BUSA: Building a sustainable healthcare future requires thoughtful reform, care and collaboration

29 April 2024

As the election draws closer, the future of our nation is at the forefront of our thoughts. We are fully aware that South Africa's success depends on our ability to generate employment, boost the economy, tackle crime and corruption, provide education for our youth, secure reliable power and water supplies, and deliver high-quality healthcare to all. In order to achieve a fair and sustainable healthcare system, it is crucial that we establish a system that will benefit present as well as future generations.

While there are undoubtedly areas in need of reform in both the public and private healthcare sectors, it is important to recognise that there are also areas of world-class excellence, notably the many outstanding healthcare professionals and hospitals operating in both domains.   It is vital that healthcare reform secures and improves rather than damages these areas of excellence, while also sustainably bolstering health system resources.  The private sector has made immense contributions to job creation, innovation, service delivery and infrastructure investment.  

Most importantly, any healthcare system we adopt for our country must be affordable, feasible, sustainable, and resistant to corruption. Furthermore, it is essential for the healthcare system to be in accordance with our Constitution.  This is a long-term investment for our country that needs to be prioritised over short-term political ambitions.  

The current NHI Bill, which is on the President’s desk for consideration, is unfortunately not consistent with building long-term sustainability and access.   It is deeply troubling that a vast number of concerned stakeholders have repeatedly raised these concerns throughout the legislative process. 

It is regrettable, not only for this Bill, but for the country itself, that their cautions and proposals were disregarded without proper consideration. As my colleague, Busi Mavuso, CEO of BLSA so rightly said in her weekly newsletter, proper public participation is a vital step in the development of sound policy. Ignoring this step, she said, is a missed opportunity to improve laws and regulations to maximise the public benefit. 

Business is not the only segment of society that is deeply concerned.  The South African Health Professionals Collaboration, a group of some 25 000 public and private healthcare doctors, dentists, specialists and allied healthcare workers also believes its members’ concerns and recommendations throughout the parliamentary process were dismissed, raising serious questions about the fairness and effectiveness of the democratic process.  

Most recently, the Public Servants Association (PSA) raised its own concerns, cautioning that significant issues need to be addressed to ensure the NHI’s success, and to mitigate negative consequences.  It was particularly concerned that the transition to the NHI may result in public servants losing out on the medical-aid subsidy they currently receive through the Government Employees Medical Scheme (GEMS). This, it said, could place an undue financial burden on public servants and their families, particularly if they are required to contribute to the NHI fund whilst receiving reduced remuneration benefits. 

This not only affects public sector employees, but every citizen that has a medical aid subsidy as part of their employment benefit package, as well as those benefiting from medical scheme tax credits that reduce their personal income tax burden.  The intention of the Government to eliminate this benefit in order to finance the National Health Insurance (NHI) should be a cause for concern for all employers and employees who access these benefits. 

The reality is that all medical scheme members, whether they reside in the public or private sectors, have invested their own after tax income to secure their, and their families’ healthcare needs.  Redistribution and cross subsidies are important principles in our highly unequal society, but this needs to be carefully constructed to ensure long-term sustainable access to healthcare, which is both a social and economic imperative.

In the current version of the NHI Bill, Government says it will divert money currently being paid in medical scheme contributions in the private sector into the public sector.  The fact is, though, that this money doesn’t belong to the state, but to private citizens.  The only way for the government to divert this money is by imposing a heavy tax burden on its citizens.

The financial risks to the country and taxpayers are substantial. The Department of Health has not yet defined the package of benefits that the NHI will offer, so the true costs are thus far unknown. However, the National Department of Health has indicated that it will need to raise an additional R200 billion each year to supplement the current national health budget. According to the 2017 White Paper on the NHI, this will come from a combination of increases in VAT, payroll and personal income taxes.

The uncomfortable truth is that to raise an extra R200bn per year, Government will need to increase VAT from 15% to 21%, or raise personal tax by 31%, or a payroll tax that is 10 times higher than the current UIF contribution, or a combination of these. Raising income tax by a third is simply unaffordable for a declining tax base, which is already under enormous financial strain, and raises significant economic risks for the country overall, with knock-on effects which do not seem to have been given due consideration to date. 

Even if Government was able to raise this money, it would mean that the package of services that citizens are able to access through the NHI would still be extremely limited.  For instance, if the NHI package of benefits is only available in the NHI Fund once it is fully implemented, those currently on medical aids will only have access to less than one-third of the benefits that they currently access through their medical aids. This will be the case even allowing for more efficient purchasing mechanisms. 

This is akin to asking someone who currently pays R100 to receive 100% of the benefits to continue paying R100, but only receive 30% of the benefits. This leaves medical scheme members with the challenge of having to find additional funding in their already-stretched household budgets, to preserve access to existing benefits. Clearly, this is an unsustainable situation, which is also constitutionally unsound.

Given that none of the concerns raised by affected parties and stakeholders were taken into account, and that there are so many challenges with this Bill, including its unaffordability, the lack of detail and clarity outlined in the Bill including on the scope of benefits, and that it contains fundamental constitutional breaches, the NHI Bill is likely to face significant legal challenges if signed by the President.  This will further delay the country’s ability to advance universal health coverage, undermining much-needed healthcare reform, which is critical for driving economic growth. 

By my reading, the majority of stakeholders, including BUSA and B4SA, support universal health coverage but believe that certain sections of the Bill need to be amended to ensure that it has a chance of success.  Section 33 of the Bill, for example, limits the participation of the private healthcare sector by stating that medical aids will not be able to cover any healthcare service that the NHI covers once it is fully implemented.  

Restricting the participation of medical schemes in financing healthcare services creates uncertainty for the broader private healthcare and business sectors.  Such limitations risk stifling innovation and much-needed investment in our healthcare system, and our economy.   Importantly, there is no other country in the world that places a legislative limitation on access to private healthcare cover to its citizens, not even the wealthy countries with a substantial tax base.  What we need to do is to create an integrated approach and common framework for benefits that supports social solidarity and which is also fiscally sustainable.  

Amending the Bill also provides an important foundation for public private collaboration and partnership.  The private sector’s participation in the NHI is critical to its success, not only in terms of funding, but also in the expansion and delivery of quality healthcare services. 

As a country, we have consistently seen that when the public and private sectors work together, pooling our substantial resources, expertise, skills and technical know-how, we are able to achieve far more than when we work in isolation of each other.   We are working together to tackle our country’s infrastructure, energy, transport and crime challenges, and we must work together to ensure that the healthcare system we land with is practical, affordable and implementable.  

Amending the NHI Bill to allow for private sector participation in funding and provision of care would not only strengthen the healthcare system but also unlock new, and more immediate, opportunities for innovation and job creation. By working together, we can harness the strengths of both sectors to build a healthcare system that is truly world-class.

Our strong recommendation, given the myriad of challenges, but also the opportunities, is for the President to send the Bill back to Parliament so that it can be properly reconfigured for its ultimate success.  Shortcuts in the legislative process for short term political gains are in nobody’s interest.  It undermines citizens and the country at large, and will inevitably lead to broken promises and a further erosion of citizens’ trust in their Government’s ability to implement sound policy.

Khulekani Mathe is BUSA’s CEO Designate