Big trouble for the NHI
Health Minister Aaron Motsoaledi has doubled down on pushing ahead with the National Health Insurance (NHI) scheme despite opposition—but investors seem confident that the plans will not land in their current state.
This was shown through a rally of healthcare stocks following the 2024 election, especially among private hospitals, where shares have shot up as much as 23%, according to analysts at Foord Asset Management.
This rally is tied to the “lower probability of the NHI being implemented in a coalition government”, the group said.
Last week, Motsoaledi announced that the health department would embark on “massive roadshows and workshops” to ‘consult’ on the NHI. However, this would be happening as it moves ahead with implementing Section 57 of the NHI Act, which relates to the “transitional arrangements” for the timelines for implementing the laws.
The minister’s announcement has been met with confusion on two fronts. Firstly, going on a roadshow to consult on the NHI makes little sense, given that provincial consultations were done before the laws were signed by the president.
Industry stakeholders and opponents of the laws who participated in those consultations said they were flat-out ignored, and none of the issues raised were changed in the final bill, so consulting after the fact feels disingenuous.
Secondly, while the NHI Act has been signed into law, none of its sections have been promulgated—so they are not yet in effect.
Legal challenges abound
According to Michael Settas, Free Market Foundation Associate and Chairman of the Health Policy Unit, the minister’s aggressive approach to opponents of the NHI, as well as his obsession with rolling out the scheme as quickly as possible, is going to stumble before the courts.
This was already seen with the recent ruling against the ‘certificate of need’ in the National Healthcare Act, which would have dictated where private doctors could practice, what type of facilities they could operate in, and criminalised operating without a certificate.
The certificate was declared invalid and unconstitutional by the High Court, with trade union Solidarity—who brought the challenge—saying a key “pillar of the NHI” was defeated.
Motsoaledi was quick to point out that the ruling had nothing to do with the NHI, and said trying to link the two was ‘anti-NHI propaganda‘.
However, Settas said Motsoaledi was out of step with the reality of the two Acts (NHA and NHI) and the fundamental similarities between the two.
“The certificate of need and the NHI are both predicated on the failed socialist ideology that centralised autocratic control can efficiently manage the dynamic forces of supply and demand.
“Several legal challenges have already been filed against NHI, and using Judge Millar’s ruling as a proxy, it is likely these will succeed – at least at the High Court level,” Settas said.
Indeed, the NHI is already facing at least two legal challenges, with many more ‘waiting in the wings’ if the government does not find a way to step down from its current implementation path.
The biggest medical scheme in the country, Discovery Health, recently announced that it would be joining the Health Funders Association (HFA) challenge to the NHI.
The HFA is one of many groups and healthcare representative bodies that are pursuing litigation against the NHI on the basis that it is unimplementable and unconstitutional.
Other litigants include trade union Solidarity, the South African Medical Association, the Board of Healthcare Funders (BHF), the South African Health Professionals Collaboration and the Democratic Alliance.
The legal challenges against the NHI are happening on several fronts, including technical implementation as well as the rationality that was applied in processing and approving the laws.
Big detractor
Even outside of the legal challenges, however, the government faces internal pushback with the new Government of National Unity (GNU) alliance partners not happy with the NHI—including the DA and IFP, the so-called ‘founding members’ of the GNU.
But even above them is the National Treasury, which has been at pains to not publicly voice it opposition to the scheme,
In September 2023, finance minister Enoch Godongwana voiced his concerns about the NHI, particularly the funding aspect.
He said that finances in the country are already under pressure and that the state would better be equipped to invest more in upgrading hospitals and infrastructure to make them more attractive to everybody, rather than going the costly route of the NHI.
In the 2024 budget, he allocated R1.4 billion for the NHI grant over the next three years—a relatively small sum—as a sign of “commitment” to the scheme. But not a convincing one.
Godongwana’s hesitations are not unfounded, either.
No one in government—not even the scheme’s biggest fans—can answer the funding question. With no costing (or even an idea of what to cost) and outdated estimates, analysts and experts have put the figures needed for the NHI anywhere between R250 billion and R1.3 trillion.
There’s no money in the budget to fund this, and any tax measures will be met with outrage and opposition from the country’s small tax base.
Loading ...
