Coalition governments at provincial level set to provide another challenge for NHI takeoff

2 Jun 2024

The National Health Insurance Act takes away the autonomy of provincial governments to execute healthcare service delivery initiatives and shifts it to the national government. This might upset coalition partners in provinces.

A general election outcome that results in more provinces across South Africa being governed under coalitions could complicate and further delay the implementation of universal health coverage, as promised by the National Health Insurance Act.

Read more in Daily Maverick: Elections dashboard

The National Health Insurance Act, recently signed by President Cyril Ramaphosa, lays the foundation for reforms aimed at achieving universal health coverage in South Africa.

The Act envisages a unified health system in which a government-controlled fund will buy healthcare services for eligible patients that are free at the point of care in both public and private facilities.

Read more in Daily Maverick: Everything you ever wanted to know about the NHI but were afraid to ask

Health experts in conversation in a Money Cents webinar with Daily Maverick’s personal finance editor, Neesa Moodley, poked holes in the National Health Insurance Act, saying its principle of universal health coverage was noble, but the Act was unworkable, unconstitutional and unaffordable.

The experts argued that the National Health Insurance Act, in its current form, would undermine the powers of provincial governments, which by law have a degree of autonomy in rolling out healthcare service delivery initiatives.

Currently, healthcare service provision in South Africa’s public sector is a function of the national government, which raises revenue through taxes. However, provincial government departments are at the coalface of implementing healthcare initiatives as they know the unique health needs of their provinces.

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The national government allocates taxpayer funding to provincial governments through a “provincial equitable share allocation” mechanism. This ensures that the equitable share of taxpayer funding allocated to each province is based on a formula that the National Treasury says takes into account both the need for poverty alleviation and population numbers in provinces. The taxpayer revenue that provinces receive through the mechanism is also supplemented by conditional grants from the national government.

The National Health Insurance Act takes away the autonomy of provincial governments to execute service delivery initiatives and shifts it to the national government, said Professor Alex van den Heever, chair of Social Security Systems Administration and Management Studies at the University of the Witwatersrand.

Through a government-controlled fund that is envisaged by the Act, the national government will usurp the powers of provinces to discharge health services and initiatives to the public and “shift the provincial equitable share allocation, academic and regional hospitals, and all conditional grant allocations to the NHI fund”, Van den Heever said.

“Now the government wants to change the current system and keep the money at a national government level. This is a whole recalibration of the entire national and provincial financing system.”

Van den Heever said the government had not changed the Constitution to accommodate this shift.

The big question is whether provinces under coalition governments will allow the health service delivery function to be transferred to the national government. Van den Heever does not expect provincial governments across the country to agree to such an arrangement.

“I can’t see it happening. Part of the reason you win a provincial government [through an election] is that you’ve got something to do. The idea … is that one of the two big functions that provinces run is healthcare. In particular within that, are academic hospital functions, provincial tertiary services and regional hospitals.

“That’s a lot that provincial governments have to show that they are effective and functional and capable of doing things. Now you’re saying that ‘I’m going to give all of that to the national government’,” Van den Heever said.

Essentially, after their healthcare powers are usurped, provinces will be left to run the basic education function. Van den Heever does not foresee Gauteng, for example, which has four academic hospitals and a large number of tertiary and regional ones, agreeing to relinquish the administration of health services under a coalition government.

Stuck in limbo

He foresees that the National Health Insurance Act will be stuck in court for a long period and not implemented, as its constitutionality and merits will be challenged. There are already several legal challenges to the Act from the trade union Solidarity, the Democratic Alliance, the Board of Healthcare Funders, the South African Medical Association, the The South African Health Professionals Collaboration, and the Health Funders' Association.

Craig Comrie, the chairperson of the HFA, which represents 73% of open medical schemes in South Africa. told webinar attendees that private sector medical schemes would still be operational for years to come as he sees a long road ahead in legal challenges to the Act. One of the key takeouts from the webinar was that members should hang on to their scheme membership as NHI is unlikely to be implemented in the next few decades at least.

Read more in Daily Maverick: NHI fund will take decades to roll out — we answer your burning questions

Contentious issues around the Act, include the fact that there is little to no detail on what medical procedures would be covered by the state, and what role medical schemes will play other than to "cover anything not covered by NHI".

“This is where the problem lies as there are no benefits outlined. Universal health access is a noble intent. It is not clear what the benefits to be covered are. The regulations [to come] will give us clarity. Freedom of choice will have to be outlined and the role of private healthcare providers.

“The ability to fund this ambitious project will be dependent on economic growth and the ability to attract additional tax revenue,” said Comrie. Van den Heever added that there has been no indication as to how the NHI will be funded. Possible options include an increase in VAT or an increase in personal income tax, which is unlikely to go down well with an already overburdened tax base.

Comrie said the HFA’s legal challenge to the National Health Insurance Act goes back to the freedom of choice and the constitutional right to health access. “After that fact, you should have the right to choose and fund your own access to health,” he said.

Dr Nicholas Crisp, the government’s National Health Insurance lead, was invited to participate in the webinar, but declined. DM

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