Research shows NHI cannot solve SA’s healthcare problems


New research provides crucial analysis and insight into South Africa’s proposed National Health Insurance and the dramatic, detrimental impact it will have on both the private and public health sectors.

The research paper, ‘An Overview of South Africa’s Health Assets and the National Health Insurance Policy‘, formed the basis for oral evidence provided to the Parliamentary Portfolio Committee on Health on the NHI Bill, prior to Parliament convening on the matter today.

It examines the National Health Insurance (NHI)’s 10-year long policy journey and, in so doing, highlights how the government’s problem statements supporting the NHI contrast starkly from reality.

The funding argument

I examine how the NHI’s adoption process has been almost exclusively underpinned by the government’s narrative of a lack of funding and a shortage of doctors as the causes of the public sector’s maladies, and that South Africa needs the NHI to attain universal health coverage.

However, the research has shown that both the funding argument and the need for universal health coverage are grounded in false premises.

Several studies, both local and international, show that South Africa factually achieves universal health coverage. The concerns raised by these studies do not relate even remotely to the universality of access but rather, broadly speaking, to the quality of care in the public sector and cost thereof in the private sector.

On the funding aspect, public health expenditure has grown substantially over the past two decades, so much so that expenditure in 2020 was, in real and per capita terms, more than double that of 2000. It is also noted that the number of medical personnel employed by the state grew by 42% between 2006 and 2016.

Our research compares the public healthcare expenditure of 25 richer peer countries, highlighting that South Africa has proportionally greater per capita public health expenditure than most of these countries yet achieves some of the worst clinical outcomes by comparison.

Impact on the private health sector

In my analysis of the private sector, I point out how the detailed and evidence-based recommendations from the Competition Commission’s six-year long Health Market Inquiry have been completely ignored by the government in the NHI policy process.

The inquiry laid out a detailed, expert blueprint for transforming the private sector into a more affordable and competitive market, yet the NHI proposals are to sweep aside the private sector and effectively nationalise it under the broad rubric of government’s socialist NHI ideology.

The research also highlights what an extreme outlier the NHI proposal is by international standards – only five countries have attempted a similar structure, with Cuba being the only developing economy to have done so. It is common knowledge that South Africa’s ruling party has a tight relationship with Cuba’s socialist government, but even the NHI proposal would perplex Cuban officials.

The Cubans have decades of experience with their NHI equivalent, and even though it has a more efficient and less centralised structure than what the NHI is proposing, their health expenditure is an eye-watering 13% of GDP, a stark outlier in health spend by any developing economy.

A balance between quality universal health care and affordability

The research paper emphasises that countries that achieve a balance between quality universal health care and affordability do so by pursuing coherent and achievable policy objectives that leverage off both the public and private assets in the respective countries.

It can be highlighted that South Africa has two highly substantial health assets in the public and private sectors, and it is much more achievable and substantially less disruptive to implement reforms to these existing assets to achieve the policy objective of quality healthcare for all citizens.

The NHI policy process has been technically superficial, with an overt reliance on a lack of additional funding – specifically centralised and under government control – as being the singular impediment to delivering better health care.

Besides the fact that this reform is simply beyond the capacity of the state to implement, it is proposing to simultaneously disrupt and replace both the private and public sectors with an entirely untested system.

At best, one can regard this proposal with a great deal of scepticism and, at worst, consider it to be reckless endangerment of the country’s health systems.

Access the full research report HERE.

Michael Settas | Consultant and Member | Health Policy Unit | Free Market Foundation | mail me



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