Politicians Adopt Contentious Nhi Bill

The National Assembly of South Africa has approved a new law that will open the door for the implementation of universal health insurance, a proposal whose detractors claim will be impossible to implement successfully and will not be financially viable.

The National Health Insurance Bill establishes a fund that will be used to pay for almost all medical treatment from accredited providers, with rates to be decided by the state, with the goal of ensuring that all South Africans have access to high-quality healthcare services. Only items and services not covered by the fund will be covered by private insurers.

During a Tuesday debate on the bill, Health Minister Joe Phaahla informed lawmakers that 51% of national medical spending is spent on the 16% of the population who have private medical insurance, with the remaining 84% of the population relying solely on the public health system receiving the remaining funds.

“This has resulted in a situation where the private health care is over-servicing its clients, leading to ever-rising costs,” he said. “The public health system is under tremendous pressure as a result.”

According to the proposed legislation, funding for the new fund will come from general tax receipts, payroll taxes, surcharges on individual income taxes, and the reallocation of funds for tax credits that are currently given to private insurers. According to Nicholas Crisp, the head of the health department, 8.5% of the nation’s gross domestic product is already spent on healthcare, so the funding gap will not be as large as critics of the NHI fear once redundancies and inefficiencies are eliminated from the system.

The legislation is currently headed to the National Council of Provinces, where it will likely be approved before being sent to President Cyril Ramaphosa for his signature. It is likely to be contested in court on the grounds that it impairs both patients’ and healthcare professionals’ constitutional rights.

Although offering universal health coverage in South Africa would be laudable, it must be done in a sustainable manner that ensures the best possible use of the state’s limited resources, according to Busi Mavuso, the CEO of Business Leadership South Africa. She emphasized that the NHI as it is envisioned in the bill would make life worse for everyone in South Africa because the state would be unable to provide adequate services and the private sector would be effectively shut down.

“A single-buyer model interferes with accountability by removing the buying decision from the patient,” Mavuso said in a June 5 email. “Instead, an elaborate bureaucracy must somehow oversee care quality, to overcome the problem that patients will no longer be able to choose their providers. The monitoring costs, if quality is going to be maintained, will swamp the purported gains from economies of scale. And the reality is that the healthcare system as it stands often fails to monitor care quality.”