R10 billion for NHI in South Africa

The National Treasury has allocated a total of R9.9 billion in direct and indirect conditional grants for National Health Insurance (NHI) in South Africa.

Finance Minister Enoch Godongwana presented South Africa’s 2025 Budget on Wednesday, 12 March.

The 2025 Budget Review revealed that, over the medium-term expenditure framework (MTEF), the indirect and direct conditional grants for NHI are allocated R8.5 billion and R1.4 billion, respectively.

This totals R9.9 billion allocated for NHI over the next three fiscal years, from 2025/26 to 2027/28.

The National Treasury said the Department of Health will fund the development of a patient information system, a centralised chronic medicine dispensing and distribution system, and a facility medicine stock surveillance system. 

This will be done to strengthen the country’s health system and prepare for the NHI policy.

This marks one of the first times the National Treasury has indicated how the NHI will be funded following the signing of the NHI Bill in May 2024.

The government’s NHI scheme aims to transform South Africa’s healthcare system, achieve universal coverage for health services, and, through this, overcome critical socio-economic imbalances and inequities of the past.

The legislation provides a framework for providing universal care through a state-run fund and will ban the private sector from financing treatment covered under the plan.

However, it has been met with severe backlash, with critics saying the legislation is misguided or even unconstitutional.

Critics have also been concerned about the lack of a clear funding model for NHI.

The NHI Act provides that all eligible South African residents will have access to healthcare services whenever they require it without the need for direct payment.

In addition, under the Act in its current form, private medical aid schemes would be prohibited from covering healthcare services already included under the NHI.

Therefore, once the NHI policy takes effect, the government will need to find additional revenue to cover both insured and uninsured South Africans, as it currently only needs funding for the latter.

Estimates of the NHI’s cost to South Africa have varied, with the Department of Health projecting an annual expenditure of approximately R200 billion.

However, this estimate is seen as highly conservative, with research from private medical aid providers showing that the NHI will cost significantly more depending on the level of care provided. 

The government’s estimates are based on the level of care provided by the state, which is far below that of the private sector. 

The Health Department’s estimate excludes services like primary care, extended chronic care, maternity care, and Prescribed Minimum Benefits (PMBs).

The cost will increase further if the NHI covers extended hospital stays and specialist procedures. 

Momentum Health estimated the private sector spends an average of R1,750 a month, or R21,000 a year, on each of the country’s 9 million medical scheme beneficiaries. 

If the NHI plans to offer the same care to all 63 million South Africans, this would translate into a cost of R1.3 trillion annually.

This is more than the government is currently spending on the entire health function.

In the 2025 Budget, the National Treasury allocated R941.5 billion to the health function over the MTEF period to support the equitable provision of public health services, including free primary healthcare. 

About 44.7% of this allocation is directed to funding district health services, particularly primary healthcare facilities such as clinics and community health centres, which also provide outreach services. 

“This level of care is recognised as the most efficient and effective due to its focus on disease prevention and proximity to communities,” the National Treasury said. 

Almost 98% of the budget for this function is allocated to provinces, amounting to about R922.7 billion.

Employee compensation accounts for 64.1% of the provincial total.

“To maintain an adequate number of healthcare personnel, especially doctors and nurses, the sector plans to focus on stricter enforcement of existing policies such as overtime work and remuneration for work performed outside the public sector,” the Budget Review added.