NHI will crush private healthcare in South Africa

Renowned political analyst RW Johnson said there is no plan on how to fund the National Health Insurance (NHI) and that it would ruin the country’s finances.

Last month, the Portfolio Committee on Health in South Africa adopted the NHI Bill despite strong opposition from many stakeholders.

The NHI Bill aims to ensure universal access to healthcare by creating a single public health fund financed through general taxes and contributions from higher-income individuals.

The Department of Health explained that National Health Insurance is a way of providing good healthcare for all by sharing the money available for healthcare among all our people.

“The health benefits that you receive will depend on how sick you are, not on how wealthy you are,” the department said.

“Hospitals, clinics, doctors, specialists, dentists, nurses and all other health workers will also be available to provide services to all much more equally.”

The plan sounds noble on paper. However, delving deeper into the issue quickly reveals why medical professionals and the private sector loathe NHI.

The first criticism is that the main reason for private healthcare and medical aid schemes is that the government has essentially destroyed public healthcare.

Instead of admitting their failure and improving public healthcare, they want to get their hands on private healthcare and the money that funds it.

This will limit competition and choice, which reduce wastage, spur innovation and drive insurers and healthcare providers to cater to patient demands.

“The NHI would leave all South Africans worse off, in a system where state provision becomes impossible and private health provision is effectively closed down,” BLSA CEO Busi Mavuso said.

Another problem is funding. Renowned political analyst RW Johnson said the government appears to be pushing NHI, but there is no plan on how to finance it.

“Even in the NHI bill, which was recently passed in parliament, there is no provision for financing it,” Johnson told Biznews.

He said there is a strange assumption that all the money currently going into private medical aid will be diverted to fund the NHI.

“It is very difficult to see why this should be the case. If you tell people who pay for medical aid they will no longer get private healthcare, they will simply stop paying,” he said.

“There is no way private medical aid money will simply be handed over to the state to fund NHI. That is a peculiar assumption.”

He added that the National Treasury has never supported NHI because the funding model would ruin the state’s finances.

Private versus public healthcare

Comparing public and private medical benefits reveal a large gap in funding. However, it is not because wealthy people don’t pay enough tax.

The people who pay the most tax in South Africa – and therefore fund public healthcare – are the same people who are on medical aid and who don’t use public care.

In the 2023 budget review, healthcare formed 11.6% of the total budget at a total allocation of R259.4 billion.

From 2019 to 2021, Treasury increased its healthcare allocation from R208.78 billion to R247.01 billion.

This is significantly larger than the total benefits paid out in the private medical scheme industry of R185 billion in 2019 to R205 billion in 2021.

Although the public healthcare budget exceeds the benefits paid out by the private sector, the number of beneficiaries of the public healthcare system far exceeds that of the private sector.

In 2021, the number of South African citizens not falling under a medical scheme was 50.6 million individuals. The number of individuals covered by medical aid was 9.7 million individuals.

This means that the benefits received by public healthcare individuals are more than four times less than that received by members of the private medical sector.

In 2021, private healthcare individuals received an average benefit of R21,152 for the year, while the benefits per non-covered individual were R4,878.

To try to provide the same healthcare to all South Africans without additional funding will overload and ruin the private healthcare system.

It is, therefore, no surprise that many doctors, dentists, and other private healthcare professionals have already left the country because of the government’s NHI plans.