Media release: Economically damaging NHI Proposals raise questions and provide no answers

“The proposals for SA’s National Health Insurance (NHI) contained in the White Paper are irrefutably unaffordable and will have a devastating impact on healthcare and the economy. That the White Paper, minus the Treasury analysis, was quietly released on December 19, a Friday when, not only were most people on holiday, but the country was reeling from Nenegate and the devastating effects that was having on the Rand and international confidence. This raises questions about government’s deliberate timing of publishing details of a significant policy shift that will mean a substantial reorganisation of the current healthcare system and leaves unanswered the critical questions of how much it will cost and who will pay for it,” said economist and FMF Health Policy Unit director Jasson Urbach at a media and industry briefing at the Free Market Foundation this week.

“The results are entirely predictable: reduced quality of care, increased brain drain of health professionals, yet another huge bureaucracy, and an unnecessary burden on government and taxpayers,” said Urbach. “The WP has barely changed from the previous Green Paper despite intensive public comment, which seems to suggest that no one in the Health Department is listening, and vital funding details are missing. Yet the government is pressing ahead in a time of great economic uncertainty, a dismal economic growth outlook and unemployment of over 8 million people. Inexplicably, and audaciously, the WP states (paragraph 250) that “focusing on the question of what NHI will cost is the wrong approach”.

How much will the NHI cost is the key question. Without the details of the “comprehensive package of health services” that is difficult to predict, but based on the 2014 average contributions to existing private medical schemes, Urbach conservatively estimates the cost of NHI to be R 367.4 billion*. A primary contender for funding is via personal income tax (PIT). “In 2014, total PIT collected from SA’s very narrow tax base was only R251.9 so we start to get some idea of the futility of this ambitious proposal,” he said.

How, in a tight economic climate, would government officials decide on which services to provide and who should receive care is another unanswered question. Clearly everyone cannot receive all benefits, yet expectations would run high in an aging population and a country that has a rising disease burden.

Urbach says that it is not government’s job to provide universal healthcare and a cursory look elsewhere in the world shows that even rich developed economies are struggling to provide healthcare to their citizens. Unemployment, low levels of income and a lack of growth are inextricably linked to poverty, inequality and poor health, and government needs to focus on growth and employment.

The solution is to leave the private healthcare industry alone for those who wish to pay, and for government to focus on financing care for the poor – preferably via state-sponsored vouchers, which they can spend where they choose. Private hospitals and expanded healthcare should be encouraged through deregulating the industry and eliminating the currently required “Certificates of Need” to allow more competition, which would reduce prices and increase healthcare quality.

More medical professionals should be trained (the number of doctors is limited to approximately 1,500 a year – a number that is not significantly higher than the 1970s, despite a population that has more than doubled and a greater disease burden). There is no justifiable reason for the government to continue to hold a monopoly on the training of doctors – the establishment of private medical training facilities can only help in alleviating the chronic shortage of skilled doctors

Government has a dismal track record on the management of large scale public funds and should outsource healthcare for the poor to the private sector, as it does for housing and infrastructure. The key question is, why is government pushing ahead on NHI in the face of huge opposition, contradictory global experience and with no apparent funds?


* Average cost for PMBs in 2014: R 567 pbpm x 12 months = R 6,804 pa x 54 million population = R 367.4 bn

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