High “NHI tax” expected for South Africa: Discovery

South Africa’s largest open health system Discovery has raised concerns about the proposed National Health Insurance Scheme (NHI) and its funding.

The NHI law is currently undergoing a public consultation process, with a number of healthcare, civil society and political groups presenting why the new system should or should not be implemented.

In a presentation to Parliament this week, Discovery said it broadly supports the bill but is concerned about the funding gap it will create and how that will be passed on to state budgets and ultimately taxpayers.

The group estimates that private healthcare spending, including funding medical assistance for around nine million South Africans, currently represents R212 billion (44%) of total healthcare funding in South Africa.

If medical systems are abolished, as proposed in the NHI law, the R212 billion funding gap will have to be filled by the state, Discovery said.

“If taxes are used to increase the state healthcare budget to that amount, additional 4.1% of GDP must be collected in taxes – hardly feasible.

“A more viable way to increase public sector funding per capita is to maintain funding for medical systems and expand access to the workforce, while focusing government resources on the most vulnerable.”

If the government’s goal is to provide universal healthcare, it should instead adopt a blended funding model – similar to that in the Netherlands, Thailand and Indonesia – that would allow consumers to continue to choose private healthcare providers, while benefiting from a larger public and would enable private sector integration, Discovery said.

It added that no other country had introduced a regulated limit on the extent of private health insurance coverage.

While discussions on the new NHI are expected to continue for most of the year, the National Treasury has said it does not expect the program to represent significant cost pressures in the medium term, given that planned implementation of the program has been proceeding at an icy pace discussed more than a decade ago.

In its Medium Term Budget Policy Statement (MTBPS) issued in November 2021, the Treasury said that a limited costing of the National Health Insurance proposal had previously shown that around R40 billion per year in additional funding would be needed over the first five years and perhaps significantly more over time.

“Currently, however, there is not enough capacity in the healthcare sector to work on the content of national health insurance. The indirect subsidy to National Health Insurance has not been exhausted, the National Health Insurance Fund has not yet been established and the National Health Insurance Law has yet to be passed by Parliament.

“It is therefore unlikely that statutory health insurance will exert significant cost pressure in the medium term,” it said.

Read: Mediclinic sends NHI alert to South Africa

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