Treasury expects NHI funding shortfall to rise to R55bn by 2030
Officials remain tight-lipped about how the ambitious plan will be financed, saying only that discussions are under way at a political level
The government’s original estimates for implementing National Health Insurance (NHI) are unaffordable in the current fiscal environment, and even a limited package of reforms will require an extra R33bn on top of the existing health budget from 2025/26, the Treasury said on Wednesday.
Officials remained tight-lipped about how the ambitious plan is to be financed, saying only that discussions were still under way at a political level.
NHI is the government’s plan for achieving universal health coverage, which aims to ensure patients receive care that is free at the point of delivery. The government is aiming to implement NHI by 2025, but questions still remain about what it will cost and how it will be paid for. The first piece of enabling legislation for NHI, which paves the way for a central fund to purchase services on behalf of the population, is currently before parliament.
“Originally, NHI costs were projected to increase public health spending from about 4% to 6% of GDP over 15 years. However, given the macroeconomic and fiscal outlook, the estimates to roll out NHI that were published in the NHI Green Paper in 2011 and in the White Paper in 2017 are no longer affordable,” the Treasury said in its medium-term budget policy statement (MTBPS), tabled in parliament by finance minister Tito Mboweni.
The medium-term budget sets out the dire state of the economy, with growth far weaker than expected and a reduction in both medium- and long-term growth forecasts. Economic growth is now projected at 0.5% for 2019, down from the 1.5% forecast in the February budget. It means the government’s revenue projections have been sharply reduced, and spending on goods and services is under increasing pressure from the state’s growing wage bill and the crisis in state-owned enterprises (SOEs).
“In this fiscal environment we had to look at how NHI could still evolve in a more affordable way,” said the Treasury’s chief director for health and social development, Mark Blecher.
The Treasury has developed an actuarial model with updated fiscal costs and a limited set of interventions intended to strengthen the health system. These include contracting with private sector GPs, extending the chronic medicine distribution programme, expanding the HIV treatment programme, scrapping user fees at public hospitals, tackling medico-legal claims and establishing the NHI fund, said Blecher.
The model puts the funding shortfall associated with the limited package at R33bn (in 2019 terms) in 2025/2026, rising to R55bn in 2030, he said.
The potential sources of funding for NHI were contained in a financing paper written by the Treasury, but it still required input from the health department, he said.
The revised consolidated health budget for 2019/2020 is R222.7bn and is expected to rise at a nominal 7% over the medium term. The health budget grows to R238.5bn in 2020/2021 and then rises to R257.2bn in 2021/2022 and to R272.9bn in the outer year.
Correction: October 30 2019
A previous version of this story incorrectly stated that the NHI shortfall would be R50bn in 2030, when it would be R55bn.