It’s business as usual for medical schemes, with NHI implementation years away

16 May 2024

In a move that no one — least of all the healthcare industry — expected, President Cyril Ramaphosa announced on Monday night that he would sign the controversial National Health Insurance (NHI) Bill into law on Wednesday. At least six legal challenges are already in the works from various parties.

One of the biggest concerns around the implementation of NHI is that there is very little solid detail in the Act. Costs and benefits were the two key issues in the NHI Act that faced constitutional challenges, said Neil Kirby, the director and head of healthcare and life sciences at Werksmans Attorneys.

At least six legal challenges are already in the works from various parties including the trade union Solidarity, the Health Funders’ Association, the South African Medical Association, the Board of Healthcare Funders, the South African Health Professionals Collaboration and the Democratic Alliance.

“We need to ask if the process [of bringing NHI into law] has been fair to those involved, [with] a proper appreciation of the implications for the stakeholders that are interested and affected by this legislation,” Kirby said. Widespread reactions from the healthcare industry last year indicated that none of their submissions had been taken into account when the Bill was passed by the National Council of Provinces in December.

The billion-rand question

The biggest questions most have are about costs. “How much is this going to cost? And … as a country, whether the cost is R140-billion to start with and R700-billion at the end, can we afford it? Can we afford to have national health insurance along with other national priorities and policies that are equally as important as healthcare, [namely] education, security and infrastructure?” Kirby asked.

National Treasury told Daily Maverick on Friday that the funding mechanism for NHI had not been finalised.

“Any details on tax amendments to raise resources for NHI would be announced in a Budget Speech by the minister of finance. The timing of these amendments would be linked to the progress in setting up the NHI Fund and operationalising NHI, which may take a number of years,” the Treasury said.

National Treasury’s Mark Blecher, who has led the team in health financing for years, was much more blunt when he told the Financial Mail that it would take three decades to fully implement the NHI.

Medical schemes – business as usual

The Council for Medical Schemes (CMS) issued an appeal for medical scheme roleplayers and members not to panic or cause widespread speculation, pointing out that the NHI Act would take effect on a date fixed by the President by proclamation in the Government Gazette.

“Importantly, section 57 of the Act states that NHI will be gradually phased in using a progressive and programmatic approach based on financial resource availability,” the CMS pointed out. It said that against this background, the Medical Schemes Act and its regulations still applied and urged members of medical aid schemes not to abandon or cancel their membership.

Adrian Gore, the chief executive of Discovery, said in its current form, the NHI Act was not feasible as it ruled out private sector collaboration. Much of the concern is based on section 33 of the Act, which states that once NHI is “fully implemented”, medical schemes will be able to cover only those services that are not covered by NHI.

“The impact of section 33 is that only once the NHI is ‘fully implemented’ will medical schemes be limited in the cover they provide to medical scheme members. Until [that time], there will be no change to your medical scheme cover,” Gore said.

“We believe it will take a long time — a decade at least — to achieve ‘full implementation’, given the scale and complexity of reforms needed. Bear in mind the NHI is an inordinately large and complex initiative that proposes extraordinary change and restructuring to public and private healthcare systems. This is unprecedented and will be incredibly difficult to achieve.”

Gore said even when the NHI was “fully implemented”, medical schemes would still be able to provide cover for benefits not covered by the NHI.

“This is important because the NHI is unlikely to have sufficient funding to provide an extensive package of benefits. Our country unfortunately faces significant financial constraints linked to low economic growth and a very narrow tax base. Medical schemes will therefore still play a significant role post-full implementation of the NHI,” he said.

His sentiments were largely echoed by Damian McHugh, chief marketing officer at Momentum Metropolitan Health, who said: “The implementation of the Nation Health Insurance Bill in its current format is not sustainable, and we expect the already documented challenges made by numerous stakeholders to become more vocal, particularly around the constitutionality of the Bill.

“Another key consideration is that the South African economy does not have the required funds to support the implementation thereof.”

Craig Comrie, the chairperson of the Health Funders’ Association (HFA) said its members were “deeply disappointed” that the opportunity to review certain flawed sections of the NHI Bill had been missed.

“Even with the President signing the NHI Bill into law on Wednesday, there will be no immediate impact on medical scheme benefits and contributions, nor any tax changes. The HFA is well prepared to defend the rights of medical scheme members and all South Africans to choose privately funded healthcare, where necessary,” he said. DM

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The billion-rand question

Medical schemes – business as usual