National Health Insurance is a big fat empty promise – experts

25 Jun 2023

New healthcare legislation is unimplementable, unaffordable, unclear and unlikely to happen any time soon, say the experts.

The National Health Insurance (NHI) Bill has been passed by the National Assembly, but experts believe it is largely “unimplementable” and is unlikely to come into effect any time soon.

Alex van der Heever, the chair of social security systems administration at the University of the Witwatersrand, says: “From the beginning, the bill was so flawed they [the governing ANC] were in a predicament where they could either try to amend the framework in Parliament, or give the ball back to the Department of Health and ask them to rework it, which would be very embarrassing.”

Peter Montalto, the managing director of financial adviser Intellidex, agrees. He told Newzroom Afrika the NHI was unlikely to happen within any reasonable timeframe as it was “logistically impossible” and there was a lack of clear information about funding.

In a vague reference to funding the NHI earlier this month, Health Minister Joe Phaahla said it “seeks to pool resources of those who can only contribute to the fiscus through indirect means such as VAT and other collections and those of us who are able and are already making fragmented contributions into 81 different schemes into one pool which can purchase services from both the public health system and private providers from lowest level of care up to the highest”.

That sounds similar to what many in the private sector are saying. It seems the Department of Health wants higher-income earners’ contributions to current private medical schemes to be channelled into public healthcare via additional taxes.

Van der Heever says the government appears to have ignored issues raised by industry stakeholders in favour of pushing through impractical legislation. “This talks to capability weaknesses … When you don’t have capacity you … carry on regardless.”

Phaahla says those who say the NHI is unaffordable base their opinions “on highly inflated costs amongst some of the private providers who are under pressure to keep delivering super [sic] profits”.

Let’s look at that. For the six months to March 2023, private hospital group Netcare posted revenue of R11.5-billion. Life Healthcare posted revenue of R10.6-billion for the same period, for the whole of southern Africa. Mediclinic did not post public financial statements as it has been bought out by Remgro.

One has to assume the minister refers to claimed “super profits” of listed private hospitals and not medical schemes. Because, surely, the minister of health understands that medical schemes offer members pooled benefits and are non-profit operations.

Back to costs. The 2023 Budget allocated R259-billion to healthcare. Of this, R113-billion goes to district health, R49-billion to central hospitals, R46-billion to “other health services”, R40-billion to provincial health and R11-billion to the management and maintenance of facilities.

So, the problem is not a lack of funding for the public healthcare sector.

“The amount SA spends on healthcare as a proportion of GDP far outstrips that of other developing economies,” observes Van der Heever. “We have a governance problem. There’s a substantial reduction in accountability in the governance framework and people have basically been stealing money from the state systematically. And they’re not being held to account for that.”

The Board of Healthcare Funders (BHF), which represents medical schemes, echoes his sentiment, saying, “to summarily ignore the many who voiced their concerns regarding governance structures and operational efficiency concerns, the concentration of risk in a single-payer system in an unstable economy featuring endemic corruption, and the many other concerns raised by state attorneys is short-sighted and highly unwise”.

The BHF has urged the government to consider a multipayer model to mitigate against the concentration of risk, to have a roll-out based on milestones not dates, and to heed concerns that the proposed NHI is susceptible to corruption by proposing alternative governance structures.

Unresolved issues

Prelisha Singh, a partner at law firm Webber Wentzel, says that, despite approval by the National Assembly, there are many unresolved questions and concerns about the practical implementation of NHI.

“Many stakeholders and experts have raised concerns that [it] is simply unaffordable, particularly as it would require an extensive administrative apparatus. A related concern is the extent to which the NHI will rely on the public healthcare system to deliver services, and the capacity of that system to provide an acceptable quality of services.

“Given the dire state of public healthcare in our country, it is surprising the government persists with plans to spend vast resources on implementing the NHI. Those resources would greatly improve the delivery of quality healthcare — and access to that care — if they were deployed directly in the public health sector,” she says.

Singh points out that the bill says the chief source of income will be money appropriated annually by Parliament.

“This must be appropriated from collections of, among others, general tax revenue, a payroll tax and a surcharge on personal income tax. This… is, however, difficult to reconcile with another clause, which states that the [NHI] Fund will be funded through ‘mandatory prepayment’ (a term defined as ‘compulsory payment for health services before they are needed in accordance with income levels’), and a third clause which empowers the Minister to make regulations on ‘all fees payable… to the fund’.”

Key issues that are unaddressed include:

The extent of benefits to be covered by the NHI Fund and the rate of reimbursement — both of which are crucial to assessing the affordability of the NHI and its impact on the provision of quality healthcare;

The rules on portability, which will allow patients to be treated by service providers other than those with whom they are registered;

The referral pathways between service providers;

The coding systems to be employed; and

The relationship between the fund and medical schemes.

Singh says a key question is what role medical schemes will play and whether they will continue to exist. As it stands, the NHI Bill stipulates that, once the minister has determined the NHI is fully implemented, medical schemes “may only offer complementary cover to services not reimbursable by the fund”. It also says patients are entitled to “purchase healthcare services that are not covered by the fund through a complementary voluntary medical insurance scheme”.

In other words, medical schemes may not cover services covered by the fund. Since the fund is intended ultimately to cover a comprehensive range of benefits, medical schemes will shrink dramatically or disappear.

Adds Singh: “This regime is likely to face constitutional challenges on the basis that it infringes the right to access healthcare services, by forcing many people who currently access private medical care via medical scheme funding to rely on what is currently a woefully inadequate public healthcare system; the property rights of medical schemes and their administrators; and the right to freedom of trade, occupation and profession.”

Martin Versfeld, another partner at Webber Wentzel, says requirements for accreditation of service providers are onerous, including the submission of a “budget impact analysis” and there is a lack of clarity on how reimbursement rates will be determined.

“One would have expected the bill to make clear that payment rates must be set at a level that allows providers to cover their efficient costs and make a reasonable return. An accredited service provider must procure health-related products according to the fund’s formulary, and suppliers listed in the formulary must deliver directly to the service provider or establishment. This blurs the line between public and private procurement, reduces competition, and unduly restricts private service providers in the conduct of their business,” he says. DM

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Unresolved issues