For SA’s health, we must get NHI right

Instead of limiting health care, as will be the case under the NHI in its current form, we need to build on what we have to urgently expand access to quality care, write Cas Coovadia and Martin Kingston

We all want a health-care system that works, ensuring every South African, rich or poor, has access to quality care without financial hardship. There are challenges in the current system, but there are many world-class doctors, nurses and hospitals in the public and private health-care sectors. We believe it is possible to build a better system if we harness the skills and resources of both for everyone’s benefit.

The National Health Insurance (NHI) Bill before the National Council of Provinces (NCOP) proposes a health-care system overhaul to address these challenges. It creates a government body, the NHI Fund — like the Road Accident Fund or Unemployment Insurance Fund — to buy health-care services for all citizens from public and private health providers, at prices set by the state. The NHI will rely entirely on funds from taxpayers and membership will be compulsory. According to the bill, everyone will access a package of NHI services free.

Business Unity South Africa (Busa) and Business for South Africa (B4SA) broadly support NHI objectives, believing change in our health-care system is urgently needed. The current version of the bill, however, omits fundamental details on what services the NHI will offer, how it will be implemented and, critically, how it will be funded. Given our precarious fiscal position, relying entirely on funding from the tax base does not seem feasible.

For us, a specific area of concern is section 33, which says that when the minister of health declares the NHI fully implemented, medical schemes such as ParMed, GEMS, Discovery, Momentum, et cetera, will only be allowed to cover or pay for health services not offered by the NHI. This creates destabilising uncertainty for medical schemes and the private health-care sector, which depend on them for financing.

No country limits the private health-care sector in providing services to citizens, not even wealthy countries with substantial tax bases. Relying on a single government fund to provide access to all health-care for every citizen is risky in terms of its ability to deliver quality health care and retain critical skills, and because it carries material governance and financial risks for the country. We are concerned we don’t have the capacity to embark upon such a significant initiative, involving building institutions from scratch.

We therefore recommend amendments to clarify uncertainty in the bill, restore and build confidence, and maximise its prospects for success. These amendments do not undermine the objectives of universal health coverage — on the contrary, they enhance and accelerate our movement towards it by providing clarity and predictability for such a significant initiative.

The financial risks are substantial. The department of health has not defined the package of benefits the NHI will offer or a full financial feasibility plan, so the true costs are unknown. However, it estimates it will need to raise an additional R200bn annually to supplement the current national health budget. The department’s 2017 NHI White Paper suggests raising this from a combination of VAT, payroll and personal income taxes.

To raise an extra R200bn a year, the government will either need to increase VAT from 15% to 21%, personal tax by 31%, institute payroll tax that is 10 times higher than the current UIF contribution, or a combination of these. This is unaffordable for the country and a declining tax base that is already under enormous financial strain. Deriving funding by raising VAT will have a profound impact on those with already limited spending capacity.

Concerningly, the NHI budget is not intended to cover infrastructure improvement at public clinics and hospitals as the fund will only pay for healthcare services. This means the government will need to find money to upgrade public hospitals and health-care facilities so they meet NHI accreditation standards.

Experience in countries similar to South Africa, such as Ghana and Indonesia, shows an NHI like the one our government proposes can run out of money each year, necessitating annual bailouts. This will see funds taken away from other critical services, such as social grants and education, or require the NHI to reduce the health-care benefits citizens receive.

Instead of limiting health care, as will be the case under the NHI in its current form, we need to build on what we have to urgently expand access to quality care. The reality is that though the public and private sectors have challenges that need addressing, we need them both and we need them to work together for the benefit of all.

Getting the NHI right from the outset is a significant responsibility that cannot be rushed as it will impact the economy and South Africans for generations. Nor can we afford endless litigation on the bill’s constitutionality, given this will accrue costs, delays and further undermine public confidence.

We need to adopt a health-care system the country can afford now and into the future, taking account of South Africa’s unique and fragile economic situation and the health-care needs of the entire population. Most importantly, we need an NHI that builds on and does not damage or destroy the health-care resources we have, be they in the public or private sectors.

We believe there are immediate changes that can address many of these concerns.

First is for the NCOP to amend section 33 to allow full private-sector participation and collaboration with the state, including medical aid funding. It will allow cross-subsidisation between the public sector and medical scheme members, and reduce the state’s health-care burden. It also secures the certainty and confidence required to retain and build on professional skills, boost and support growth, job creation, productivity, innovation and much-needed investment. This will not stop or limit the NHI, but strengthen it.

Second, there are a number of ways to enable the private sector to help build a better health-care service with immediate benefits for all. This will take further pressure off the public health-care sector and move universal health coverage forward in a way that meaningfully and visibly supports the NHI.

The country is able to expand access to affordable private health care for more South Africans through the introduction of low-cost medical aid options. This simply requires regulatory approval from the Council of Medical Schemes. It will bring more capital and investment into the health-care sector without the government needing to raise taxes or take on debt. Furthermore, we believe the cost of private cover could be reduced by more than 20% if the 2019 recommendations of the government’s health market inquiry are urgently implemented.

We can also boost our pipeline of health professionals by incorporating private sector facilities in training. These proposals have been tabled to the government.

The NHI Fund is a vital vehicle for public-private partnerships to make private-sector capacity available to public-sector patients. This requires a balanced and sustainable approach to contracting with private health-care providers that ensures South Africans have access to high-quality care that drives economic growth, while addressing the social imperative of care for everyone.

By making these changes, which allow the country to harness all available health-care resources, we can expand health-care access and set our country on the path to achieving universal health coverage. South Africa has great health-care assets in the private and public sectors. We need to do better with what we have, not break the system down. We need to take time to get this right by providing certainty, predictability, building confidence and implementing a credible proposition that achieves the country’s shared objectives.

Getting the NHI right from the outset is a significant responsibility that cannot be rushed as it will impact the economy and South Africans for generations

Coovadia is Busa CEO; Kingston is B4SA steering committee chair