Medical schemes warn of tax hikes, emigration and corruption as government pushes through NHI

 ·2 Jun 2023

The Health Funders Association (HFA), representing approximately 73% of open medical schemes and 50% of total medical scheme membership in South Africa, has criticised the adoption of the National Health Insurance (NHI) Bill and has rejected it in its current form.

The group joined the South African Medical Association (SAMA), which expressed similar sentiments after the bill was rubber-stamped by an ANC majority in the portfolio committee for health in May.

The HFA said that the bill perpetuates several tenets, which it believes will undermine the quality of healthcare and the objective of moving towards universal health coverage in South Africa.

“While this version of the bill includes some minor amendments, these amendments fall short of the extensive recommendations made by the private health sector – including the Health Funders Association –  opposition parties, various experts and other role-players, as well as the concerns raised by the Parliamentary Legal Advisor,” the group said.

The HFA raised key issues with the bill, including the limitation on medical schemes, the lack of clarity on financing, the potential flight of skills and a drop in quality healthcare.

Limitations on the benefits that medical schemes will be permitted to provide

One of the biggest issues with the NHI that remains unaddressed is the role of medical schemes under the system.

According to the Bill, once the NHI Fund has been fully implemented, medical schemes will only be permitted to offer benefits for services not covered by the NHI.

The HFA said that adding the nearly nine million lives covered by medical schemes onto an already over-burdened and failing public health system would be detrimental to the quality of care.

“The input of the Parliamentary Legal Services to the Portfolio Committee indicates that the limitation on the role of medical schemes would violate the realisation of healthcare access. The constitutional implications of the right to access healthcare and freedom of association have not been addressed,” it said.

The group said that limiting the role of medical schemes will have broader implications on the South African economy as it could have a negative impact on investor confidence.

“Healthcare access is a key consideration for investment in South Africa and for South African employers. Furthermore, it will detract from investment in the healthcare system which would benefit the NHI Fund.”

A seeming lack of input from Treasury on the financing mechanism

The HFA said that the financing of the scheme remains up in the air, and little detail has been provided on where money will come from and whether this is sustainable or not.

“While the Bill talks to the principles of cross-subsidisation, it is not clear whether affordability studies have been conducted.  It is also unclear whether a longer-term financial strategy has been developed to sustain the proposed financing system,” it said.

“The Bill erroneously refers to the medical scheme tax credits as being paid to medical schemes rather than being a reduction in tax for individuals. This is a concerning misrepresentation as it suggests that the fiscal impact of the proposed tax increases is not being properly assessed.”

Before tax credits can be allocated to the NHI, these taxes must first be collected, and this amounts to an unacceptably high tax increase on a narrow base of taxpayers.

Flight of skills

Echoing previous sentiments from private healthcare providers, the HFA said that the government needs to work with the private sector to ensure that skills are retained in the country.

“If the Bill is passed in its current form, the HFA is concerned that there could be further loss of already constrained healthcare skills,” it said.

“A strategy to partner with the private sector in increasing training capacity of healthcare skills must form part of the implementation plan for NHI. This must be accompanied by a comprehensive retention plan to keep these skills in the country and part of the healthcare system.”

A single NHI Fund

The HFA rejected the single-fund model of the NHI, saying that it will be vulnerable to corruption and theft.

“As per the current bill, this Fund will not be autonomous as the Minister of Health will have far-reaching powers over the Fund in terms of appointments and regulations.

“HFA is particularly concerned that the unintended consequences of the changes to other laws included in the NHI Bill have not been properly addressed,” it said.

Quality of healthcare

While there are pockets of excellence, most of the health provisions and facilities in the public health sector do not meet the standards set by the Office of Health Standards Compliance (OHSC).

This raises concerns about the overall quality of healthcare under NHI as well as the time that it will take for there to be sufficient facilities that meet the necessary accreditation levels to support full implementation, the HFA said.

“We are cognisant that there is still a lengthy process to be undergone before the enactment of this Bill. However, we believe that the Bill in its current form is not fit for purpose if the matters raised are not urgently addressed,” it said.

Read: Ramaphosa steamrolls ahead with the NHI despite the multitude of red flags

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