The octopus that will strangle health care

John Kane-Berman says the NHI is a megalomaniacal system we literally cannot afford

Much has been made of the very high costs likely to be incurred by the government's proposed National Health Insurance (NHI) system. A final white paper on the NHI published in June this year puts its starting costs in 2025 at R256 billion in 2010 prices. Other estimates put the figure at double this. Last week the committee on tax headed by Dennis Davis said that NHI would be unaffordable without substantial tax increases. The Department of Health still has no practical ideas about funding. It thinks NHI should be imposed regardless of the cost.  

But of one thing we can be sure. A huge proportion of the costs of NHI will be swallowed by bureaucracy, leaving less money for the actual provision of health services. South Africa will have more and more health bureaucrats and fewer and fewer doctors. All prices will be fixed by bureaucrats.

Following the white paper, the department has already invited nominations for seven new committees to help implement NHI. These will deal with tertiary services, training and development, pricing, benefits, the consolidation of financing, and technology. There will also be a national health commission.

That is for starters. The NHI fund will be buttressed by 12 "specific technical functional units". These will deal with planning and forecasting, benefits design, price determination, accreditation, purchasing and contracting, procurement, information technology, provider payment, risk and fraud, legislation, performance monitoring, and international cooperation.

In addition, at national level, there will be an NHI board, various "clinical peer review committees", an information repository and data system, a health technology assessment entity, and a national health commission. The current office of health standards compliance will remain. There will also be "functional business units" at central hospitals.

These national structures will be supplemented by other bodies in each of South Africa's 44 municipal districts. Among these will be ward-based primary health care outreach teams, integrated school health programmes, district clinical specialist teams, contracting units for primary care, district health management offices, clinics committees, and various other offices to coordinate some of these.

The costs of all these structures are but one problem. There are plenty of other risks. One is that is that they will become part of the ruling party's patronage network, staffed by people appointed for political reasons. Another is that lots of "consultants" will be required, so that the costs of this bureaucracy will be much higher than the actual wages of those employed in it. A third risk is that many of these institutions will be captured by trade unions, just as several provincial education departments have been captured. NHI will be run primarily for the benefit of bureaucrats, many thousands of them.   

Perhaps the greatest risk is that a growing proportion of the doctors produced each year by our universities will emigrate rather than subject themselves to the endless filling in of forms that the bureaucracy will require.

Among the forms they will have to fill in are those begging, repeatedly, for payment. Given that the intention, and inevitable outcome, of the NHI plan is that private medical aids will be put out of business, the state will become the biggest source of income for most doctors (as well as clinics, hospitals, and other providers of health care).

A survey in 2015 by the South African Medical Association reported that the average amount owing to doctors in Gauteng was R895 000. A report in 2016 by the Radiological Society of South Africa found that medical aids usually reimbursed doctors within 20 days, but that the Compensation Fund run by the government took an average of 350 days. The relatively small sums involved in these delays will be dwarfed by the billions the NHI will fail to pay timeously, if at all. Health providers without deep pockets risk going bankrupt.         

Not only is NHI beyond this country's means, running this megalomaniacal system is beyond the capacity of its government. As with public education, we will soon have a health care system which is one of the most costly and corrupt but least efficient on the planet.            

* John Kane-Berman is a policy fellow at the IRR, a think-tank that promotes political and economic freedom.