requirement to raise taxes equivalent to 3% of GDP “would be equivalent to a 31% increase in personal income tax or a 63% increase in corporate taxes”, he writes. The government seriously thinks there’s more room to tax South Africans, even though taxpayers are blue in the face and the economy is starved of oxygen.
Van den Heever also notes that a department that is responsible for the failures of the present healthcare system cannot possibly be expected to manage a much larger, more complex system such as the NHI. He says there have been no institutional or financial feasibility studies, despite the project being 10 years in the making, and the pilot projects provide no evidence that it’ll work.
He proposes that government instead institute major reforms of the existing public healthcare system, including divorcing it from political control, and that the private sector ought to implement the recommendations of the Health Market Inquiry.
“Only a failing health department could generate a proposal like this and take it seriously – let alone expect everyone else to join them in their fantasy,” he writes.
Tim Cohen, in these pages, wonders whether there are grounds for a constitutional challenge against the NHI, on the grounds that mandatory payment for the system and the prohibition on parallel private health insurance services amounts to mandatory membership of the NHI, which might contravene the constitutional right to freedom of association.
A better case, I believe, could be made that those who have paid into private insurance schemes will effectively have their assets expropriated by the NHI. This would violate the property clause of the Constitution. The industry itself could probably also make the argument that its business is being destroyed in an arbitrary and capricious manner.
John Kane-Berman, a former CEO and still policy fellow of the SAIRR, wrote an article entitled The NHI must be fought tooth and nail, a sentiment with which I wholeheartedly agree.
He also makes constitutional arguments: “You do not advance freedom by limiting choice. You do not advance it by removing rights. You do not advance ‘freedom of trade, occupation, and profession’ by imposing limitations on the rights of doctors, causing more of them to emigrate. You do not promote the rights of persons ‘to control over their body’ by empowering bureaucrats to tell them what medical procedures they may or may not have. You do not promote ‘access to healthcare services’ by setting up the one run by the state as the only one in town, because you have destroyed the medical aid industry. You do not promote ‘freedom of association’ by destroying that industry.”
He continues: “The Constitution requires the state to take ‘reasonable and other measures, within its available resources, to achieve the progressive realisation’ of rights that include access ‘to health-care services’. There is nothing ‘reasonable’ about using financial or any other kinds of coercion to force everyone into a monopolistic health care system run by a callous, corrupt, and incompetent government.”
If it’s not reasonable, I guess the NHI would fall under “other measures”, then, of the unreasonable, authoritarian and draconian kind. Still, it’s certainly not “within its available resources”.
The version of the NHI Bill now before Parliament does nothing to change my opinion of a year ago, that the NHI will be an unmitigated disaster. DM
Magician's tricks are not generally covered by intellectual property laws. They can be stolen and repurposed by anyone.