On the heels of Discovery’s CEO Adrian Gore’s statements that the National Health Insurance (NHI) scheme was ”problematic”, IOL Business takes a deep dive into the the criticism of the NHI Act.
In May, Gore described the NHI Act as “flawed” and that it would take decades to implement the universal healthcare system. This did little to stop President Cyril Ramaphosa signing it into law, weeks before the May elections.
"We see no scenario in which there is sufficient funding for a workable and comprehensive NHI in its current form, hence our conviction that private sector collaboration is vital, and that full implementation of the bill remains a long way off, likely decades," Gore said.
"Significant flaws in the bill and the legislative processes followed in promulgating the bill, will also likely result in the bill being challenged on numerous fronts, leading to further likely delays.“
A problematic piece of legislation
Recently Gore again sounded the alarm bells around the NHI scheme, warning it would need exorbitant tax hikes to fund.
Gore said that the implementation of the NHI Act, in its current form, will essentially wreck the South African economy.
He made these comments at the company’s annual Discovery Day event and further emphasised that the scheme was unworkable and unfeasible.
“This is a complex issue. It is an intergenerational process that will take time, but it is a problematic piece of legislation,” Gore said.
“We have been unequivocal as business, as Discovery, and as a sector, that the NHI is unworkable without private sector collaboration,” he said.
“There is just not enough funding available if the NHI is imposed in a draconian form that excludes private medical aids,” Gore added.
Discovery has created a tax list that South Africa would need to implement to fund the roughly R200 billion needed for NHI each year.
This how they will tax South Africans
According to Discovery, they claim government would need to institute:
- A 31% increase in personal income tax or
- A 6.5% increase in VAT or
- A ten times increase in payroll tax
“That would wreck the economy and does not do enough for anyone. You need more funding,” Gore emphasised.
Gore is making predictions on assumptions
The tax predictions related to NHI as presented by Discovery are purely based on a model that based on assumptions that have not been made public, Foster Mohale, the Health Departmental Spokesperson said.
“It is also probably correct to assume the predictions are based on current health system structuring, with a high dominance of hospital care and very little use of alternative reimbursement mechanisms,” Mohale added.
“These two factors have been known to drive up health sector costs and thus will impact the predictions on tax implications.
“There is no proposal currently on the table that talks to the tax implications of NHI - the focus is on remobilising the current tax funding that is in the system (including tax credits and medical scheme subsidies) into the NHI Fund before looking at other options”.
He said that the NHI scheme will be funded using the current allocations in the system.
Mohale said that all personal health care allocations will be strategically collated to meet the health needs of the all South Africans as outlined in the NHI Act.
Unsustainable
The insurance company Momentum said that the implementation of the NHI bill in its current format is not sustainable as the South African economy does not have the required funds to support the implementation the scheme.
“Based on this, our belief remains that the current private and public system should collaborate to better utilise the experience and infrastructure of the private industry to augment the public offering and ensure we don’t lose critical experienced resources from our health economy,” Momentum said in a statement.
The company argued that the NHI Act’s limitation on medical schemes to only provide cover for services that are not covered by the NHI will be very harmful to the healthcare system.
“This means that many individuals who currently contribute financially to the health system will no longer contribute, and the entire burden of healthcare costs will be funded through taxes,” Momentum said.
“The current model, whereby revenue for healthcare is collected on a voluntary basis, will be limited to a small number of services. The creation of a single purchaser blocks individuals from contributing directly to their own healthcare costs, instead they will be taxed.”
“A fundamental challenge to the implementation of the NHI lies in the unavailability of state funding to finance the vast set of reforms. Without economic growth, government revenue is severely constrained.”
Momentum lamented that there are numerous areas of the NHI scheme that are very arduous to implement and will lead to a reduction in access to healthcare.
“These include, the requirements for adherence to a referral pathway, the requirements to register as a user, the creation of multiple new semi-autonomous national government entities without defined governance structures, the implementation of a health information system, reduced access to care for asylum seekers and refugees, the accreditation of healthcare providers while the vast majority of state facilities do not meet the requirements set by the Office of Health Standards Compliance (OHSC), the establishment of all the structures that are specified in the Bill, and many more,” the insurer said.
The company emphasised that South Africans should continue with their current healthcare arrangements.
The NHI is unaffordable
Two weeks ago, Busa called for an “urgent amendment“ to the NHI Act, as it was unacceptable in its current form.
The organisation said it was disappointed that despite commitments by the government to engage in the NHI scheme, structured discussions had not yet taken place.
Busa CEO, Cas Coovadia said the organisation was deeply concerned about the inappropriate rhetoric directed at those who have raised legitimate concerns regarding the NHI Act, in its current form.
“Raising these concerns is not only appropriate but in fact, the responsible and necessary course of action to ensure that the path that we choose as a country is both viable and sustainable,” he added.
“We have also been extremely clear in our position that the NHI, as is envisioned in the Act, is unaffordable, unimplementable and unconstitutional, and therefore requires urgent amendment,” Coovadia explained.
A meeting with Ramaphosa
This week, Busa and President Cyril Ramaphosa met to discuss the business organisation's major concerns over the NHI Act. The meeting also included the Minister of Health, Dr Aaron Motsoaledi and the Deputy Minister, Dr Joe Phaahla.
“Business and government expressed a shared commitment to the underlying objectives of the NHI, namely to achieve universal health coverage for all South Africans and address inequality in the health system,” the Presidency said.
The president has requested that Busa submit specific proposals on the remaining issues of concern as a basis for further engagement.
“Government remains committed to engaging with all stakeholders in good faith on the process of healthcare reform, and to finding workable solutions that will advance quality and affordable healthcare for all,” the Presidency said.
“This transformational health care initiative furthers our constitutional commitment to progressively realise access to health care services for all its citizens.
“At its essence, the NHI is a commitment to eradicate the stark inequalities that have long determined who receives adequate healthcare and who suffers from neglect,” Ramaphosa said.
IOL BUSINESS