FW de Klerk Foundation’s submission on the NHI Bill: The proposed NHI will not achieve universal health coverage

20 September 2023

On 15 September, the FW de Klerk Foundation made a written submission to the National Council of Provinces on the National Health Insurance Bill. The Foundation analysed key failures of the NHI Bill with specific reference to the constitutional principle of the Rule of Law and rationality, the feasibility of the proposed system and governance concerns, coupled with the unfettered power of the Minister of Health (“the Minister”).

The Foundation fully supports the goal of Universal Health Coverage (UHC), which is defined by the World Health Organisation (WHO) as: “ensuring all people have access to needed health services (including prevention, promotion, treatment, rehabilitation and palliation) of sufficient quality to be effective while ensuring that the use of these services does not expose the user to financial hardship”. However, we do not think that the proposed NHI Fund will achieve UHC, and suggest that there are other more effective ways of realising this noble goal.

The Foundation is opposed to the NHI Bill because:

it breaches the Rule of Law in as far as it lacks clarity and is irrational;

it contravenes constitutional rights and freedoms;

it might affect the role of the provinces; and

it gives almost unfettered powers to the Minister of Health.

Lack of Clarity

The NHI Bill does not provide sufficient clarity with regard to the manner in which it will be funded or where it will find the trained and experienced personnel that would be required for its administration. There is no clarity regarding the proposed pricing system or the ‘complementary’ health services that medical aid schemes will still be able to provide; or the extent to which their members would continue to be covered for healthcare benefits they currently enjoy. It also provides little clarity on the role of the proposed District Health Management Offices and their relationship with provincial administrations.

Lack of Rationality

The Bill is irrational because the State does not possess the financial, manpower and managerial resources to implement the NHI; because of the failure of the Government to address the present crisis in the public health care sector before implementing the NHI; and because of its failure to give proper consideration to the likely unintended consequences of the implementation of the NHI.

Affordability and Funding

It is estimated that the NHI will cost at least R450 billion. The Treasury, the Davis Commission and the Minister of Finance have all stated that the scheme is unaffordable.

The Government estimates that the NHI would require (at least) an additional R200 billion in tax revenue which it would raise from a payroll tax, a surcharge on personal income tax, and by reallocating tax credits that are currently paid to medical scheme members.

Business Unity SA and Business for SA, state this will require raising “personal income tax by almost one-third, VAT from 15% to 21% or applying a payroll tax ten times higher than the current UIF contribution, or a combination of these measures.” The Minister of Finance, Mr Enoch Godongwana has commented that the funding model is unsustainable because “the tax payer is already overtaxed.”

Under these circumstances, statements by Dr Zweli Mkhize and President Ramaphosa that “the NHI will be implemented regardless of the costs” are a clear indication of irrationality.

Absence of manpower or managerial resources to administer the NHI.

The UK employs 1,2 million people to run the National Health Service (NHS) for a population of 66 million (only 6 million more than South Africa). This includes some 600 000 highly trained and experienced administrative staff. Even so, after 75 years the NHS is experiencing serious problems. Where will South Africa find the trained personnel to run the NHI – particularly when one considers the problems it already experiences in running public health services?

The State clearly does not have the managerial capacity to run the NHI. The State has experienced serious problems with the administration of, and combatting corruption in, SOEs and other government programmes. However, the NHI would present administrative challenges far greater and more complex than any of those confronting any other state institution – and, as the sole purchaser of all medical services and medicines, the NHI would also be exceptionally vulnerable to corruption.

Failure to address the critical problems in the public health sector

In view of the central role that public health services must continue to play in the implementation of the NHI, it is irrational to implement the NHI before the critical problems experienced by the public healthcare sector have been successfully addressed.

The Office of Health and Standards Compliance (OHSC) has reported that out of 730 public clinics and hospitals inspected, only “1% were fully compliant” with basic healthcare standards such as hygiene and the availability of medicines; “5% were compliant ‘with requirements’”; “16% were ‘conditionally compliant’”; and an alarming “77% were non-compliant.” The OHSC attributes these bad outcomes to ‘a lack of competence’, coupled with poor ‘leadership and management.’

“The government’s contingent liability for medico-legal claims stood at roughly R120 billion in the 2020/21 financial year. This was almost half the entire national healthcare budget.” This included cases of medical negligence such as “botched operations or brain damage to new-born infants.”

“Corruption in public healthcare already costs the [public healthcare] system an estimated R40 billion a year.”

Failure to consider the likely unintended consequences of the NHI and its rejection by healthcare practitioners, business and taxpayers

Rationality requires reasonable consideration of the likely consequences of the NHI.

There are deep concerns that the implementation of the NHI, as presently devised, may lead to the destruction of South Africa’s world standard private health care sector without any assurance that the new system will provide healthcare services that are any better than those presently offered by the public healthcare system.

Medical practitioners have indicated that they would emigrate, or give serious consideration to emigration, if the NHI were implemented. A 2019 Solidarity poll found that 41.6% of health care practitioners would consider emigration if the NHI scheme were implemented. “Only 15% of the respondents were of the opinion that the NHI could be implemented successfully, and 84.5% believed that the NHI had the potential to destabilise the health care system in South Africa.”

There are also well-grounded concerns that the absence of proper healthcare services, that might eventuate from the implementation of the NHI, and the onerous personal taxation that it would involve, would lead to accelerated emigration of skilled South Africans who have until now made use of the private healthcare sector. This could have disastrous consequences for the future of the country.

Contravention of constitutional rights, freedoms and provisions

It would contravene the right to bodily and psychological integrity in Section 12(2). People have a right to make decisions regarding their personal health care and the health care of their families, including the right to choose who should provide them with health care.

It would contravene Section 22 which guarantees the right of citizens “to choose their trade, occupation and profession freely.” This must include the right to decide for whom and where they will work. The NHI would eliminate, or greatly diminish, medical insurance schemes and would deprive many of their current employees’ the right to pursue their chosen occupation.

The NHI’s implications for the future role of provinces

It is proposed that District Health Management Offices should be established to “manage, facilitate, support and coordinate the provision of primary healthcare services and non-personal health services at district level”. This might have far-reaching implications for the role of provinces in the provision of healthcare services which, in terms of Schedule 4A of the Constitution, is a functional area where both the National and Provincial Legislature have concurrent legislative competence.

The unfettered powers of the Minister of Health

Although the NHI Fund is supposed to be an “autonomous public entity” it would be accountable only to the Minister. In the 2018 version of the Bill, the NHI Fund Board was described as “an independent board” that would be “accountable to Parliament” and not to the Minister. The current version of the Bill no longer includes any such provision.

The Minister would have extensive powers in respect of the functioning of the NHI Fund and would appoint all the members of the Board of the NHI Fund. There are no satisfactory criteria for Board members and the Minister would have the power to dissolve the Board.

Remedies

The Foundation suggested that, in its laudable efforts to achieve Universal Health Coverage, the State should give consideration to the following proposals:

It should take urgent and comprehensive steps to rebuild the public healthcare sector and to ensure that it meets fundamental healthcare standards and functions cost-effectively and without corruption.

It should engage the private health sector, including medical schemes, to devise ‘low-cost options’ for the poorer members of the population to access private medical healthcare. It should consider the 2022 proposals of the Council for Medical Schemes to implement low-cost options that could provide access to specified primary healthcare services for R130 per adult member per month – and that would provide coverage to at least 2.3 million low-income workers.

It should make provision for the full deduction of medical expenses from taxable income. This would help give more people who are currently unable to access private health care the opportunity to do so.

It should take steps to curb the alarming increase in medico-legal claims against provincial health departments which currently result in unacceptable and un-budgeted costs.

Most importantly, the Foundation suggested that there is an urgent need to achieve cross-party consensus among all stakeholders on how best to achieve Universal Health Coverage. The public should be properly informed on alternative models, and not focus only on the NHI.

Opposition to the NHI – as it is envisaged in the Bill – does not mean opposition to the ideal of UHC. It simply requires consideration of more inclusive, workable and constitutionally compliant ways of achieving this noble goal.

Read the Foundation’s full submission here.

Issued by FW de Klerk Foundation, 22 September 2023