NHI built on lies: health funders

 ·19 Jun 2024

Research commissioned by the Board of Healthcare Funders (BHF) shows that the national government has been dishing out unsubstantiated falsehoods, distortions and outright lies when making statements about private healthcare, medical aid, and the reasons why South Africa needs National Health Insurance (NHI).

The NHI Act was signed into law on 15 May 2024, putting into motion the establishment of a single-buyer healthcare system that will ultimately decimate private medical funding in South Africa.

Under the NHI, once fully implemented, medical aids will not be allowed to cover any of the services offered by the NHI Fund.

While it remains to be seen what services the NHI will actually cover—and the scheme is years, if not decades, away from being ‘fully implemented’—the medical aid industry is unimpressed with the laws as they currently stand.

According to Dr Katlego Mothudi, Managing Director at the BHF, having the ideal and goal of universal healthcare is commendable, but sidelining private funders is incredibly damaging to healthcare options in the country.

Making matters worse, the government has used falsehoods and misconceptions to villainise medical aids and private healthcare to help push the flawed laws through.

Mothudi said that one of the biggest misconceptions about the NHI—among at least ten others—is the central idea that healthcare is a ‘public good’, suggesting all healthcare funding should exclude medical schemes, and should be government-funded.

Dr Katlego Mothudi, Director at the Board of Healthcare Funders (BHF)

“Healthcare is more accurately described as a social good. A public good, like military services, is one that the government must provide and from which no one can be excluded, regardless of payment. While healthcare is essential, it is not feasible to provide it as a public good,” Mothudi said.

This is just one of the narratives the government has pushed and seeded into the public to pass the NHI, going as far back as 2009.

The BHF commissioned Professor Alex van den Heever, Chair in the Field of Social Security Systems Administration and Management Studies at the Wits School of Governance, to investigate these many claims.

“Despite their hyperbolic nature and lack of systematic research, these statements have significant weight due to their endorsement by influential individuals. Professor van den Heever’s report identified frequently repeated assertions that he concluded were unsubstantiated and untrue,” Mothudi said.

These are outlined below:

1. Medical schemes are unsustainable

NHI representatives said in 2009 that medical schemes were headed for collapse because of unsustainable financing models.

They posited that schemes were already reaching insolvency levels (in 2009) and that, “regardless of the NHI, if private sector medical schemes premium increases continue at this rate they’ll become non-existent anyway”.

  • Academic finding: The assertion that the medical schemes system is not viable and financially failing is not supported by the factual evidence. Over the period of 2005 to 2022, medical schemes have maintained stability in all relevant variables. This assertion is assessed as false.

2. Commercialisation is fatal to health systems

In 2011, the former health minister was quoted as calling private healthcare a “monster,” which was echoed by the former deputy minister as “monstrous and brutal.” The minister said it is an “uncontrolled, unregulated commercialisation of healthcare,” undermining healthcare as a public good.

  • Academic finding: Many countries have established regulated private health financing that works alongside social health insurance and universal healthcare. The position that these are not compatible is not supported by evidence and is assessed as false.

3. Healthcare is a ‘public good’

At the same time (2011), the former health minister posited that the use of a “public good” for “excessive profit” is unacceptable, which is why the government introduced the National Health Insurance scheme in the first place.

  • Academic finding: Healthcare as a ‘public good’ is mistaken and false. A public good is a technical term used in economics to refer to product markets where the exclusion principle cannot be applied—ie, you cannot exclude access to the product in exchange for payment or other eligibility criteria. Healthcare does not match this definition.

4. Medical scheme benefits run out

The government has repeatedly stated that medical aid coverage “runs out” around the middle of the year, and private hospitals turn patients away, and medical scheme members are forced to go to public hospitals, adding to the burden on public healthcare.

This has been used to drive the narrative that a state-run fund in the NHI is necessary to get rid of this practice.

  • Academic finding: The Health Department has not conducted a study to back up this claim. Medical schemes must cover the prescribed minimum benefits by law, oncology benefits cannot be exhausted, ICU services cannot run out, and where public facilities are used, the medical schemes must reimburse the state. The claim is assessed as false.

5. Out-of-pocket payments make up a lot of private healthcare spend

The National Department of Health has posited that OOPs, in the form of co-payments or direct payments to the private sector, are significant and are even required by medical aid members with full coverage. This confirms the system doesn’t work and needs to be replaced by the NHI.

  • Academic finding: The claim is not based on any empirical study that can be found. According to the World Health Organisation, out of 187 countries, South Africa has the 11th lowest OOP expenditure (2000-2022) with expenditure at less than 1% of GDP. The claim is assessed as false.

6. Money spent on private healthcare is inequitable

One of the most commonly stated justifications for the NHI is that the same amount of money is spent on private healthcare to cover a small percentage of the population as is spent on public healthcare to cover the rest of the population.

This has led to per capita spending of over R11,000 in the private sector versus R2,800 in the public sector.

  • Academic finding: Using after-tax money on private healthcare does not reflect health inequity, nor is there any clear instance of how this harms public health system users. The claim of inequity is regarded as false.

7. The distribution of healthcare professionals is inequitable

Another popular justification for the NHI is that the private sector’s profit motive and higher spend ‘steals’ professionals away from the public sector.

The health department has said that ‘the cream’ of South African society has access to huge financial and human resources, leaving less for the public sector.

  • Academic finding: The Health Department has no information system that can track or justify the claim. Thus, it has no evidentiary foundation. The department has also not performed any systemic analysis to support the claim. The official healthcare workforce makes no such claim, and available information contradicts the assertion. The claim is assessed as false.

8. Medical aid tax credits are an unfair subsidy to the rich

The Department of Health has said that ‘private money’ spent on private healthcare is subsidised by the state to the tune of R47 billion due to subsidies through medical aid tax credits.

It said that without these subsidies, medical aids would cease to exist – and it’s unfair on anyone not on medical aids because they do not get access to this subsidy.

  • Academic assessment: The department has not performed any systematic analysis to back up the claim, and is contradicted by the official documentation that outlines the basis for the subsidy. Further to this, the subsidy is 75.4% paid for by medical scheme households. The claim is assessed as false, manipulative and deliberately excludes any assessment of the subsidy and value it delivers.

9. Most medical scheme beneficiaries are white

A highly divisive and politically emotive argument used to justify the NHI is that private healthcare only caters for privileged white people.

This was repeated by president Cyril Ramaphosa at the signing of the bill, when he waved off the backlash to the laws as the fears of “well-to-do rich people” and referring to “white fear”.

  • Academic assessment: the claim is factually incorrect and false. More than half of all medical scheme beneficiaries are black South Africans, with white South Africans accounting for less than a third.

10. Medical schemes are risk-rated

An official claimed in 2009 that medical aid schemes have a risk-rating policy that recruits younger, healthier people who need less medical attention, only to dump them later or charge them more when they are old and cannot afford premiums.

  • Academic assessment: The Medical Schemes Act prohibits risk rating. The claim is assessed as false.

11. People find private and public healthcare as equally as good/bad

Officials have stated that the public and private healthcare systems are equally as good/bad, and that South Africans report the same levels of customer satisfaction when using private and public healthcare services.

  • Academic assessment: Using the same set of data, which was used as a basis for the claim, finds that it’s simply not true. Overall levels of satisfaction for public healthcare is at 53.8% ‘very satisfied’, compared to 92.6% for private healthcare.

The full presentation can be read here.

Read: NHI warning for employers in South Africa

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