LETTER: NHI cost estimates are exaggerated

DA deputy health spokesperson Karl le Roux’s article refers (“Motsoaledi should come clean about NHI cost before implementation”, December 9).

National Health Insurance (NHI) seeks to fulfil the promise of the constitution by ensuring that access to healthcare is based on need, not income. It aims to dismantle the apartheid-era dual system that perpetuates inequality. This is not just about healthcare; it’s about justice, redress, healing dignity and equity.

The private sector’s lucrative financial model is built on exclusivity and high costs. It is no surprise that this sector — and the DA, which often aligns with its interests — opposes a system such as the NHI, which aims to redistribute resources and ensure universal access.

The DA’s claim that the NHI will bankrupt the country is based on misrepresentations and exaggerations. Medical aid Momentum claims the NHI will cost R1.3-trillion, but this figure assumes a Rolls-Royce system that mirrors private healthcare for all. A closer look at international examples shows that universal healthcare systems are not only affordable but also improve overall health outcomes:

• Thailand: Universal coverage costs just 2.7% of GDP, while improving life expectancy and reducing poverty.
• South Korea: Its phased approach to universal health, starting with industrial workers, proved fiscally sustainable and was later expanded. Its costs during its expansion phase were about 4.5% of GDP.
• Canada: Despite initial cost concerns its system now delivers excellent healthcare at 10% of GDP, lower than SA’s combined public-private expenditure.

For SA, based on a GDP of R7-trillion, this translates to R189bn (Thailand’s model) or R315bn (South Korea’s model) annually. Even with a blended per capita cost of R8,625 (weighted average of public and private expenditures), the estimated cost for NHI is R750bn-R890bn, far below the alarmist R1.3-trillion figure. This could be funded through progressive payroll taxes, reallocation of existing resources and efficiency gains from bulk procurement.

Integrating private healthcare infrastructure into the NHI system reduces capital costs for new facilities. While private hospitals will require compensation, economies of scale and centralised procurement can save 10%-15% annually, equivalent to R67bn-R139bn.

Global studies show that single-payer systems often reduce administrative overheads, costing just 3%-8% of total healthcare expenditure. For NHI this equates to R33bn-R46bn, which is manageable within the existing fiscal framework. This is significantly lower than the current fragmented system.

How to fund the NHI

Critics fail to acknowledge that universal healthcare systems worldwide rely on innovative funding mechanisms that SA can adopt:

• Progressive taxation. A modest payroll tax of 2%-3%, with employer contributions, can generate significant revenue. For example, Taiwan funds its universal healthcare system through a premium equal to 5.17% of wages, ensuring sustainability.
• Reallocation of existing resources. The current healthcare budget of R259bn can be supplemented by redirecting wasteful expenditures and tackling corruption, which costs the public sector billions annually.
• Dual contribution model. A phased approach allows voluntary private insurance to coexist, enabling citizens to top up their coverage while ensuring universal baseline care.

The DA points to the challenges in public hospitals as evidence that the NHI will fail. This argument ignores the fact that the NHI is designed to address these very issues. Centralised funding and oversight will improve accountability, while pooling resources will reduce disparities between urban and rural healthcare facilities. Bulk procurement of medicines and equipment will lower costs, benefiting public and private sectors.

The ANC government must show the courage to move forward with the NHI. There will always be naysayers, but we cannot let fear of the unknown stall progress. The NHI represents an opportunity to build a healthier, more equitable society.

Health minister Aaron Motsoaledi and his team must conduct and publish detailed cost estimates, as these will help counter misinformation and build public trust. While the department of health’s costing efforts need refinement, international precedents demonstrate that universal healthcare is feasible with incremental implementation.

SA must learn from good and bad examples abroad. Let’s have a phased, iterative approach to implementation. Start with high-need districts, refine the system based on real-world experience, and expand coverage progressively.

Faiez Jacobs
Former ANC MP

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