EDITORIAL: NHI: good politics, bad law

The president’s assent to the National Health Insurance (NHI) Act just two weeks before voters go to the polls is a clever but dangerous move.

It is smart, because doing so on the cusp of a general election that is widely expected to see the ANC lose its majority for the first time in 30 years eliminates the risk that opponents manage to secure a politically damaging judgment against the act before votes are cast. 

But it is dangerous because while the president may boast that he has made good on the ANC’s promise to deliver on NHI, he has signed into law a scheme so deeply flawed it risks doing irreparable harm to the health system, triggering an exodus of highly sought-after medical professionals, and undermining investor confidence.

There is no question that SA’s health system needs reform. It is entirely unacceptable that the services people obtain hinge so heavily on their income. Only 15% of the population belongs to medical schemes that pool their monthly contributions to pay for private services, while the rest of the population relies on over-stretched and increasingly decrepit public health facilities or must pay out of pocket to see a private doctor or dentist. Nor can one take issue with the ANC’s commitment to the principles of universal health coverage, in which all patients receive care without fear of financial hardship. Under NHI, the government intends to replace SA’s two-tier health system with a single service that provides care that is free at the point of delivery, with the rich and healthy subsidising the poor and the sick.

The trouble is, as has been repeatedly pointed out by economists, healthcare professionals, organised business and civil society, the act will not achieve this noble goal. NHI is an extraordinarily large and complex initiative that aims to make sweeping changes to the public and private health systems under the direction of a government that presides over increasingly corrupt and dysfunctional public services. The Post Office, railways, electricity supply, water provision, schooling and the police are all in a state of disarray, leaving the public with little faith that the government can get things done.

The NHI Act sets in motion the ANC’s plan to establish a government-controlled fund that will purchase services from public and private healthcare providers, and bans medical schemes from offering cover for benefits provided by the scheme. This is a remarkable feature, as nowhere else in the world are people prevented from using alternatives to the state health system. It is as though the government were to prohibit the private sector from providing education or security, industries that have grown steadily over the past three decades in response to the diminishing capability of the state. The NHI’s block on medical scheme cover for the services it renders means that if it offers maternity care, a pregnant woman who doesn’t want to use the government facilities to which it directs her will be unable to pre-fund her care at a private facility via a medical scheme and will have to pay out of pocket.

The timing of the president’s signature on the NHI Act should come as no surprise. Each milestone in the plan’s evolution has been reached with a political goal in mind, not because a substantive improvement has been made to the policy and ensuing legislation. Despite extensive public input, the scheme set out in the act is virtually identical to that sketched in the green paper in 2011.

More than a decade after the first iteration of the NHI policy was released, there is still no clarity on how the scheme will be financed or rolled out. The health department has indicated NHI will cost R500bn a year and assumes that the medical scheme industry’s R200bn annual contribution income can be redirected to NHI by taxation. The notion that people will be willing to pay in taxes what they now set aside for medical scheme cover is patently absurd. Generating R200bn would mean increasing personal income tax by 31%, raising VAT from 15% to 21.5%, or instituting a 10-fold increase in payroll taxes, according to Business for SA’s estimates.

Equally worrying is the disjuncture between what the act and the government say about timelines. The former says it will be implemented in two phases, concluding in 2028. The president, health minister and officials say it will take many years, perhaps decades, to come to fruition. This is not a healthy state of affairs. It creates an overhang of uncertainty as damaging as the scheme itself.