NHI won’t work without private sector

The government is contradicting itself by using the private sector’s help to solve South Africa’s water and electricity crisis while forcing them out of the healthcare sector through the National Health Insurance (NH) Act.

This is the view of Business Leadership South Africa CEO Busi Mavuso, who said last week saw major strides forward in the legislative and policy environment and a major stride backwards. 

The National Council of Provinces (NCOP) passed amendments to the Electricity Regulation Act, which now awaits the President’s signature. 

This legislation consolidates the major reform effort that has been made in the electricity sector. 

She explained it would result in the unbundling of the grid operator from Eskom and the establishment of an open market for electricity, radically transforming how electricity is generated and sold in South Africa. 

Similarly, the National Water Resources Infrastructure Agency Bill, also passed by the NCOP last week, is an important part of the overall strategy to stabilise South Africa’s water supply.

This agency will oversee the planning and implementation of large-scale bulk water infrastructure, consolidating the Trans-Caledonian Tunnel Authority and other assets to rationalise the management of bulk water infrastructure. 

It should be able to attract private sector funding, driving critical investment in fixing and building new infrastructure. 

“Both of these show the power of the state and private sector working in tandem,” Mavuso said. 

“The private sector is good at managing operational risk, raising investment and building infrastructure. It is good at maintaining infrastructure, given that it depends on consistent and functional infrastructure to provide the outputs that generate its revenue.” 

“Good partnerships between the state and private sector are formed when there is appropriate allocation of risks to those who are best positioned to manage them.”

She said these kinds of structural reforms are vital for economic growth. 

While they do not deliver immediate results, they establish the environment in which investment can happen and, over time, much greater economic activity results. 

“It is key to solving our unemployment crisis, which saw official unemployment reach 32.9% last week, the highest level outside of the Covid pandemic,” she said.

However, she said the NHI Bill, signed into law last week by President Cyril Ramaphosa, is a stark contrast to these. 

Ramaphosa enacted the Bill last week despite many objections from the private sector and several industry roleplayers. 

The NHI plans to achieve universal coverage for health services by transforming South Africa’s healthcare system. 

While business and civil society support this aim, they have said the current scheme will not achieve it as it cuts out private funding, is unconstitutional, and is unworkable. 

Mavuso explained that, rather than combining the best of public and private, this legislation poses a major threat to the private sector. 

“Despite significant objections from the private sector, ranging from healthcare practitioners to medical aids, the President has chosen to ignore the many recommendations that would have improved the workability of a national health insurance scheme,” she said. 

BLSA previously said the legislation is unworkable, economically damaging and contrary to the precepts of South Africa’s Constitution. 

Under the Act, South Africa’s health care system takes on a single buyer model and proposes to force all other medical insurance to restrict itself to only those benefits not provided by the single fund. 

Mavuso pointed out that this is effectively the opposite of what has recently been done in the electricity sector.

“This flies in the face of the demonstrated success of competitive markets in providing services that the state used to monopolise,” she said.

“The Bill is a huge blow to professionals working in the private sector who must now consider their options for their futures.” 

“Our ability to attract global skills depends on having access to quality medical services for their families. Our ambitions of becoming a regional hub for business across the continent are now seriously threatened.” 

She said there are ways to deliver universal healthcare that are feasible, which business strongly supports. 

Organised business, among others, made many recommendations as part of the consultation process on how these can be achieved. 

“Those recommendations were roundly ignored. The legislation is in every way counterproductive – it will damage both the private and public healthcare systems while missing an opportunity to actually deliver improved healthcare for everyone.”