NHI not a panacea for the nation’s ills - Weekend Argus

1 September 2018 - As with land reform, ensuring that all South Africans have access to quality healthcare is important. And, like land reform, the government is implementing the wrong solutions.

Marius Roodt

Ronald Reagan is reputed to have said once that the scariest sentence in the English language is: ‘I’m from the government and I’m here to help.’ Many a South African will attest to this.  

The South African government has something of a reverse Midas touch – whatever it touches seems to fail. One has only to survey the wreckage of state-owned enterprises strewn across our political and economic landscape to recognise the truth of this. And now the government has set its sights on the healthcare system.

The objective of ensuring that all South Africans receive a high standard of healthcare is a noble – and, indeed, essential – goal, but rather than emulating the excellence of private healthcare, the government is seeking rather to extend the reach of a dismally performing public health service..

In June, minister of health Aaron Motsoaledi released for public comment two bills which, if enacted, will fundamentally change the way South Africans receive healthcare. The first of these bills relates to setting up a National Health Insurance (NHI) system. The public has until 21 September 2018 to comment.

The new NHI bill will result in the introduction of an NHI fund, along with a number of other bodies, which will be established to administer NHI. All health expenses will be paid into a central fund from which all health expenses will be paid. This will, in theory, ensure that all healthcare is free at the point-of-service. The NHI fund will have a number of sub-units which will decide on NHI benefits, approve treatment protocols, set prices, accredit health providers, procure medicines and other supplies, pay for all services and items purchased, monitor the overall performance of the system, and guard against fraud. Effectively the NHI will be a state-run medical aid, with no opt-out option.

Dr Motsoaledi has said that these bills are the expropriation without compensation (EWC) of the health sector. In this, he is correct. Like EWC, the implementation of NHI will make all South Africans poorer and lead to a number of unintended consequences.

Imagine the vast bureaucracy that will be needed to manage the NHI fund, as well as the opportunities for corruption and kickbacks that will exist in such a system. Any South African who thinks a new NHI fund will work well has perhaps been in a coma since late April 1994, or is so blinded by ideology and can only conceive of a system where the state has control.

The latter is likely the very reason why this is being pushed by the governing party. It is clear that the African National Congress (ANC) is working to gain increasing state involvement in almost every aspect of South African life. This is not scare-mongering: we at the Institute of Race Relations have tracked more than two dozen pieces of legislation in recent years aimed at restricting property rights. The proposed implementation of NHI is another incremental advance by the government against the rights of South Africans to decide how they want to live.

Even if we chose to be charitable and believed the motivation of the ANC and the government was only to ensure that all South Africans had access to decent healthcare, NHI is unlikely to result in this. South Africa already spends a large chunk of its gross domestic product (GDP) on healthcare (more than equivalent-income countries) yet we still have dismal outcomes. Only about 15% of public healthcare facilities meet the basic norms and standards which are expected of a healthcare facility, even from perspectives such as hygiene. Medical negligence claims are now so high that they are equivalent to nearly a quarter of the R200 billion national healthcare budget for 2018/19.

These are not issues which can simply be solved by throwing money at the problem, which the government seems to think will happen. And the vast amounts of money that the government will need to spend to make NHI work are truly eye-watering. Depending on the final design of the system, NHI could cost as much as R1 trillion. Dr Motsoaledi has said that total cost of the system is impossible to calculate and it is up to National Treasury to fund it.

The Davis Tax Committee has also pointed out that NHI is unsustainable without higher economic growth.

And without higher economic growth, the only source of greater funds is higher taxes. If NHI becomes a reality, the over-burdened middle class will find itself with yet another tax to pay.

Throwing money at the problem of public healthcare in South Africa, or forcibly co-opting the private system, will not solve its many problems. The solutions are merit-based appointments, strict accountability for poor performance, and effective action against corruption and wasteful spending. At the same time, the burden on the public sector could be lessened by increasing access to the private system. Poorer households should be allowed to purchase healthcare through the use of vouchers. At the same time, it should be mandatory for all employed people to belong to a medical scheme. For those on lower incomes this could be subsidised by their employer who would then gain tax credits.

As with land reform, ensuring that all South Africans have access to quality healthcare is important. And, like land reform, the government is implementing the wrong solutions. EWC will not result in real, sustainable land reform. Similarly, the implementation of NHI will not mean that more South Africans will have access to quality healthcare – it may well result in the exact opposite outcome.

Marius Roodt is a campaign manager at the Institute of Race Relations (IRR), a liberal think tank that promotes economic and political freedom. If you agree with what you have just read then click here or SMS your name to 32823.