NHI is now law

President Cyril Ramaphosa has signed the National Health Insurance (NHI) Bill, making it an official law in South Africa despite massive opposition from industry roleplayers.

The government has been discussing implementing NHI in South Africa for years, with the NHI Green Paper having been released in 2011. However, the NHI Bill was only introduced to Parliament in 2019.

Last year, the Portfolio Committee on Health approved the Bill, followed by the National Assembly and the National Council of Provinces. It was passed on to the President in December 2023.

The NHI Act aims to transform South Africa’s healthcare system to achieve universal coverage for health services and, through this, overcome critical socio-economic imbalances and inequities of the past. 

The legislation provides a framework for the provision of universal care through a state-run fund and will ban the private sector from financing treatment covered under the plan. 

There has been widespread support for reform of a system that sees a multibillion-rand private healthcare industry servicing only 16% of the population and the balance relying on overburdened public facilities.

However, NHI critics have argued that the government’s proposals haven’t been properly costed, are unconstitutional and could be successfully challenged in court.

Finances

Several industry roleplayers have expressed concern that a funding model for the NHI has yet to be introduced.

Many have argued that the only way to fund the NHI – which is expected to cost the country an additional R200 billion in funding each year – is through raising taxes.

Discovery has estimated that the following tax increases would be needed to fund the NHI –

• A 31% increase in personal income tax or
• A 6.5% increase in VAT or
• A ten times increase in payroll tax

These figures are worrying for a country that has a small tax base that is already being squeezed to raise revenue for the government. 

“If you were to do that, I would argue that you would destroy the economy,” Discovery CEO Adrian Gore previously said.

“It’s not a healthcare issue – it creates a real economic problem. I don’t think people would bear paying 30% more taxes and having 70% less healthcare.”

Legal battles

The signing of the NHI Bill into law has made many concerned about where the status of their private and public healthcare now stands.

However, it is unlikely that the legislation will have a notable immediate impact on healthcare in South Africa, as its implementation will take years.

In addition, several NHI critics have vowed to sue the government over the legislation, meaning it will likely be tied up in court for years to come.

One notable legal threat has come from the opposition party, the DA, which has already expressed its intention to oppose the Bill in court.

The party said that, upon its signing into law by Ramaphosa, the DA will challenge the ANC’s NHI all the way to the Constitutional Court.

“Our legal team was briefed months ago already and will file our legal challenge against this devasting legislation without delay,” it said.

“We have built up reams of correspondence, including with Ramaphosa himself, that we will enter into evidence to show that the process which led to the adoption of this Bill by Parliament disregarded public input and that the Bill itself is flagrantly unconstitutional.”

BUSA CEO Cas Coovadia has also said that while the organisation fully supports the objective of universal health coverage, “it is essential that we get the NHI right through all means still at our disposal, including appropriate legal interventions”.

“The NHI Bill in its current form is unworkable, unaffordable, and not in line with the Constitution,” he said. 

“What is especially troubling is that the President is proceeding with the Bill despite extensive constructive inputs made by a wide range of stakeholders, including doctors and healthcare professionals, civil society, public sector unions, academics and business.” 

Worsening healthcare

Coovadia said the unfortunate consequence of the government’s failure to consider public criticism is that this version of the NHI Bill will hamper rather than promote access to quality healthcare for all citizens in South Africa.

Importantly, the NHI Act does not do away with medical schemes entirely but does state that they cannot offer cover for services covered by the NHI, which have yet to be specified.

However, the managing director of the Board of Healthcare Funders (BHF), Dr Katlego Mothudi said earlier this year that the private health funding sector in South Africa should not be sacrificed in favour of NHI.

He argued that the private healthcare sector is a valuable source of jobs, scarce skills, infrastructure, financial investment, and quality healthcare. 

“The value it adds to the economy and the support it provides to the public health sector cannot be underestimated,” he said. 

“The Bill reduces the role of the private sector, and we want those sections removed.”

Mothudi said that weakening any aspect of the private health sector will weaken the national health system rather than strengthen it.

Many have also warned that the implementation of NHI in South Africa will lead to an exodus of skilled healthcare practitioners.

Investec chief economist Annabel Bishop previously said the government’s National Health Insurance (NHI) plan will lead to the emigration of skilled professionals and taxpayers, such as doctors and business leaders.

Bishop highlighted that South Africa’s state healthcare system has ranked amongst the worst providers for many years in the World Bank’s global competitiveness survey. 

In addition, she said most private-sector doctors and specialists will likely emigrate under the NHI.

Business leaders, skilled workers and entrepreneurs will likely emigrate too, and international tourism collapse under state healthcare is the only option. 

“This would all negatively affect state revenue, resulting in a massive worsening in borrowing, while state expenditure would rocket, and the prospect of fiscal consolidation disappear,” Bishop warned.

Many other organisations, including the South African Medical Association (SAMA), have also warned that the NHI Bill will chase medical professionals out of South Africa.

SAMA said it is deeply concerned about the passing of the NHI Bill despite numerous objections by the organisation.

It said the Bill excluded suggestions by medical professionals, including doctors, which risks an exodus of these sought-after skills from the country.

Without healthcare professionals’ buy-in, the chance of success for the planned NHI is slim.