Discovery founder and CEO Adrian Gore warned the government’s National Health Insurance (NHI) scheme will require significant tax increases to fund, which would destroy the economy.
Speaking during the PSG Think Big series, Gore said South Africa’s status quo for healthcare is unsustainable and that universal health coverage is required for all citizens.
This is why Discovery unequivocally supports the NHI. However, the key issue to consider when constructing South Africa’s NHI is affordability.
South Africa currently spends around R435 per person on healthcare in the public sector per month.
While there are no specific numbers yet, it is estimated that the NHI scheme will require a further R200 billion to R300 billion to fund.
“So, how do you get that money into the NHI scheme? The only way you can do that is through the taxation system. We’re going to raise taxes,” Gore said.
Discovery estimates that the government would have to raise income tax by 30% or more or increase value-added tax to 22% to raise R200 billion.
“If you were to do that, I would argue that you would destroy the economy,” Gore said.
Aside from the severe economic impact raising taxes by such significant amounts would have, Gore said it is important to consider what the government could buy with that extra R200 billion.
Currently, the NHI Bill says that once it is fully implemented, private medical schemes cannot provide coverage for things the NHI covers.
Assuming the government manages to raise the additional R200 billion for the NHI, this would only take the number currently spent on public healthcare from R425 rand per person per month to around R680 per person per month.
“So it doesn’t give you that dramatic increase in finance available per person,” Gore said.
In addition, medical scheme members or the employed sector are currently spending around R2,400 per person per month.
“So what you would see happening is you would raise taxes for employed people by 30%, and you lower their healthcare by 70%. You go from R2,400 rand per month to R680 per month,” he explained.
“It illustrates the tragedy of affordability, the level of inequality in the country, and it shows you that it’s not doable without wrecking the employed sector.”
“It’s not a healthcare issue – it creates a real economic problem. I don’t think people would bear paying 30% more taxes and having 70% less healthcare.”
He said the NHI Bill, in the form described in the NHI Bill, is not something the country can currently afford.
“If we get rapid economic growth and, over time, we find ways to do this in different ways with many different methodologies, then it may be workable,” he said.
Gore said the only way to achieve a workable NHI in South Africa is to keep the private sector in place.
“You need that funding. We need more doctors, we need more hospitals, we need more money, not less,” he said.