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The unknowns of National Health Insurance are exactly what we should be afraid of


Michael Settas is a member of the Free Market Foundation’s Health Policy Unit. He has provided strategic consulting to health funders and managers, and currently runs his own health insurance business.

The argument by the chairperson of Parliament’s Health Committee, Dr Sibongiseni Dhlomo, that citizens should not fear the unknowns of the National Health Insurance is disturbing. Government’s virtual absence of technical policy analysis since NHI became official policy is exactly that type of unknown that is grounds for great alarm.

It was India’s late Prime Minister Indira Gandhi who once said, “Beware of ministers who can do nothing without money, and those who want to do everything with money.”

She was warning against the very same argument currently being proffered by Dr Sibongiseni Dhlomo, chairperson of the Portfolio Committee on Health in the National Assembly, that more taxpayer money for the National Health Insurance (NHI) will fix South Africa’s health woes.

Dr Dhlomo’s article in Daily Maverick on 3 March 2020 arguing that citizens should not fear the unknown of the NHI is disturbing casuistry, since government’s virtual absence of technical policy analysis since NHI became official policy in 2009 is exactly that type of unknown that is grounds for great alarm.

The fact that the NHI Bill has been passed by the National Assembly, without any understanding of how much it is going to cost or how the very technical and complex process of implementing it is going to be realised, is deeply concerning. These are unknowns of considerable importance to which no answers have even vaguely been attempted by the government.

Any reading of the Auditor General’s report on the Department of Health over the past decade is profoundly disconcerting and in this vein, Dr Dhlomo enjoins us to support the Anti-Corruption Health Forum, launched by President Cyril Ramaphosa. But if the president and Dr Dhlomo were serious about fighting corruption, why would they support the flawed governance structures proposed within the NHI Bill? Reading the NHI Bill leaves only one conclusion – the poor governance structures will undoubtedly endorse even higher levels of political interference and corruption and, worse still, it will have more money with which to do so.

The NHI’s governance structure is analogous to that of the National Student Financial Aid Scheme (NSFAS) – where appointed administrator Randall Carolissen declared it in need of a complete revamp if it was to eradicate the pervasive corruption it has experienced over recent years.

Dr Dhlomo declares further that the disproportionate spend between the public and private health systems is immoral – he attempts to take the sanctimonious higher ground yet it should be his own government that should show contrition for the suffering that ordinary citizens experience under the public health system. He repeatedly bemoans insufficiencies within the public system but comparisons with peer countries show that our per capita public health budget is within the upper half of the spectrum for middle-income countries, yet our health outcomes are among the worst in the world.

He further argues that “economists across the world advocate cross-subsidisation, where the rich support the poor to improve their quality of life”. He is walking the now well-worn path of blaming the private sector for the woes of the public sector. There is zero evidence to suggest that the existence of the private sector has any negative impact on the public sector.

Factually, there is a substantial subsidy from the private sector to the public sector. The wealthier citizens pay the taxes that fund the public system and, in addition to that, reduce the burden on the public health system by purchasing their own private cover. The public sector attains reduced prices on medicines and materials on large-scale tenders from private suppliers and those same suppliers then obtain their profit margins with higher prices from the private sector. This is an implicit yet substantial subsidy.

If Dr Dhlomo believes that the government can access the private money currently paid to medical schemes via additional NHI taxes, he is sorely mistaken. Contributions to medical schemes may be a grudge purchase but citizens are purchasing peace of mind that quality healthcare is at hand if required. To raise taxes by an equivalent of what members spend on medical scheme contributions (R192-billion for 2018), would require an increase in personal taxes of around 39%. This is never going to happen.

His further argument that the Health Market Inquiry (HMI) into the private health sector is vindication for NHI is also disingenuous. One of the primary findings of the HMI was that the government failed to regulate the private sector appropriately – and subsequently, it was neither competitive nor efficient. If anything, the HMI’s findings are that the government’s negligence over the past 20 years is largely responsible for the astronomical cost increases seen in the private sector.

Dr Dhlomo also drums up the now moribund analogy that Britain implemented the NHS in their recessionary economy post the Second World War. Britain is one of only a handful of countries that implemented a monopolised single-payer national health system – similar to what the NHI proposals are. And the NHS’ insufficiencies show in the poorer outcomes that it achieves when compared with its peers. The NHS has steadily moved away from the doctrine of monopolised central control by implementing incremental changes over the past three decades that resemble decentralised internal competing markets. These have delivered promising results for the NHS but nonetheless it amply emphasises that the British government has abandoned the tenets of monopolised central control that once characterised the NHS in favour of free-market policies that have improved outcomes and better served the demands of patients.

The promise from the NHI to deliver comprehensive care that will be free to all citizens is a very large claim – and to wrap this up in populist garbage that it is the private sector that is to blame for the current lack of public service delivery makes the promise even less believable.

If we are to have constructive dialogue on improving the health outcomes of the nation, then some semblance of reality would be required in order to bring all stakeholders – both private and public – around the table. The current anti-private sector rhetoric from the government is only going to drive up opposition to NHI and will probably see the private sector taking to the courts if the NHI proposals are implemented as they stand.

The public sector has numerous challenges – this is no secret. The private sector has its own set of challenges – also no secret. But the private sector has the capacity and the willingness to expand healthcare services to more citizens. The government would do far better to engage that willingness, wrapped in the framework of the recommendations from the Health Market Inquiry.

Implementing the HMI recommendations would bring cost relief to the private sector, thus expanding cover to more citizens willing to purchase private care and subsequently reduce government’s own financial burden in delivering care to the balance of citizens who cannot afford to purchase private care.

Given the country’s current fiscal position, it’s a win-win situation – especially for the citizens of South Africa. DM


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