Special advisor to the president answers 6 burning questions about the new NHI in South Africa

 ·22 Aug 2019

Dr Olive Shisana, the social policy special advisor to president Cyril Ramaphosa, has addressed some of the key issues around the incoming National Health Insurance (NHI).

Shisana said that the NHI will not require mass sums of money, as some critics have claimed, and that any additional taxes will be far lower than medical aid premiums.

The public health specialist has also commented on questions around the potential for corruption within the new bill.

Shisana moved to answer several questions raised by think tank, the Institute for Race Relations (IRR) after the bill was published earlier this month.

How will it be funded? 

The IRR has stated that current costs for healthcare in South Africa exceed R450 billion, based on both public and private healthcare spending – for true universal healthcare, costs could at least amount to that.

Shisana said that the cost of NHI will require an additional R33 billion a year by 2025/26, and at most R55 billion over and above the R220 billion currently spent in the public health sector.

“This is because the state is already spending on the provision of comprehensive services in several facilities, however, there are gaps that need to be filled to optimize the services,” she said.

“The demand that the NHI Bill should indicate costs is unfair because costs change over time.”

A director-general in the Department of Health, Shisana said that the scheme will be funded by:

  • General tax revenue;
  • Reallocation of funding for medical scheme tax credits;
  • A payroll tax (employer and employee);
  • A surcharge on personal income tax.

“Only the minister of finance can pronounce on taxes, not the ministry of health. Therefore, it will be unconstitutional to indicate the tax levels in a health bill,” she said.

However, she said that the notion that the NHI needs large sums of new money is unfounded.

“The assumption made is that the NHI will not build on the current budget. What is expected to happen to the current budget?

“The additional tax will be far lower than the current amount paid on medical aid premiums. NHI will introduce efficiency gains that will expand health care to all,” she said.

What benefits will it cover?

The NHI Bill is not expected to provide an itemised list of thousands of services that will be provided, Shisana said.

“The services will be comprehensive. The state currently provides comprehensive services.”

Will the emigration of doctors impact the NHI? 

Shisana said that the migration of doctors is a global phenomenon and not limited to South Africa. “We value our health professionals and want to retain them,” she said.

“The health professionals are committed to improving this health system. This is why we involved them in designing the blueprint for improving the health system.

“Just like we have managed to get consensus with them on the Presidential Health Compact, we will find a fine balance that ensures their practice is sustainable while they provide quality services to all.”

Shisana said this is enforced in the NHI Bill which requires that services contracted should include both quality and acceptable price.

Will the health sector be able to administer the NHI?

The assumption that problems with the management of some of the state-owned entities (SOEs) will automatically transfer to the NHI Fund is incorrect, said Shisana.

“Many public entities are functioning very well, such as the Medical Research Council, Council for Industrial Scientific Research, National Research Foundation, and Council of Geoscience, Water Research Commission,” she said.

“They obtain unqualified audits, some of them clean audits. To assume that because Eskom, Prasa, Denel had problems, therefore, NHI will have a problem is not founded.

“This is because NHI will not be a state owned entity, but more of a public entity that operates under the Public Finance Management Act, audited by the auditor general.”

Shisana said that the NHI will also be much simpler to administer than medical schemes as the payment mechanisms are streamlined.

While medical aid requires submission of individual claims, the NHI Fund pays providers a capitation rate, which is a flat amount per person served by that provider, which may be adjusted for factors that affect the need for health services (such as age), the specialist said.

“The cost of administering NHI at national and regional levels is calculated at less than 2% compared to 10-12% in medical schemes on average.

“All the administrative savings that NHI Fund gains as a result of changing the payment mechanisms will be applied to improve the quality and quantity of the health services.”

Shisana said that the NHI will also pay hospitals using a fixed amount based on the diagnosis of the patient rather than on the basis of itemised fee-for-service bills.

“Instead of each patient submitting an individual claim, the hospital will submit a single consolidated claim, at the end of the month, listing the patients treated and their diagnoses,” she said.

“The NHI Fund, similar to the tried and tested United States Medicare, will use the Diagnostic Related Grouping (DRG), which categorises hospitalisation costs and determine how much to pay for a patient’s hospital stay.”

How will corruption be curbed?

Shisana acknowledged that corruption exists in both the public and private sectors, and that it needs to be rooted out and prevented while perpetrators are prosecuted.

“The presidential health Compact signed by the president, the minister of health and key stakeholders in health including the health professionals, labour, business and civil society has called for setting up a particular anti-corruption unit in the Department of Health,” she said.

“This unit will be backed by the Health Sector Anti-corruption Forum which includes the SIU, Corruption Watch, Section 27, NDOH, Hawks, Financial Intelligence Center, NPA, Council of Medical Schemes, etc.

“This latter body will ensure that a risk engine is established to detect and prevent corruption of the NHI Fund and use special court tribunals to try suspects. These measures will go a long way to deal with this scourge.”

Why are medical schemes being so drastically limited?

For NHI to be affordable, efficient and equitable, it needs a national resource pool that will be used to provide health services to all, said Shisana.

“This is an instrument to end the race, class, gender divisions that continue to plague South Africa. For example, 76% of medical scheme members are white, and only 10% are black africans.”

She said that if medical schemes are allowed to offer the same services as NHI, most of the specialists, doctors, dentists, and allied health professionals will simply provide care to the mostly white people and leave black African people with under-resourced providers.

“This maldistribution of human resources is at the root of the health care crisis,” Shisana said.

Read: Discovery responds to the NHI: medical aids aren’t going anywhere

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