South Africa

Government’s NHI model will not work – Discovery Health CEO

Discovery Health’s Ryan Noach said the single-funder model described in the National Health Insurance (NHI) Bill would not be able to achieve the government’s goal of equitable access to healthcare.

Noach told Daily Investor that Discovery Health does not endorse the single-funder model proposed in the NHI Bill. 

“This approach is not only risky and inefficient, but it is also unlikely to be equitable since cross-subsidies cannot be properly managed,” he said.

According to Noach, the passing of the NHI Bill will have no immediate impact on medical schemes, but Section 33 sets out that once the NHI is fully implemented (with no clear definition of what this means), medical schemes would not be allowed to provide cover for anything that the NHI covers. 

“In other words, at the discretion of the minister, when the NHI is fully implemented – the schemes would only be allowed to offer what the NHI does not offer.” 

Therefore, the NHI would be a single monopolistic funder for the NHI package of services. 

Ryan Noach
Discovery Health CEO Ryan Noach

“Even though this may be some way off, given that Department of Health officials have said it may take a decade for NHI to be fully implemented, this provision drives away investment in the health sector and the opportunity to encourage the development of innovative healthcare delivery models for all South Africans.”

As an alternative, Noach recommended a multi-fund framework, which he described as “not only less risky and faster to implement, but also ensures that cross-subsidies are managed to ensure that social solidarity is achieved”. 

He believes financial integrity and sustainability can only be achieved through collaborative work between the private and public sectors, “built on the strength of the Covid-19 partnerships that served South Africa so well”.

He said Discovery had made comprehensive recommendations to Parliament explaining how a multi-funder approach can speed up the implementation of NHI for the benefit of all South Africans.

Private-public partnerships

Busisiwe Mavuso
BLSA CEO Busi Mavuso

Noach’s suggestion echoes the recommendations made by Business Leadership South Africa CEO Busi Mavuso.

According to Mavuso, NHI, as envisaged in the Bill, would leave all South Africans worse off. She recommended that the system should instead consist of a private-public partnership.

She said the NHI Bill illustrates that the government did not learn from other successful public-private partnerships.

She used the Covid-19 pandemic as an example where a partnership between the government and private sector proved successful. Together, the two entities could source equipment and medicines, roll out vaccines and fund other interventions.

“It was a clear demonstration that national health outcomes are achieved faster and more efficiently when government and business work together, drawing on their respective strengths,” she said.

“With the right incentives, the private sector can complement government efforts, speed up the investment needed and reduce costs to the state and users.” 

Mavuso pointed to the Affordable Care Act (Obamacare) in the US as a viable alternative to NHI with a single-buyer model.

Under Obamacare, health insurers must provide minimum benefits, and the state subsidises those earning below a threshold.

However, insurers also compete in a marketplace to offer coverage, and consumers can choose their providers. 

“This approach focuses scarce public resources where it matters: supporting those who do not work or earn below a threshold while ensuring market incentives reduce costs and improve service quality,” said Mavuso.

“Together, we can build a mechanism that delivers the best possible universal healthcare to South Africans at the lowest cost while ensuring we do not destroy the parts of our health system that do work effectively.”

Additionally, forcing the private sector out of healthcare provision could discourage internationally mobile businesspeople from working in South Africa.

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