Government hits back at NHI critics

 ·12 Dec 2023

Deputy Minister of Health Dr Sibongiseni Dhlomo has hit back at Discovery CEO Adrian Gore and other critics of the National Health Insurance (NHI) Bill, saying that the private healthcare industry was widely consulted, and no amount of lobbying will change the government’s stance.

Responding to data presented by the Discovery CEO this week on the stark financial reality of the NHI, Dhlomo said that the government’s plans were being “distorted”.

He refuted that the bill passed by the National Council of Provinces last week was unchanged from the bill’s beginnings, and he also dismissed Gore’s calculations – particularly around the tax hikes that would be needed to fund the government’s scheme.

Most notably, however, he said that there is no intention from the government to back down – despite the lobbying from the private sector.

Private sector ignored

“Claims that the private sector was disregarded during the NHI Bill’s development are inaccurate,” Dhlomo said.

“From 2019 to 2023, Parliament conducted extensive consultations with communities and stakeholders, including private sector hearings, to gather diverse opinions. I was privileged to chair 36 public hearings meetings in the country attended by close to 36,000 people and had just under 1,000 people who came and spoke. Over 800 supported the bill, and another 120 did not support the bill.”

The deputy minister said that the government amended “some areas” of the bill based on inputs, adding that the voted bill by the National Assembly is not the same product sent to the Portfolio Committee on Health by the Ministry of Health and the Cabinet.

Critics of the bill – from businesses, healthcare professionals and analysts – have slammed the government’s plans for keeping section 33 of the bill unchanged. This section relates to medical aids specifically and would see their role in South African healthcare diminished and ultimately removed.

Discovery has called for this section to be amended to be more flexible so that the future of medical aids in the country can be determined at a later date once the NHI is more certain about what it will provide and how it will work.

Tax hikes are definitely coming

In the Discovery briefing, Gore laid out the financial reality of the NHI, stating explicitly that the government’s plans lack funding and that even the Department of Health’s projections will leave the country’s population heavily underfunded for “comprehensive” health coverage.

In summary, he showed that just covering the prescribed minimum benefits would require the government to find over R500 billion more in tax revenue each year – an equivalent 80% hike in taxes – and this would still fall short of the coverage currently available in the private sector.

Dhlomo has rejected this position entirely, saying small tax hikes will fund the scheme.

“Concerns about insufficient resources for NHI are unfounded. The Bill clearly outlines funding sources, including appropriations, general tax revenue, medical scheme tax credits, payroll tax (2%), and a surcharge (2%) on personal income tax,” he said.

The deputy minister said that the “key issue” with NHI funding lies in “allocative inefficiency”, not a lack of funds.

“By redirecting current funding sources to NHI, the country could immediately access substantial resources, as outlined in the White Paper on NHI.”

The deputy minister did not elaborate on which “funding sources” would be redirected but restated that a payroll tax and personal income surcharge would be used.

He said that private healthcare also carries a 15% “administrative cost” that makes it excessively expensive, whereas the NHI would only carry a 3% cost.

Gore noted in his address that removing the 15% “profit” from private healthcare still put private coverage at R2,000 (around three times more than the NHI would provide) – although doing so would also deter any incentives for further investment and skills transfer in the sector.

Not going away

The crux of Dhlomo’s response, however, is that the NHI will be moving ahead, regardless of the lobbying and backlash from the private sector.

“The resounding support for NHI from the majority, especially those who lack access to quality healthcare, influenced Parliament’s decisions, despite private sector suggestions not gaining favour,” he said.

“The focus was on prioritizing the needs of the underserved. For that, we remain committed, and no amount of lobbying or distortion of the narrative will change that.”

Dhlomo said that the NHI aims to “transform service provision, ensuring sustainable pricing by eliminating unnecessary costs found in private healthcare”, including “inflated medical scheme costs, specialists charging exorbitant fees for primary care, and patient overservicing”.

“NHI presents an opportunity to address these issues and create a more efficient and equitable healthcare system. We intend to roll out NHI incrementally working within the available resources as articulated in the constitution, i.e. progressive realisation of the right to health care,” Dhlomo said.

“The NHI Bill is a crucial step towards ending healthcare inequality in South Africa. A closer examination of the Bill’s provisions reveals a well-thought-out plan for sustainable funding and transformative changes in healthcare service delivery.”

Read: Big NHI reality check from Discovery CEO Adrian Gore

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