South Africa

Government cannot take medical aid money for NHI

Ryan Noach

Discovery Health CEO Ryan Noach said the government has no way of getting its hands on medical aid money to fund the newly adopted National Health Insurance (NHI) Bill.

His comments followed South Africa’s National Assembly passing the NHI Bill, which will introduce universal health insurance.

The Department of Health explained that NHI would provide good healthcare for all by sharing the money available for healthcare among all our people.

Health Minister Joe Phaahla said 16% of the population with private medical insurance account for 51% of national expenditure on medical treatment.

The balance of the money is spent on the other 84% of the population who rely solely on the public health system.

“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,” he said.

The NHI Bill aims to ensure universal access to healthcare where “health benefits will depend on how sick you are, not on how wealthy you are”.

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

A single public health fund to serve all citizens sounds great on paper, but there is no clarity on how it will be funded.

Joe Phaahla
Health Minister Joe Phaahla

Noach said the NHI’s money bill – the financing part of the plan, which must come from the National Treasury – has not been published.

Finance Minister Enoch Godongwana made little reference to NHI in his latest budget speech, and Treasury clearly did not do much work on financing the NHI.

Speculation suggests NHI will be financed through general taxes and contributions from higher-income individuals.

It raises concerns that the government will rely on medical aid contributions to fund its new universal health insurance.

Noach said it is naive for the Department of Health to assume that medical aid contributions will be redirected into a national health insurance scheme.

He is not concerned that the public healthcare system and NHI could get their hands on medical aid funds from companies like Discovery.

Medical aid funds are voluntarily contributed by members of the medical schemes from their after-tax earnings.

“These funds are well-protected by the medical schemes, which are effectively trust funds. They are functioning as mutual funds that hold the money on behalf of members,” he said.

“By law, there is no way anybody could take or nationalise access to those funds. That would be completely beyond the realm of realistic thought.”

Noach equated it to the government taking people’s pension fund money or nationalising it.

“We see no mechanism whatsoever to do that, and we think medical aid funds are well-protected by law,” he said.