Good news for people with medical aid in South Africa

Health Minister Dr Aaron Motsoaledi has clarified that nobody without a medical tax credit in South Africa will be forced to access medical care through the public health sector under the National Health Insurance (NHI) Act.

In response to a recent Parliamentary question, the minister explained that scheme members and their beneficiaries will continue to choose between accessing private or public providers as they do now.

This comes after Motsoaledi floated the idea of phasing out medical aid tax credits to fund NHI in South Africa.

In October this year, News24 reported that the deputy director-general for health overseeing the NHI, Nicholas Crisp, presented the Health Department’s funding plan for NHI.

This plan included the phased removal of tax credits, which would start with the wealthiest third of medical aid members.

In a Parliamentary question and answer, DA MP Dr Karl Le Roux asked Motsoaledi to explain the impact of these plans further.

He asked whether the Health Department has assessed the total number of South Africans who would be forced to abandon their medical aids and access medical care through the public health sector following the removal of such subsidies and tax credits.

He further asked whether the department had assessed the impact of the specified total number of individuals on the public health system and how this would increase cost pressures on the already stretched public sector. 

In response, Motsoaledi explained that, according to the NHI Act, the phasing out of tax credits will be done through a Money Bill to be published by the Finance Minister, where all the relevant factors will be determined and taken into consideration.

“The NHI Act has got no section stating that people would be ‘forced to abandon their medical aids’,” he said.

“The attention of the Honourable Member is drawn to the facts of the NHI Act that nobody without a medical tax credit will be forced to ‘access medical care through the public health sector’.” 

“Scheme members and their beneficiaries will continue to choose between accessing private or public providers as they do now.”

South Africa’s NHI Robin Hood

Motsoaledi further explained that, currently, medical aid tax credits “cost” the fiscus around R33 billion each year.

He said this money would have gone a long way to help the poor in the public health sector, but is being moved from the fiscus to subsidise well-off parts of the population.

“If that amount of money is rather made available to the public healthcare system, then the poor would benefit immensely,” he said. 

“We wish to remind the Honourable Member that the public sector caters for 86% of the population, whereas the private sector, where this R33 billion is headed to, caters for only 14% of the population.”

Momentum Health previously estimated that 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.

However, Momentum Health chief marketing officer Damian McHugh noted that there would be savings, like doing away with medical aid tax credits and other economies of scale.

Taking these cost savings and other revenue measures into account could bring this to a more conservative estimate of R900 billion.

Many industry stakeholders have warned that the NHI Act, in its current form, may be unconstitutional, as it could be interpreted as limiting South Africans’ freedom of choice.

This is because, under the legislation, private medical providers will be limited to only providing services not already offered by the public sector.

This is why Sakeliga has argued that the Act is unconstitutional, because it bans medical schemes and insurance businesses that currently serve nearly 10 million customers in South Africa.

Sakeliga claimed that if the state attempts to implement the NHI Act, it risks causing significant and lasting harm to healthcare services, while driving thousands of skilled medical practitioners overseas.