PUBLIC HEALTH: National health insurance is a big fat expert on empty promises

The National Health Insurance (NHI) Act has been passed by the National Assembly, but experts believe it is largely unenforceable and unlikely to come into effect anytime soon.

Alex van der Heever, chair of the administration of social security systems at the University of the Witwatersrand, says: From the outset, the bill was so flawed that [the governing ANC] were in a situation where they could try to change the framework in Parliament or hand the ball back to the Department of Health and ask them to rework it, which would be very embarrassing.

Peter Montalto, the chief executive officer of financial advisor Intellidex, agrees. He told Newzroom Afrika that the NHI was unlikely to happen within a reasonable timeframe as it was logistically impossible and there was a lack of clear information on funding.

In a vague reference to NHI funding earlier this month, Health Minister Joe Phaahla said it seeks to pool the resources of those who can contribute to the fiscus only through indirect means such as VAT and other collections and those of us who are able and are already making fragmented contributions across 81 different schemes into a pool that can buy services from both the public health system and private providers from the lowest level of care up to the highest.

It sounds similar to what many in the private sector are saying. It appears that the Department of Health wants contributions from top incomes to current private medical schemes to be funneled into public health via additional taxes.

Van der Heever says the government appears to have ignored issues raised by industry stakeholders in favor of impractical legislation. This speaks of weaknesses in ability. When you have no capacity, go ahead regardless.

Phaahla says those who say NHI is not affordable are basing their views on highly inflated costs among some of the private providers who are under pressure to continue providing super [sic] profits.

Let’s take a look at that. For the six months to March 2023, private hospital group Netcare reported revenue of R11.5 billion. Life Healthcare reported revenues of R10.6 billion in the same period, for the whole of Southern Africa. Mediclinic has not published public financial statements as it was taken over by Remgro.

It must be assumed that the minister is referring to the alleged super profits of the private hospitals listed and not the medical schemes. Because surely the minister of health understands that medical schemes offer members common benefits and are non-profit operations.

Let’s go back to costs. The 2023 budget earmarked R259 billion for healthcare. Of this, R113 billion goes to district health care, R49 billion to central hospitals, R46 billion to other health services, R40 billion to provincial health care and R11 billion to facility management and maintenance.

So, the problem is not lack of funding for the public health sector.

The amount SA spends on health care as a percentage of GDP far exceeds that of other developing economies, Van der Heever notes. We have a governance problem. There is a substantial reduction of accountability in the governance framework and people have basically systematically stolen money from the state. And they don’t have to account for it.

The Board of Healthcare Funders (BHF), which represents all medical schemes except the Discovery Health Medical Scheme, echoes its sentiment, saying it summarily ignores the many who have voiced their concerns about governance structures and issues of operational efficiency, the concentration of risk in a single taxpayer system in an unstable economy characterized by endemic corruption and the many other concerns raised by state prosecutors is short-sighted and highly reckless.

The BHF has urged the government to consider a multipayer model to mitigate risk concentration, to have a rollout based on undated milestones and to address concerns that the proposed NHI is susceptible to corruption by proposing alternative governance structures.

Unresolved issues

Prelisha Singh, partner at law firm Webber Wentzel, says that despite the approval by the National Assembly, there are many unresolved questions and concerns about the practical implementation of the NHI.

Many stakeholders and experts have raised concerns about this [it] it is simply unsustainable, especially since it would require a vast administrative apparatus. A related concern is the extent to which the NHI will rely on the public health system to deliver services and that system’s ability to deliver an acceptable quality of services.

Given the dire state of public health in our country, it is surprising that the government persists with plans to spend massive resources on NHI implementation. Such resources would greatly improve the delivery of quality health care and access to such care if it were directly employed in the public health sector, he says.

Singh points out that the bill states that the main source of income will be money allocated annually by Parliament.

This is to be provided from the collections of, inter alia, general tax revenues, a payroll tax and a personal income tax surcharge. This is, however, difficult to reconcile with another clause, which states that the [NHI] The fund will be financed through compulsory upfront payment (a term defined as compulsory payment for health services before they are needed based on income levels) and a third clause authorizing the minister to regulate all taxes payable to the fund.

Key issues that have not been addressed include:

  • The amount of benefits that must be covered by the NHI Fund and the reimbursement rate, both crucial factors in assessing the affordability of the NHI and its impact on the delivery of quality health care;
  • Portability rules, which will allow patients to be treated by service providers other than those with which they are enrolled;
  • The referral paths between service providers;
  • The coding systems to be used; AND
  • The relationship between the fund and health schemes.

Singh says a key question is what role medical programs will play and whether they will continue to exist. As it stands, the NHI bill stipulates that once the Minister has ruled that the NHI is fully implemented, health schemes can only offer complementary coverage to services that are not reimbursable from the fund. He also says patients have the right to purchase health services that are not covered by the fund through a voluntary supplementary medical insurance scheme.

In other words, health schemes may not cover services covered by the fund. As the fund is ultimately intended to cover a full range of benefits, healthcare schemes will shrink dramatically or disappear.

Adds Singh: This regime is likely to face constitutional challenges on the basis that it violates the right to access health services, forcing many people currently accessing private medical care via medical program funding to rely on what is currently a woefully inadequate public health system; the property rights of healthcare facilities and their administrators; and the right to freedom of trade, occupation and profession.

Martin Versfeld, another partner at Webber Wentzel, says the requirements for accrediting service providers are onerous, including submitting a budget impact analysis, and that there is a lack of clarity on how reimbursement rates will be determined.

One would have expected the bill to clarify that payment rates must be set at a level that allows providers to cover their costs efficiently and achieve a reasonable return. An accredited service provider must procure health care products based on the funds form, and the providers listed on the form must deliver directly to the service provider or institution. This blurs the line between public and private procurement, reduces competition and unduly restricts private service providers from conducting their business, he says. DM

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