South Africa’s NHI disaster waiting to happen

 ·3 May 2024

Investec Healthcare Equity Analyst Letlotlo Lenake says that the NHI is completely unaffordable and presents a material risk for South Africa’s economy – especially with the foundational premise that 5 million taxpayers will foot the healthcare bill for over 60 million.

As the ANC-led government and president Cyril Ramaphosa charge ahead with plans to sign the National Health Insurance Bill into law, Lanake said the response to the question of whether South Africa can afford the system is a “resounding no”.

Speaking on the latest Investec Focus Podcast, No Ordinary Wednesday, the analyst said that the NHI Bill, as it currently stands, carries both quantitative and qualitative risks to the country.

Quantitatively, the estimated costs of the NHI are unachievable with the country’s tax base, and qualitatively, the resultant impact on resources like doctors and healthcare professionals poses even greater risks to healthcare in the country.

Investec Healthcare Equity Analyst Letlotlo Lenake

Lenake noted that the current annual estimates of the NHI—around R256 billion a year—are based on 10-year-old whitepapers and projections and haven’t been updated for inflation.

As a percentage of GDP, we’re looking at double digits. For an emerging economy, this is a significant amount to spend on healthcare,” he said.

According to the bill, a big portion of the NHI Fund will be coming from taxes. Either through budget reprioritisation or a host of other taxes. This is simply something the South African taxpayer cannot bear.

“If you take away medical aid tax credits, it adds quite significant costs on top of education and healthcare – it sends the wrong signals to an already small tax base,” he said.

Lenake said that there are currently around 24 million registered taxpayers in South Africa, but only a fraction of that account for the bulk of taxes, probably around 5 million.

Having 5 million taxpayers financing the healthcare needs of 60 million people does not make any sense, he said.

“It is a resounding no that South Africa can afford this,” he said.

Government’s delusion

Health activist and convenor of the Progressive Health Forum, Dr Aslam Dasoo, added to the discussion, saying that, once fully implemented, the NHI will likely cost around R700 billion.

“That will have to be raised and put into a fund. And the way they want to do that is by eliminating all medical schemes and having a single-payer run by the government, through the SOE model,” he said.

“You will no longer have any choice. This is a problem. The entire premise is misguided and misdirected.”

Dasoo said that South Africa’s public and private healthcare crisis was driven by the government, which mismanaged the public sector for 20 years and failed to regulate the private sector – and so now it is trying to direct attention away from this with the promises of an impossible system.

Health activist and convenor of the Progressive Health Forum, Dr Aslam Dasoo

“The NHI is a political sleight of hand. It’s a distraction; a deflection from a government that, over 20 years, has brought one of the best propositions we’ve had for anything approaching, say, the NHS in the UK, to its knees.”

Dasoo said that the NHI will not fix anything in South Africa because the government has failed to grasp that healthcare is an end-cost, a system that develops in response to declining health.

“Health is the start – based on social and economic determinants,” he said, adding that this includes nutrition, shelter, access to water, access to safety and education.

“If there is a breakdown in any of those modalities, health suffers, and the healthcare system has to respond. The failure to grasp that is criminal neglect,” he said.

The health expert said that the government should “dispense with the delusion of the NHI” and that the private sector needs to stop walking on eggshells and demand that the bill in its entirety be sent back to parliament.

The solution to the healthcare crisis, he said, is to “do what is logical”.

“If 85% to 90% of your population use the public system, spend your time on that. Fix that. Fix that to the extent that those who don’t want to be in private healthcare start migrating back.

“The private sector must be regulated. There are the recommended regulations in writing. Implement (them). Do those two things, and in five years you will have a completely different healthcare system,” he said.

Read: NHI war is just getting started

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