The NHI could work in South Africa – but not like this

 ·20 Oct 2023

Discovery CEO Adrian Gore says the National Health Insurance (NHI) could work in South Africa if amendments are made to the current Bill.

Despite being passed by the National Assembly earlier this year, the NHI bill has received widespread criticism from private healthcare players, business leaders and parliament’s own legal service.

In its annual report, Discovery CEO Adrian Gore said that the NHI Bill in its current state is unworkable but did not dismiss the idea of universal healthcare.

“The current version of the Bill states that once NHI has been fully implemented, medical schemes may only offer complementary cover to services not reimbursable by the NHI Fund,” Gore said.

“Universal healthcare is crucial, and the NHI is a remedy to achieving this.”

“However, we are of the view that the NHI is not workable without private-sector collaboration. Funding the additional healthcare spend required for NHI through tax increases on a small base is not sustainable.”

Discovery Group CEO Adrian Gore

Outgoing Discovery Health CEO Ryan Noach previously warned that the implementation of the NHI will lead to a tax revolt.

“Treasury has not calculated how much the NHI will cost. The only number in the public domain is R200 billion, provided by the Department of Health. In reality, it is double that,” Noach said.

Using Professor Roseanne Harris’s research, Discovery Health said that the following tax increases would be needed to generate the extra R200 billion for the NHI.

  • Increase VAT from 15% to 21.5%.
  • Increase personal income taxes by 32%.
  • Implement a payroll tax equivalent to ten times their current UIF contributions.

Although there are different combinations of VAT, personal income taxes, company taxes and payroll taxes, the total funding results are similar.

“These big tax increases will only get the government to around 50% of what the NHI requires,” said Noach.

“These three scenarios are entirely unfeasible. You don’t need to understand that there will be a tax revolt. You will never raise it.”

Gore shared a similar sentiment over the tax increases while warning about healthcare access to medical scheme members.

“Further, even with this additional spend, total healthcare funding would still be insufficient and would result in the medical scheme population paying more tax and getting substantially less healthcare,” he added.

That said, with changes to the current Bill, the group CEO believes that the private and public sectors can work together to achieve some of the goals.

“The resources of both the public and private sectors are needed to deliver universal health coverage, and changes to the current version of the proposed Bill could facilitate this collaboration.”

Discovery is not the first medical scheme provider to note that the NHI could work in South Africa, with Momentum seeing the initiative as a way to address the nation’s incredible health inequality.

Momentum said that the government should not kill medical aid members but instead work with them to create low-cost medical aid options, allowing the private sector to take some of the pressure off the public healthcare system.

Read: Discovery announces price hikes for 2024 – here’s how much more you’ll be paying

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