NHI funding demands in South Africa – Treasury responds
The National Treasury has responded to the parliamentary hearings on the medium-term budget policy statement (MTBPS) delivered last week, including its financing strategy for the controversial National Health Insurance (NHI) scheme.
While the NHI is receiving some attention in the budget, the Treasury pointed out that the National Health Insurance Act has not yet been promulgated, and much of the financing towards the scheme is through indirect grants.
The country has budgeted just under R3 billion for the NHI over the 2025 Medium-Term Expenditure Framework (MTEF) period, R2.5 billion of which is indirect health spending and R460 million of which is direct NHI funding.
The direct grant relates to the National Department of Health’s preparations for the implementation of the NHI, including the testing of reforms, improving services of primary healthcare facilities and aligning infrastructure with national and provincial policy directives.
The indirect financing, which accounts for the bulk of the grant, relates to two projects: health facility revitalisation, and development of health systems. Both of these serve the NHI, but are also independent projects not directly tied to the NHI.
“Patient information systems, as one of the key focus areas of this grant, is allocated R112.5 million in 2024/25 to continue its work on implementing patient information systems.
“For general practitioner contracting, the department is allocated R103 million to develop and test strategic purchasing,” Treasury said.
Treasury said that it, along with other key departments, is part of the NHI Technical Work Group, which is looking for a “reasonable rollout of the NHI” while looking at various aspects like matters related to intergovernmental relations, strategic purchasing, and crucially, tax policy.
However, this is nowhere near ready for launch.
“A substantial amount of work still needs to be commissioned by the department, supported by other stakeholders, to enable the successful and effective implementation of NHI,” the department said.
“NHI act still needs to be promulgated, and NHI regulation needs to be gazette for comment.”
Importantly, the NHI fund—enabled by the NHI Act—will take two to three years at minimum to establish fully and list, Treasury said.
“A lot of work needs to be done on allocating health functions across the spheres and potential function shifts.”
Funding the NHI remains a crucial and unanswered question.
The government has not given a clear indication of how much the scheme will cost to operate, nor how and where the funding will come from.
Estimates based on decades-old data sit around R250 billion extra funding needed, while the medical aid sector has put the number over R1 trillion for private-healthcare-level coverage—a figure the health department has denied, without providing a counter-estimate.
In terms of funding sources, the NHI Act makes provision for the government to fund the scheme by moving budgets around or by introducing and increasing taxes.
The government has floated a payroll tax and other surcharges—along with removing medical aid tax credits—as a possible stream.
There have also been proposals to use funds from South Africa’s Public Investment Corporation (PIC) to finance public health infrastructure in preparation for the scheme.
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