Bad news about National Health Insurance in South Africa

Over the past few years, government spending on healthcare has become a far lower priority for the state, which is bad news for its National Health Insurance (NHI) plans.

Recent data from The Outlier showed that in 2017, health received the second-biggest share of the government’s budget. In 2025, it dropped to fourth place.

Finance Minister Enoch Godongwana presented the 2025 Budget on Wednesday, 12 March. The budget outlined the government’s proposed spending plan for the 2025/26 fiscal year.

The Outlier explained that the most significant share of the Budget is going towards servicing debt, as it has for the past few years. 

Godongwana previously said that 22 cents of every rand the government raises in revenue is spent on servicing debt. 

In the 2025/26 fiscal year, the government will pay R1.1 billion a day to service its debt, spending a total of R424.9 billion.

This will increase to R478.6 billion, or R1.3 billion a day, by the 2027/28 financial year as the government struggles to arrest its financial decline.

“It is more than what we spend on health, the police and basic education,” the minister said.

The Outlier reported that basic education received the second-biggest share of government spending in the 2025 Budget—R75 billion less than debt servicing. This follows social protection, 90% of which is social grants. 

The fourth-largest spending item is health, which received a 7.8% bump on last year’s allocation. This is more than basic education (7.6%) and social protection (7.6%) but less than debt servicing (9.1%).

In his 2025 Budget presentation, the minister said a ‘significant portion’ of the health budget is spent on salaries and wages. 

However, the public health system lost close to 9,000 health workers in the past year.

“We did not have the money to retain or replace them even after reprioritising funds budgeted for consumables and medicines,” Godongwana said.

Earlier this year, Health Minister Dr Aaron Motsoaledi explained on Newzroom Afrika that despite South Africa’s severe doctor shortage, there are insufficient resources to hire more healthcare professionals.

He attributed this mainly to the austerity measures implemented by Godongwana, which have also impacted various sectors outside of healthcare. 

“We have got severe austerity measures, very crippling budget cuts that affect not only our capacity to hire doctors but to perform quite a large number of functions,” Motsoaledi said.

Therefore, although he agrees with the grievances of doctors who are struggling to find employment, the minister said you simply cannot hire people that you cannot afford to pay – which is exactly the situation South Africa is in. 

“This does not bode well for National Health Insurance,” The Outlier said.

The government’s NHI scheme aims to transform South Africa’s healthcare system, 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 providing universal care through a state-run fund and will ban the private sector from financing treatment covered under the plan.

However, it has been met with severe backlash, with critics saying the legislation is misguided or even unconstitutional.

Critics have also been concerned about the lack of a clear funding model for NHI.

The NHI Act provides that all eligible South African residents will have access to healthcare services whenever they require it without the need for direct payment.

In addition, under the Act in its current form, private medical aid schemes would be prohibited from covering healthcare services already included under the NHI.

Therefore, once the NHI policy takes effect, the government will need to find additional revenue to cover both insured and uninsured South Africans, as it currently only needs funding for the latter.

Estimates of the NHI’s cost to South Africa have varied, with the Department of Health projecting an annual expenditure of approximately R200 billion.

However, this estimate is seen as highly conservative, with research from private medical aid providers showing that the NHI will cost significantly more depending on the level of care provided. 

The government’s estimates are based on the level of care provided by the state, which is far below that of the private sector. 

Momentum Health estimated the private sector spends an average of R1,750 a month, or R21,000 a year, on each of the country’s 9 million medical scheme beneficiaries. 

If the NHI plans to offer the same care to all 63 million South Africans, this would translate into a cost of R1.3 trillion annually.

The Outlier‘s findings on government healthcare spending can be seen in the graph below –