The National Health Insurance Bill – how this could affect medical aid scheme members in South Africa

by Elmarie Jensen

What is the NHI Bill?

On 8 August 2019, Health Minister, Zweli Mkhize, introduced the National Health Insurance Bill (“NHI Bill”) at the National Assembly.

Under the Bill, a three-phased approach would be adopted.  The first phase was from 2012 to 2017.  The Bill of 2019 has two phases – the first from 2017 to 2022 and the second from 2022 to 2026.

Regarded as one of the biggest policy changes since 1994, the aim of the Bill is to create a NHI Fund which will pave the way for a “comprehensive overhaul of South Africa’s healthcare system.”  While the 60-page Bill goes into detail, in a number of areas, it still fails to provide answers to key questions on the proposed NHI system.

How will the NHI Bill work?

Various committees and teams including medical professors will be formed to decide which protocols doctors may follow, which treatments they may administer and what lists of drugs/technology can be used.  The State is proposing the introduction of a system in which patients could access a higher level of services (e.g. seeing a specialist) only on the basis of referral networks in order to keep costs down.

Under the Bill, every doctor will be bound to treat NHI patients in a specific way – whether or not they agree with it. If a doctor does not agree with the prescribed referral route as determined by the NHI, he/she will have to log a complaint.

Under the NHI, the State will literally control every aspect of healthcare, for example:

  • Decide which healthcare services will be covered;
  • Determine (dictate) the fees to be paid to doctors, specialists and other healthcare providers;
  • Decide the medicines to be prescribed;
  • Decide on the blood tests to be allowed;
  • Determine the medical equipment and health technologies to be used;
  • Determine the prices to be paid for every item from aspirins and antibiotics to options for childbirth and X-rays and MRI scans.

At this stage, it seems unlikely that the private sector would be allowed to play a role in managing what will in essence be a state-owned enterprise – at least twice the size of Eskom.  The future of private health care (exacerbated by fears among middle-class South Africans that they, too, could in future be spending hours at a time in long queues at under-staffed and under-resourced state hospitals) is currently creating major uncertainty and panic among members of medical schemes.

Who will pay for the NHI?

For the time being, the implementation of new taxes for NHI is not expected before 2022. 

Once implemented, however, payment to the Fund will be mandatory and will be collected as part of general tax revenue.

Initially government will not be raising taxes to fund the NHI, but will be using the funds that are currently available more efficiently. It is only in the final stages that Treasury will evaluate and implement new taxation.

Although Treasury is still working on a new financing paper for NHI, funding is expected by way of:

  • General tax revenue (which will include transferring funds from provincial health budgets to the NHI Fund);
  • A payroll tax (employer and employee);
  • A surcharge on personal income tax; and
  • Taxpayers’ medical scheme fees tax credit will be reallocated to the NHI Fund.

There is, as yet, no indication as to how much this may cost taxpayers. However, it seems more certain that taxpayers will no longer receive medical scheme fees tax credits, which for a family of four, currently provides relief of just more than R12,000 per year.

How will the Bill affect medical schemes?

Currently, the Bill provides very limited information about the future role of medical schemes.  It only states that, once NHI has been fully implemented (i.e. by 2026), will medical schemes be allowed to offer complimentary cover for services not reimbursable by the NHI, in other words, outside government’s package of care.

The Bill does not expressly exclude persons from obtaining services privately and outside the NHI Fund, however, private insurers and medical schemes will not be allowed to provide cover for services covered by the NHI.  This means that expensive treatments, previously covered by medical schemes, could become unaffordable if funded privately.

NHI roll-out not a walk in the park

According to a magnitude of parties opposing the NHI Bill, there are strong views that the Bill will create an easily captured governance structure that will concentrate power in the hands of the Minister of Health. As no Minister to date has been held to account for state capture, the concerned views are that “nothing will be different,” specifically with regard to the fact that the first phase of the NHI pilot projects that have been rolled out, costed R4 billion and achieved nothing.  According to Wits School of Governance Prof Alex van den Heever, the Department of Health has a consistent history of failure.

Although the notion that an NHS-style system similar to the U.K’s could work in South Africa is a genuinely heartwarming one, the reality of stone-cold practicalities, the risk of creating another state-owned enterprise to swallow public money – is the last thing our economy needs.

A recent report in The Times highlighted renewed fears about mass emigration of doctors and other health professionals.  Without doctors, we do not have a healthcare system – neither private nor public.  This would kill not only the NHI plan that relies explicitly on there being more doctors, but it may kill the private healthcare sector – or what will be left of it, as well.

The DA has questioned the constitutionality of the Bill and vowed to use all legal options to fight what it deems a bad draft law designed to turn the health system into “another state-owned enterprise.”  DA leader, Mmusi Maimane, also said the Bill would not pass constitutional muster as it will undermine the role of provinces in providing health care.

How could this affect you?

In a nutshell, your doctor may no longer be allowed to decide which medication you can take and which treatment would be appropriate.

You would also be denied free treatment should you deviate from the prescribed referral pathway, for example, your GP will have to refer you to a specialist.  You would not be allowed to go directly to any medical specialist.

As a member of a medical scheme, where does the proposed NHI Bill leave you? 

For the foreseeable future, medical schemes do not envisage any material impact on their business or on the cost or their benefit structures over the next few years.

As the roll-out of the NHI is expected to take place over an extended period, it will be limited by our country’s current economic and financial position, making the proposed Bill a potentially unattainable objective.

Over and above that, the legislative process may take a considerable amount of time. More than 10 different Acts would amendment in order to allow for this proposed Bill to be passed.

Further to this, the view of a multitude of role players is that the substantially limiting the role of medical schemes would be counter-productive to the NHI.  It is an undeniable fact that there are simply insufficient resources to meet the healthcare needs of all South Africans.   By preventing those who can afford medical scheme cover with an option to use it, the burden on the NHI will be increased and will drain the very resources that must be used for people in most need.


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