Controversial NHI Bill passed

South Africa’s National Assembly approved a new law that will pave the way for the introduction of universal health insurance, a plan its critics argue will be financially unsustainable and impossible to implement effectively.

The National Health Insurance Bill aims to ensure all South Africans have access to quality healthcare services and provides for the establishment of a fund that will be used to pay for almost all medical treatment from accredited providers, with rates to be determined by the state.

Private insurers will only be able to pay for products and services that aren’t covered by the fund.

The 16% of the population who have private medical insurance account for 51% of national expenditure on medical treatment, while the balance of the money is spent on the other 84% of the population who rely solely on the public health system, Health Minister Joe Phaahla told lawmakers on Tuesday during a debate on the bill.

“This has led to a situation where the public health system is under tremendous pressure, while the private health care is over-servicing its clients, leading to ever-rising costs,” he said.

Money for the new fund will come from general tax revenue, payroll taxes, surcharges on personal income tax and the reallocation of funding for tax credits that are currently paid to private insurers, according to the bill.

Nicholas Crisp, the head of the health department, has said that about 8.5% of gross domestic product is already spent on healthcare and that once duplication and inefficiencies are removed from the system, the funding gap isn’t as big as NHI critics fear.

The law will now go to the National Council of Provinces, and if it’s passed there, it will be referred to President Cyril Ramaphosa to sign into law.

There’s a likelihood that it will be challenged in court on the grounds that it erodes the constitutional rights of both patients and healthcare professionals.

While the provision of universal health coverage in South Africa would be laudable, it must be done in a way that is sustainable and ensures that the state’s scarce resources are put to the best use, said Busi Mavuso, the chief executive officer of Business Leadership South Africa.

She warned that the NHI, as envisaged in the bill, would leave all South Africans worse off, with the state unable to provide adequate services and private provision effectively closed down.

“A single-buyer model interferes with accountability by removing the buying decision from the patient,” Mavuso said in a June 5 email.

“Instead, an elaborate bureaucracy must somehow oversee care quality to overcome the problem that patients will no longer be able to choose their providers. The monitoring costs, if the quality is going to be maintained, will swamp the purported gains from economies of scale. And the reality is that the healthcare system as it stands often fails to monitor care quality.”