Health

NHI: A policy doomed to fail

The number has risen well beyond R100bn that taxpayers will have to dish out -analysts.

The R100bn figure thrown around as the cost taxpayers will have to pay for the National Health Insurance (NHI) policy is grossly inaccurate reckons analysts.

Current public health expenditure is sitting at more than R70bn, or 3.5% of GDP (2007 numbers). Thus "it is inconceivable that only R100bn could be taxed", even though this was proposed, says independent health economist Alex van den Heever believes,." An analyst who declined to be named echoed Van den Heever's views, saying it is not possible at the current funding rate, for the cost of the policy to be only R100bn.

Van den Heever reckons that in order to implement this policy the proponents would need to spend all of GDP or at least half of it on healthcare, which is just not realistic. He continued to say that the proposals are so farfetched; it is unclear what they would implement. An analyst labelled the policy as "uncertain". She reckons that NHI is a difficult piece of legislation and although it seems like a good idea in theory, "it just won't work". She said until now the proponents have been secretive about the policy and how it will be implemented.

"In large this proposal merely indicates that the proponents don't really know what they are doing, they have lost the plot," reckons Van den Heever. This policy just has political impetus all over it and senior politicians probably haven't gone through these issues properly.

"It is not an urgent interest in repairing the healthcare system, but it can only damage it," said Van den Heever. "The current public sector has low-functionality, is badly run and it needs more money to be substantially improved" and the quality of taxpayers medical scheme coverage may be harmed by this policy.

Asked what would happen to the profits of companies like Medi-Clinic (JSE: MDC), Netcare (JSE: NTC) or Discovery (JSE: DSY), Van den Heever said "I see little impact on any of the commercial players, the most significant impact will be on taxpayers." Another analyst said forget the impact on profits the most important thing would be how much funding this policy will need."

However, medical companies refused to be dawn on the issue. Medi-Clinic said: "The private hospital sector has, through the Hospital Association of South Africa, gone on record as endorsing the principle of NHI." It believes that the policy is essentially about improving access to healthcare by ensuring an appropriate financial and healthcare delivery model and universal health coverage for all.

Medi-Clinic looks forward to engaging in this process, and participating constructively in discussions. However, it cannot fully comment on the NHI as it would be pre-empting the publication of an official document on which such discussions will be based.

Netcare said:, we "will not comment on the NHI at this stage".

Discovery which was previously vocal also declined to comment.,. Deputy CEO of Discovery Health, Dr Jonathan Broomberg, said "At this stage, the ANC has published a very broad outline of the proposed architecture of a proposed NHI system, but this does not contain any details about how the NHI system will be designed and implemented."

He continued to say that, "until the full details of the proposed NHI reforms are published and consultations and discussions are completed, it is difficult to comment on the impact of the NHI on our business."

On the other hand the ANC continues to discuss the policy. It released a statement on the crisis in the medical aid industry. The ANC believes that the proposed NHI scheme would help resolve problems faced by medical aid members who were not getting value for money. It shares the view that the medical aid industry has consistently failed to control the cost of healthcare and has been unable to address efficiencies and equity in the private sector.

The key lasting solution lies - not only in addressing the needs of the 40m uninsured - but also the millions who are currently insured or underinsured by the medical schemes. "Only through the NHI, will we overcome the present inequitable and fragmented two-tier healthcare system, by pooling healthcare funds into a single one." The ANC believes that in this way there will be comprehensive cover for all South Africans - free at the point of use.

Write to Khosie Thom: khosie@moneyweb.co.za

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