NHI will impose an unnecessary and intolerable burden on SA

27 January 2016
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The proposals in the National Health Insurance (NHI) White Paper, if adopted, would prove to be an unmitigated disaster, not only for health care in South Africa, but also for the economy in general.

The White Paper essentially seeks to nationalise healthcare and extend the long and clumsy arm of government into that most private and personal area of our lives. The consequences are predictable: The proposals would reduce the quality of South African health-care provision, drive more health-care professionals out of the country, create a bureaucracy incapable of handling the huge volume of claims, and impose an unnecessary and intolerable burden on both government and taxpayers.

The following quote by Professor Thomas Sowell of Stanford University sums up the situation succinctly: “It is amazing that people who think we cannot afford to pay for doctors, hospitals, and medication somehow think that we can afford to pay for doctors, hospitals, medication and a government bureaucracy to administer it”.

The timing of the release of the NHI White Paper was intriguing. This big news should have received major coverage since it not only affects us, but also our children, grandchildren, and generations to come. And because, as the White Paper states, a “[NHI] represents a substantial policy shift that will necessitate a massive reorganisation of the current health care system”. Yet, the Department of Health chose to release the White Paper at a time when South Africa had three finance ministers in the space of one week, the rand was plummeting, investors (both foreign and domestic) were frantically pulling out resources, and, to put it bluntly, the economy was, and largely remains, in crisis.

South Africa’s economic growth rate for 2015 amounted to a mere 1.3%, and the International Monetary Fund (IMF) recently cut its economic growth forecast for South Africa for 2016 by almost half to 0.7%. This leads to the question: Under NHI, in a tight economic climate such as we are currently experiencing, how would the government officials decide which services to provide and who should receive care?

Moreover, when individuals are forced to make payments into the centrally controlled NHI fund, what will happen to them when their disposable income has been all but wiped out and they can no longer afford to pay for someone else's “free” health care?

South Africa would not be alone in struggling to answer these questions. All across the globe healthcare systems are under increasing pressure from rising costs. For example, a headline in The Guardian stated, “[Britain’s] NHS is in trouble and its chief executive has requested £8bn [R184bn] to save it”. If an advanced, developed country, which has a GDP per capita (PPP adjusted) that is more than three times greater than that of South Africa ($38,178 vs $12,446), is struggling to meet the demands of patients under their “free health care for all” policy, it is unrealistic to assume that a poor developing country such as SA will be able to afford to do so.

More importantly, it is neither necessary nor appropriate for government to assume responsibility for the “health of the nation”. The very idea of a National Health Insurance fuels the erroneous general perception that government is the foundational source of our health and is thus entitled to regulate individual and private sector provider’s activities.

The government does not have to provide “free health care to all” – this is a disastrous use of scarce taxpayer resources. Additional spending in any one area of the economy comes at the expense of spending in another. In other words, if the government dedicates more of the budget toward healthcare, this necessarily means that there is less money available for education, policing, resolving the country’s electricity crisis etc

The government’s role should be to finance medical care for the poor and destitute, and to purchase an increasing percentage of those services from privately competing providers. To do this, it must allow and encourage the rapid growth of the private healthcare sector.

We are currently facing an important tipping point that not only affects the healthcare sector but the economy in general. We can choose either systematic deregulation of the private sector on both the funding and provision sides, or tighter controls where all of our healthcare decisions are governed from the cradle to the grave. We need to have the courage to recognise the impending disaster and correct the mistakes before they are made.

Author: Jasson Urbach is an Economist and director of the Free Market Foundation. This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the FMF.



Comments on NHI will impose an unnecessary and intolerable burden on SA





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27 Jan 2016, 18:18 Rory Short It seems that we are being governed by people who are suffering from the collective delusion that they are all powerful and can thus successfully bend society in any direction that they choose.