Health Funders Association launches latest legal challenge to NHI Act, calling legislation ‘unworkable’

The Health Funders Association argues that ‘lmost all successful [universal healthcare coverage] models, whether it’s in high-income, middle-income or even low-income countries, involve strong public-private sector collaboration’. (Photo: Rosetta Msimango / Spotlight)

By Tamsin Metelerkamp

5 Jun 2025

The Health Funders Association is the sixth organisation to launch a legal challenge to the NHI Act, describing it as ‘unaffordable, unworkable and unconstitutional’.

The Health Funders Association (HFA), a nonprofit representing 20 medical schemes and three administrators in South Africa’s private healthcare funding sector, has become the latest organisation to launch a legal challenge to the National Health Insurance Act.

On Thursday, 5 June the HFA announced the challenge, which has been lodged in the Gauteng Division of the High Court in Pretoria. The organisation has said that while it supports the “goal of universal health coverage”, it considers the NHI Act to be “unaffordable, unworkable and unconstitutional”.

“Litigation is not our preferred route but it is, under these circumstances, the responsible one to protect our economy and the future of healthcare in our country,” said NFA chief executive Thoneshan Naidoo.

Unconstitutional and invalid

In its legal challenge, the HFA argues that the NHI Act is procedurally and substantively flawed and will cause irreparable harm to the health system economy. It also seeks to show that:

Section 33 of the NHI Act, which limits the role of medical schemes to providing complementary cover, infringes on section 27 of the Constitution regarding the right to access healthcare;

The Act is not a “reasonable measure” under section 27(2) of the Constitution, which stipulates that the government must take progressive, reasonable steps to realise access to care; and

The Act unconstitutionally delegates legislative authority to the minister of health.

Naidoo said that the relief sought by the HFA in the high court was for “certain sections of the NHI Act be declared unconstitutional and invalid. Alternatively, the Act, in its entirety, to be declared unconstitutional and invalid.”

There are already five legal challenges to the Act playing out in South Africa’s courts, led by the South African Medical Association, the Board of Healthcare Funders, the Hospital Association of South Africa, the South African Private Practitioners Forum and the trade union Solidarity.

Read more: On what grounds are the legal challenges against the contentious NHI Act being fought?

“With our knowledge, skills and experience of the funding industry… we bring an understanding of what the flaws are [in the NHI Act], what path we’re on and alternative solutions. We don’t view ourselves in opposition, but as part of completing the solution,” Naidoo told Daily Maverick.

NHI Act Health Funders Association Thoneshan Naidoo, CEO of the Health Funders Association. (Photo: Supplied)

He noted that the HFA had engaged with the NHI through public participation processes before it was signed into law, in an attempt to work collaboratively with stakeholders.

“We are a part of Busa [Business Unity South Africa]... and while we go ahead with this legal challenge, we are hoping that through Busa… and that ongoing engagement with the president, it can lead to some amicable solution,” Naidoo said.

Health Department spokesperson Foster Mohale said the department would study the HFA’s application once it had received it and “respond accordingly through the legal channels”.

Independent study

Part of the reason the HFA’s legal challenge was launched more than a year after the NHI Act was signed into law was to allow time to research the potential impact of the legislation, said Naidoo. The organisation commissioned an independent economic analysis by consultancy firm Genesis Analytics.

“The Genesis analysis assesses various potential efficiency savings under NHI compared to the current system. For modelling purposes, savings are assumed to be as high as 45% of private sector cost levels. The report demonstrates that even under the most optimistic assumptions, it is not possible to raise the funds required for NHI,” the HFA said.

“For NHI to fund a level of care equivalent to what medical scheme members currently receive, as government has indicated is the intention, the Genesis model shows that personal income tax would need to increase by 2.2 times (a 115% increase in tax) from the current average rate of 21% to an average of 46% of income.”

The Genensis model considered a scenario of pooling existing healthcare expenditure in the private and public sectors to support NHI. Its finding was that to enable this, personal income tax would need to increase by 1.5 times its current rate (a 47% increase in tax), from its average of 21% to 31%, according to the HFA. The report stated that medical scheme members would face a 43% reduction in the level of healthcare services relative to what they currently receive.

When breaking down who would be affected by the potential decline in services under the NHI, Naidoo said the Genesis analysis showed that more than 68% of medical scheme members were black, Indian or coloured, with up to 83% earning less than R37,500 per month.

“There’s often a misconception that medical schemes are for the wealthy and the elite. But if 83% are earning less than R40,000, it means this is actually your economic engine of South Africa. This is your workforce,” Naidoo said.

Read more: Healthcare coalition proposes ‘pragmatic’ reforms for SA, says NHI ‘unworkable’

Another finding of the study was that an additional 282,000 healthcare professionals would be needed to achieve the same level of care and access under the NHI than is currently experienced through medical schemes.

“Every year, we only get about 3,600 new medical graduates. Qualifications take between nine to 13 years… so the targets are decades away,” Naidoo said.

healthcare NHI The Health Funders Association argues that ‘almost all successful [universal healthcare coverage] models, whether it’s in high-income, middle-income or even low-income countries, involve strong public-private sector collaboration’. (Photo: Rosetta Msimango / Spotlight)

Pursuing meaningful reform

Naidoo said the HFA was not seeking to preserve the status quo, since it believed meaningful reform was essential to improve affordability, quality and access in healthcare.

“We remain committed to working with government and stakeholders to design a more inclusive, financially viable and constitutionally sound [system],” he said.

“Almost all successful [universal healthcare coverage] models, whether it’s in high-income, middle-income or even low-income countries, involve strong public-private sector collaboration… Rather than sidelining the private sector, these systems leverage its capacity, innovation and infrastructure to expand access, improve efficiency and enhance quality of care.”

The HFA has proposed a “hybrid funding model” that involves the NHI fund and medical schemes operating “in tandem”. It argues that this system would preserve individuals’ “freedom to choose supplementary private cover”.

“Public resources are focused on those most in need, while regulated competition supports innovation, efficiency and cost control,” it said.

“The proposed model offers a common benefit package with built-in cross-subsidisation to ensure equitable access for vulnerable populations. Grounded in a strong primary healthcare foundation, the model reflects international best practice and is especially relevant for middle-income countries like South Africa.”

Other organisations have proposed alternative models to the NHI fund, including the Universal Healthcare Access Coalition, made up of the South African Medical Association, the Progressive Health Forum and the South African Private Practitioners Forum.

Naidoo noted that a “common thread” in many of these healthcare reform proposals was the emphasis placed on “multifund, multipayer systems” rather than a single-fund monopoly. DM

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South Africa

Unconstitutional and invalid

Independent study

Pursuing meaningful reform