Numerous problems plague the NHI plan

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According to Stats SA, the country has about 58.8 million people living in the country. Of those, 8.8 million pay for private medical cover, and the Council for Medical Schemes’ annual report shows that they pay a collective sum of R179.8 billion a year, at an average contribution rate per member of R1,695.10 per month.

The intention of the National Health Insurance (NHI), on implementation in 2026, is to provide everyone living in SA the same type of cover in the public system as that enjoyed by those that can afford it in the private healthcare sector.

There are however significant problems with actualising the NHI, ranging from conflicts of interest to the devastation wrought on public finances by the prolonged lockdown, to government’s demonstrable wastefulness and corruption in state owned enterprises. None of this portends well.

Conflicts of interest

The NHI bill gives the minister extensive powers to make key appointments, including members of the board, the CEO, the advisory committees responsible for determining what benefits patients will get and how much service providers will be paid, and a new procurement office that will manage lucrative tenders for medicines and equipment.

This arrangement leaves the fund wide open to corruption and it creates a conflict of interest between operations and accountability: if your appointment is political, you are accountable to the appointer and the governance structure means nothing.

If the minister does not like what the CEO is doing, he can simply remove them. An instructive example of how government handles its own largesse can be best seen with the operational problems and lack of accountability within state owned enterprises and how poorly these enterprises perform and need bailouts.

Healthcare cannot be load-shedded when the system is overburdened or sick people told that they cannot use services because ‘something is down’.

Healthcare can often be a matter of life and death and the issues that bedevile state owned enterprises, due to government ineptitude, would result in needless deaths in the healthcare system just as happened at Life Esidimeni.

COVID-19 funding crisis

The bill proposes several new taxation options for raising additional revenue, such as a surcharge on income and a payroll tax.

Thankfully there is a hint that things may not move as fast as the government hopes, as there is an acknowledgment that the current fiscal environment does not lend itself to raising taxes.

The hit on the fiscus due to the prolonged lockdown will also realistically and mercifully mean that implementing the NHI will be significantly harder for the government as they scramble to find funding sources.

There is also the matter of South Africa rising debt to GDP ratio which Finance Minister Tito Mboweni warned could balloon to more than 100% in his Mid-Term Budget Policy Statement in October should government fail to cut spending and shrink the budget deficit.

South Africa’s debt in October stood at 81% of GDP and the government’s failure to cut the public wage bill due to pressure from unions means that a demonstrably expensive NHI, will be ruinous for public finances.

Unhappy healthcare workers

According to trade union Solidarity, based off questionnaires sent to healthcare workers by their research institute, 20.8% of healthcare workers have already initiated plans to emigrate and a further 41.06% say they will do so if the NHI is fully implemented.

Many of those healthcare workers simply do not believe that the NHI will deliver on promised quality, and will in fact hamper healthcare workers’ ability to deliver quality care to patients.

Healthcare workers, just like many of their fellow South Africans, simply do not trust a government that has shown itself to be corrupt, without accountability and lacking in transparency.

If the government cannot get public education right, why should healthcare workers trust that they will get a comprehensive and more complex public healthcare system right?

Resentment (lack of social capital)

The bill does not have any mechanisms that encourage cost control from South Africans. It is illustrative to consider that in the middle of a pandemic, when the country needed as many free beds and healthcare resources as possible, some South Africans chose to drink excessively and inflict trauma-related injuries on each other and use up precious healthcare resources.

Put another way, the South Africans who pay the most into the system will use it the least. In a 2018 green paper entitled Prevention is better than cure, delivered to the International Association of National Public Health Institutes, UK Health Secretary Matt Hancock called on UK citizens to take more care of their own health and to take greater responsibility for taking strain off the National Health Service (NHS) by eating and drinking less.

There is not much indication many South Africans will simply choose to do the same sort of thing of their own volition. This will create resentment between those who are responsible and pay in, and those who are not, and do not.

Simply put, people who know they have to pay for their own healthcare are more judicious and careful with their own health.

Uncosted social issues

The other side of the prevention-is-better-than-cure coin is that, because of the devastation caused by the extended lockdown, the health problems relating to joblessness, dangerous neighbourhoods and food insecurity will be pushed onto the NHI.

Essentially, government failures will be dumped onto the system and many people who are stuck in poverty and who are hungry will struggle to make choices that lead to better health outcomes.

These are downstream costs that will destabilise the healthcare system and undermine any realistic chance of quality care across the board.

In conclusion

These factors show that the NHI is expensive and impractical. It will most likely be a monumental waste of taxpayer money and a boon for the most corrupt.


Sindile Vabaza | Writer and aspiring Economist | Free Market Foundation | mail me


 



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