NHI won’t work without the private sector – Adrian Gore

Discovery CEO Adrian Gore said the government’s National Health Insurance (NHI) scheme will not be workable unless the public and private sector work together.

In the latest instalment of the PSG Think Big series, Gore said the status quo for healthcare in South Africa is unsustainable, and universal health coverage is required for all South Africans.

He said Discovery supports the implementation of universal health coverage in South Africa, and “we have to make it work”.

However, he said the NHI is not workable without private-sector collaboration. 

“When you look at the numbers, the funding, the complexity, it requires private sector collaboration, and if that can be achieved, then the Bill can be made workable,” he said.

Currently, the NHI Bill says that once the NHI is fully implemented, private medical schemes cannot provide coverage for things that the NHI covers. 

Gore said the NHI Bill in its current form would require significant additional funding, estimated to be around R200 billion.

The only way for the government to raise this additional funding consistently is to raise taxes. Gore estimated it would require a 30% increase in personal income tax or a 22% value-added tax.

This, he said, would destroy South Africa’s economy and only achieve a marginal benefit for public sector healthcare.

The NHI will also need more doctors and hospitals, many of which could only come from the private sector.

Gore, therefore, thinks a blended and multi-funder model would be a better way to implement universal health coverage in South Africa. 

However, he admitted that he does not know exactly how to make the NHI workable.

“This is a complicated thing to do. The country doesn’t have the resources. If you look at the amount of money available for healthcare, even if we can afford it, it’s so small for the needs that we have. So we’ve got a real problem to solve. It’s not a simple thing.”

However, Gore said collaboration between the public and private sectors is needed to find this solution.

“Once you get the collaboration and we work together, there are ways to achieve it,” he said.

“I think we are finding that in many different ways that when the public and private sector work together, we find solutions.” 

“We did that with a vaccine, and I think we can do it with the NHI as well.”

Public-private collaboration

Gore’s suggestion echoes the recommendations made by Business Leadership South Africa CEO Busi Mavuso.

According to Mavuso, NHI, as envisaged in the Bill, would leave all South Africans worse off. She recommended that the system should instead consist of a private-public partnership.

She said the NHI Bill illustrates that the government did not learn from other successful public-private partnerships.

She used the Covid-19 pandemic as an example where a partnership between the government and private sector proved successful. Together, the two entities could source equipment and medicines, roll out vaccines and fund other interventions.

“It was a clear demonstration that national health outcomes are achieved faster and more efficiently when government and business work together, drawing on their respective strengths,” she said.

“With the right incentives, the private sector can complement government efforts, speed up the investment needed and reduce costs to the state and users.” 

Mavuso pointed to the Affordable Care Act (Obamacare) in the US as a viable alternative to NHI with a single-buyer model.

Under Obamacare, health insurers must provide minimum benefits, and the state subsidises those earning below a threshold.

However, insurers also compete in a marketplace to offer coverage, and consumers can choose their providers. 

“This approach focuses scarce public resources where it matters: supporting those who do not work or earn below a threshold while ensuring market incentives reduce costs and improve service quality,” said Mavuso.

“Together, we can build a mechanism that delivers the best possible universal healthcare to South Africans at the lowest cost while ensuring we do not destroy the parts of our health system that do work effectively.”

Additionally, forcing the private sector out of healthcare provision could discourage internationally mobile businesspeople from working in South Africa.