The government wants your pension to pay for NHI

Despite not having a clear idea of how to fund its National Health Insurance (NHI) plan, the government is pushing forward with its plan to implement universal healthcare, even if it means relying on South Africans’ pensions.  

This was explained by a senior analyst at the Institute of Race Relations, Marius Roodt, on SABC News. 

Recently, the Health Department proposed that the National Treasury use savings managed by the Public Investment Corporation (PIC) to build and upgrade public infrastructure in anticipation of the NHI scheme. 

“I think it shows that the government doesn’t know where money for NHI is going to come from,” Roodt said.

“The PIC shouldn’t be funding things such as the NHI. The point of the PIC is to invest money for pensions of government employees.”

One of the PIC’s mandates is to get a reasonable return for its investors, which it will not get by investing in hospitals.

He explained that, for areas where the government is not obligated to make a return, like healthcare and education, tax monies and other means of funding would be more appropriate.

Roodt said, at the moment, the government simply does not have enough money for the NHI.

“Nobody is opposed to South Africans getting decent healthcare. The problem is the NHI and how it’s going to be funded,” he said. “The NHI itself is simply not the way to do it.”

Health Minister Dr Aaron Motsoaledi told Newzroom Afrika the department needs far more infrastructure funding than allocated and has sought alternatives due to the government’s poor financial state.

He noted that private hospitals have used PIC investments for infrastructure and equipment, adding, “Why can’t the same be done for public hospitals?”

“The PIC money would be used to build the infrastructure we need now, and funding from the National Treasury as part of our budget would be used to pay back the PIC over a period of 20 to 30 years.”

Pressed on returns for pensioners, Motsoaledi said technical details would be worked out later, adding, “We know the money is not free and belongs to pensioners. When they retire, they must get that money. We will be able to pay it back.”

He added that while there would be a return on investment, it should not be excessive since the funds are public.

Motsoaledi clarified the funds would be ringfenced for infrastructure and equipment, not salaries.

According to Roodt, if the NHI system is implemented, it would place significant strain on South Africa’s healthcare system, potentially resulting in an exodus of doctors.

Under the NHI, South Africa would see the end of its private healthcare sector, forcing those who can emigrate to leave the country. 

As a result, all of the country’s healthcare burden would fall on the already strained public healthcare system which will not have enough resources to treat everyone.

“I just think it’s a system that hasn’t been thought through properly,” Roodt said.

Instead of relying on NHI, he said there are better ways to expand healthcare in South Africa to ensure that the country moves in a direction where everyone can get a decent level of healthcare. 

Eliminating the private medical sector, including private medical aid, is not the way to ensure that all South Africans can access decent healthcare.

“What needs to happen is that more South Africans need to be able to access private healthcare,” he said.

In order to make it easier for people to access low-cost medical aid, people can be given health vouchers, for example, which would allow them to choose where they want to spend that money, whether it is in the private or the public healthcare system. 

Roodt explained that this proposed “health voucher” system would take the existing healthcare budget and divide it among the population so that people could spend exclusively on healthcare.

In general, making it easier for people to join medical aid is crucial, he said. One way to achieve this would be to make everyone who is employed formally a member of a medical aid.

Giving lower-income earners a tax break or having their employers subsidise their healthcare could help make this a possibility. 

“What we actually need to do is grow the economy so we can get more people working who then can afford to pay for private medical aid if that’s what they want,” he said.

Having more people employed and a growing economy increases tax revenue, which would allow the government to improve and expand healthcare facilities in South Africa.