BUSA/B4SA submission to NCOP: Small, but critical changes to allow for private sector collaboration, can make NHI affordable and sustainable for everyone

18 September 2023

The National Health Insurance (NHI) Bill if adopted in its current format excludes a collaborative role for the private sector that is critical to the NHI being affordable and sustainable for everyone and undermines the fundamental objective of the NHI, which is to address the current inequality in the South African health care system.

This is according to a written submission made by Business Unity South Africa (BUSA) and Business for South Africa (B4SA) to the Select Committee on Health and Social Services of the National Council of Provinces in respect of the NHI Bill.

Cas Coovadia, CEO of BUSA, said: “Universal health coverage is very important for the future success of our country and our economy, and we are deeply concerned that the current process and version of the NHI Bill with its attendant constitutional risks, is likely to widen health inequality rather than reduce it. However, we believe that with small but critical changes to the Bill, which allows both the public and the private sector to work together, as we did during the COVID-19 pandemic, a sustainable and affordable NHI is possible, that meets the health care needs of all citizens, regardless of their socio-economic status. The NCOP process offers the country an opportunity to make these changes. South Africa’s health care system has much to gain if we get this right. It is essential that we do.”

The NHI Bill creates a single Government-controlled fund relying entirely on tax revenue that will buy and pay for all health care services for everyone, which includes the services of doctors, nurses, specialists, allied health care professionals, hospitals, clinics, ambulance services and medication.

Coovadia said: “The Government says these services will be free at the point of access, but that it will require an additional R200bn to fund the NHI. This is an estimate made by the Department of Health in 2011, but independent experts estimate that the amount actually required will be closer to R500bn. This money has to come from somewhere, and the Department of Health has said it will come from increasing taxes.”

According to FTI Consulting which conducted the analysis on behalf of BUSA and B4SA, just to raise an extra R200bn, the government will need to increase VAT from 15% to 21%, or raise personal tax by 31%, or a payroll tax that is 10x higher than the current UIF contribution, or a combination of these.

“This is not possible, because South African taxpayers who already fund the public healthcare system, are overtaxed and under extreme pressure, and the economy is struggling. This is clear from National Treasury’s recent proposal to cut government spending, warning of unprecedented challenges and South Africa’s deteriorating public finances.

“In addition, a single Government-controlled fund is at risk of running at a loss, and so Government will need to top up the NHI whenever it runs out of money, as we have seen in other countries similar to our own which have adopted this model. This presents a stark challenge to Government - a funding top up will be at the expense of other important services such as education, energy, social security and law enforcement, or the NHI will be forced to reduce the scope and quality of health care services it offers.”

“For all these reasons, we cannot support this model. The NHI’s source of funding and health care benefits need to be clearly understood before the Bill is adopted by Parliament, as it would with any Bill that has tax implications.”

The BUSA/B4SA submission makes the point that a sustainable and affordable NHI that meets the health care needs of everyone is possible if Government and the private sector work together.

The private health care sector is a valuable part of the national health care system with deep and valuable experience, resources, capacity, advanced technology, systems and a track record that can be used to support the NHI for the benefit of everybody. However, section 33 of the Bill does not allow this to happen as it limits the role of the medical aids, which are the main source of funding for private health care providers. There is no other country in the world that has adopted the single Government-controlled fund for health care that effectively prohibits alternative funding sources from the private sector.

Meeting the objectives of UHC requires a sustainable private sector collaborating through a contracting framework that is scientifically informed, independent, and transparent. This must take into account the many differences in costs related to the delivery of healthcare services in the private sector compared to the public sector, and must support continued investment in the private sector. Failure to do so poses an enormous risk to the country’s ability to keep highly mobile and vital healthcare skills and resources.

Martin Kingston, Chair of the B4SA Steering Committee, says the submission outlines proposed changes to the NHI Bill which will allow for the active and ongoing involvement of the private health care sector, and which are needed to set the country on the pathway to achieve universal health coverage. These proposed changes are also intended to address the operational and constitutional challenges contained in the Bill, so that once it is adopted the country can proceed with implementation of the NHI without lengthy litigation.

“We saw the benefits of an effective public-private partnership during the COVID-19 pandemic, when the private sector pooled its skills and funding to support government efforts for the benefit of all South Africans. This partnership continues today, where Government and Business are working together to address problems in the energy, transport and logistics sectors, and tackling crime and corruption. We believe this model, combining public and private funding, can serve as a successful template for ensuring access to quality health care and fostering social solidarity, to ensure no person is left behind. Our country has been at its most successful when the private and public sectors have been able to collaborate in a coordinated fashion, and regrettably, some aspects of the Bill constrain this. For this collaboration to work, it needs to be clearly stated in the Bill.”

In addition, the submission BUSA/B4SA outlined the impact on the provinces, highlighting that the Bill introduces material budgetary and operational changes in the provinces, in that it immediately re-assigns about R196bn or 85% of provincial health budgets to the NHI Fund, and requires significant human resources restructuring, as between the Fund and provinces, for which there is no detail outlined in the Bill. The provinces will no longer be responsible for allocation of this budget to its health care services and employees, as this will be managed at a national level, and the provinces will only be able to invoice the NHI Fund for services provided.

Coovadia said: “We appreciate the efficiency gains that this reorganisation is intended to being about. However, these are significant changes and so require proper planning and impact assessment prior to passing of the Bill to ensure that there are no service delivery interruptions, and that the impact on provincial employees is mitigated. To date, no plans have been shared and it is not clear whether the provinces have been informed of the substantial impact of the Bill, or the risks it introduces to health care delivery.”

Issued by Business Unity South Africa and Business for South Africa, 18 September 2023