NHI remains uncosted and unaffordable – IRR

South Africans should be deeply alarmed that the National Assembly this week approved the NHI Bill without knowing how much it will cost.

In March 2022, Minister of Finance Enoch Godongwana said that the government had not updated the cost model of the proposed National Health Insurance (NHI) scheme since the 2019/2020 financial year, before the Covid pandemic.

In 2019 then health minister Dr Zweli Mkhize said annual costs were likely to exceed the combined total (R470bn) of public and private health spending that year. Both he and his successor, Dr Joe Phaahla, are adamant that the NHI must proceed ‘regardless of its costs’.

The tax increases required to generate at least R470bn a year (and more likely R700bn a year by 2026) will be high. For reference, R700bn is around a third of projected total government revenue in 2022/2023, estimated at R2 225bn for 2025/26.

South Africa already has one of the highest tax burdens in the world, while its tax base is very small. In addition, its public debt remains high. As of 2022, the country’s gross loan debt as a percentage of GDP stood at 71%. The government is already having to spend a billion rand per day, every day, for the next three years to service its existing debt. It thus urgently needs to reduce state spending and cannot increase it in the way the NHI will require.

The National Treasury warned in its October 2019 medium term budget policy statement that NHI costs were ‘no longer affordable’, given the country’s ‘macroeconomic and fiscal outlook’ at the time. This echoes an earlier warning by the Davis Tax Committee, which stated in 2017 that the NHI was ‘unlikely to be sustainable’ without faster economic growth, which has not transpired and is unlikely to be achieved. It is irresponsible for the government to press on with the NHI Bill in the face of these important warnings.

There is also no certainty that ‘NHI taxes’ will be reserved for NHI purposes, rather than used for general government spending. Given the state’s well-known weaknesses in spending public money responsibly and effectively, placing additional hundreds of billions of rands of taxpayer money into the hands of state agents and their politically connected associates is a recipe for disaster.

The implementation of the NHI will result in the exodus of many health professionals because they believe the NHI will ‘destabilise’ healthcare rather than improve it. Many are also reluctant to subject themselves to the NHI’s comprehensive controls over their fees and treatment decisions.

All BEE preferential procurement rules will also apply for the NHI. The BEE procurement rules will encourage inflated pricing and defective delivery, much as occurred with the Kusile and Medupi power plants. The NHI will therefore result in health-shedding, much as government policies resulted in load-shedding in the electricity sector.

Said IRR Campaign Manager Mlondi Mdluli: “The NCOP must oppose the implementation of the NHI Bill. It is inconsistent with Section 27 of the Constitution, which requires the state to take 'reasonable' measures, within its ‘available’ resources, to make healthcare ‘progressively’ more available to all. The NHI is neither ‘reasonable’ nor ‘affordable’. The IRR will oppose the NHI with all the resources at its disposal. The government should rather focus on fixing what is broken instead of breaking what works.”

Members of the public wishing to oppose the NHI are encouraged to visit the IRR website at https://irr.org.za/campaigns/stop-nhi.

Media contacts: Mlondi Mdluli, IRR Campaign Manager – 071 148 2971; mlondi@irr.org.za

Marius Roodt, IRR Head of Campaigns – 082 799 7035; marius@irr.org.za

Media enquiries: Michael Morris Tel: 066 302 1968 Email: michael@irr.org.za

Sinalo Thuku, 073 932 8506 Email: sinalo@irr.org.za