NHI funding plans remain unrealistic – IRR
6 November 2024
The latest announcement that the National Health Insurance (NHI) could be funded through the use of funds from the Public Investment Corporation (PIC) shows that the government still has no idea how the scheme will be funded, which is untenable.
So says the Institute of Race Relations (IRR) in response to Minister of Health Dr Aaron Motsoaledi’s answer to a parliamentary question revealing that his department and the National Treasury were in talks to access PIC funds to pay for public health infrastructure.
Says IRR analyst and writer Marius Roodt: “The fact that the health department is now looking to the assets of the PIC to potentially fund NHI shows that the government still has no idea how it’s going to fund it. It is only through raids like these or through large, unsustainable tax increases that NHI can be funded and neither is a good solution.”
Roodt notes that if PIC assets are being considered then it would not be surprising if the government started looking at other pension funds to help pay for NHI.
“The issue of prescribed assets – where pension funds are forced to put money into certain assets – is something that the ANC perennially raises. Do not be surprised if the ANC starts looking to private pensions as a possible funding source for NHI,” warns Roodt.
“Some people will say that the ANC would never look to private pension funds to fund a scheme like NHI. But senior health department officials have made it clear that they view the savings that South Africans have in private medical aids as something the government should have access to in order to fund NHI,” Roodt continues.
The government must forget about NHI once and for all, says Roodt.
“Nobody is opposed to ensuring that all South Africans can access good quality healthcare, but NHI will not ensure that. It will destroy that which works and not fix that which is broken,” Roodt points out.
The IRR has proposed a number of solutions to the problems facing South African healthcare. Firstly, it should be made compulsory for everyone in formal employment to join a medical aid, as recently proposed by the Hospital Association of South Africa (HASA. The cost of doing so for low-income earners should be funded by employers by obliging them to issue a monthly healthcare voucher to each employee earning below a certain threshold, enabling them to buy obligatory medical cover of their choice.
A minimum voucher value should be prescribed. This should be set at a level that allows employees to buy basic private health coverage while allowing them to top up the value of the voucher from their earned income should they prefer more expensive options. This would spread the benefits of private healthcare without overburdening the state. In return for picking up part of the tab, employers should be given tax breaks or other incentives.
The second intervention must see reforms which support medical insurance companies in creating and rolling out low-cost plans instead of opposing them, as the government is currently doing. There is no good reason why people on lower incomes should be deprived of the opportunity to buy private medical insurance if insurers can offer it – which they can.
Allowing more low-cost options in the market would dramatically increase the number of people benefiting from private healthcare, further alleviating the strain on the public healthcare system.
The government should remove restrictions on the expansion of the private healthcare sector. It should allow private educational facilities to train doctors, nurses, and other healthcare professionals. It makes no sense to restrict such training to state facilities, which, in any event, cannot produce sufficient numbers of doctors and nurses to meet the country's needs. The state should also allow private investors to build hospitals or clinics wherever they see a market opportunity rather than withholding permission to build such facilities.
Finally, in the broader context, the government must adopt policies that facilitate rapid economic growth. It is only through a growing economy that we will see a sustainable reduction in poverty and unemployment. With greater economic activity and more people employed, we will see more tax revenue, giving the fiscus the necessary additional resources it needs to ensure that public healthcare in South Africa is of an acceptable standard.
NHI is not the answer – apart from its myriad other problems South Africa can simply not afford it. And the latest attempt to access PIC funds to pay for it lays this out even more clearly.
Issued by Marius Roodt, IRR Head of Campaigns, 6 November 2024
