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NHI: Where are we today?

The financial resources remain a concern.
Improving the level and coverage is likely to increase the overall cost of healthcare provision in South Africa. Image: Supplied

The National Health Insurance (NHI) Bill began with various consultative and legislative processes in 2012.

Given its potential scale, resource and administrative requirements, as well as its potential to transform South Africa’s healthcare and socio-economic landscape, it was envisioned that potential implementation would be over a period of about 14 years. This was penned as a moving target.

Read: Draft South African law sets stage for national health insurance (Jun 2018)

The aim was to set up the fund after legislative approval and provide majority coverage by mid-2020 to 2030. Implementation was expected to occur in a phased manner.

At present, the NHI Bill has been published by the Minister of Health, approved by cabinet and is currently awaiting consideration in parliament.

While the bill will likely be passed, there are many uncertainties in terms of how it will work, what it will look like, how it will be funded and if it has a reasonable chance of achieving its goal of quality healthcare for all residents.

Read: NHI benefits and implementation remain undiagnosed

A few pilot projects to test its potential and the administrative planning of the NHI, such as setting up population databases, have begun.

What are we currently spending on healthcare?

The 2021 Budget allocated about R248 billion to national healthcare provision, but this only applies to the public sector at a national and provincial level.

The private sector is relatively large and the spending in this sector is similar to that of the public sector, even though it covers less than 20% of the national population.

This disparity in resources, where half of healthcare spending is used in the private sector for a minority of the population, is the key driver behind the idea of the NHI.

In total, South Africa’s health expenditure currently stands at roughly half a trillion rand. Relative to other emerging market economies, the share of SA’s gross domestic product (GDP) allocated to healthcare costs (around 8% of GDP), exceeds the average for other African and developing economies. Due to various reasons such as capacity to deliver, it is often felt that despite this relatively high level of spending, our national healthcare outcomes are not necessarily superior when compared to some of the developing economies.

Impact of Covid-19?

The Covid-19 pandemic has brought into sharp focus questions around universal healthcare provisions around the world. South Africa is no exception, given the high levels of inequality and how this manifests in the allocation of healthcare resources in the country.

It is commonly accepted that lower income groups have been more vulnerable in terms of access to quality healthcare during the pandemic. In some developed countries, minorities, lower income groups, women and the elderly suffered disproportionate economic and health effects as a result of the pandemic.

This has increased the urgency for universal health coverage and a reconfiguration of national health systems.

However, the financial resources for the successful implementation of the NHI remain a big concern. The pandemic has forced the South African government and others globally to spend beyond what was originally budgeted for, significantly increasing national debt levels to deal with the health and economic repercussions of the pandemic. This has created potential financial constraints for the NHI and other national priorities that need to be implemented.

How might the pandemic push us towards implementation?

The pandemic highlighted a lack of resources to meet the country’s healthcare needs at a crucial moment.

Media coverage of overfilled hospitals or the unavailability of hospital beds and other healthcare facilities in some of the most disadvantaged areas of the country, served primarily by public facilities, was evident.

While the private healthcare sector also experienced some level of strain at the peak, the sector seemed to have weathered the pandemic storm marginally better, by virtue of having greater resources and the smaller population that it covers.

The likely effects on healthcare costs and demands?

There are many uncertainties in terms of how the NHI will work, what medical activities will be covered, the role of the private sector and where the resources will come from.

Funding ideas have included some level of taxation whether direct or indirect, payroll charges, and a level of subsidisation where the wealthier bear the burden of some of the costs.

Given these uncertainties, it is difficult to quantify the cost but it is generally accepted that improving the level of healthcare and coverage will increase the overall cost of healthcare provision in South Africa. Demand may increase for those who previously had limited access as a result of financial constraints, as they will now have access to certain medical care and procedures.

On the other hand, and as experienced in some countries, the NHI would become a single fund and a single buyer of medical services for the general public, although private medical services could still have a major role to play.

Having a single buyer with a standard list of approved medical procedures covered, medicines and prescribed healthcare partners to deliver these can reduce the cost of medical services entirely. Price limits for procedures and medicines in government contracts with healthcare providers could also reduce costs. This will be achieved through the scale and bargaining power that a single buyer of the healthcare services presents.

Any consequences from an investor’s perspective?

South Africa has a relatively vibrant private healthcare sector made up of pioneering medical administrators such as Discovery and other financial/medical services groups, drug manufacturers and retailers such as Aspen and Clicks, hospital groups such as Netcare and Mediclinic, and managed care companies.

Significant policy changes creates uncertainty for private companies and this has been reflected in the share price volatility of some of these companies, before Covid-19 started. At the same time, given the resources and skills within the private sector, it creates potential opportunities.

Some of the uncertainty relating to the private sector includes:

  • What role medical aids will play and if some of the middle class will abandon them altogether given the NHI;
  • What the medical benefits of the NHI will be – if it will be focused primarily on primary healthcare;
  • If there would be cost controls and limits and how significant these would be;
  • What the extent of collaboration and use of private sector facilities and personnel will be;
  • What the source of financing will be, as the economy is on the verge of a fiscal debt trap, which has long-term implications on borrowing and debt expenditure; and
  • How the medical fraternity will respond to emigration of skills, for example.

What has the pandemic taught us with regard to the proposed NHI?

Several realisations have come to the fore as a result of Covid-19.

These include:

  • The overwhelming need for the implementation of the NHI; Covid-19 has been an unfortunate stress test for healthcare systems around the world.
  • The repercussions of global inequality, in which South Africa leads on many indicators.
  • The resources gap between the public and private healthcare sectors.
  • The implementation challenges faced by government, including a lack of resources and skills in the public healthcare sector.

Kwaku Koranteng is head of institutional business at Absa Multi Management.

COMMENTS   22

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The problem with this is that anything that is managed and run by the government fails. Funds are stolen, medicine that is procured will find it’s way to the black market. Palms will be greased. Bribes will be paid. Soon the NHI will be bankrupt, just like what happened to the Road Accident Fund. And all others.

Just look at the condition of state hospitals and you will realize that the very same people that caused their demise have just not the capacity to mange something far bigger and more complex. The problem is that these guys are so ignorant not to be able to recognize their incompetence.

To be fair, while most government health is a total mess, there are many excellent units. In a few cases those are the places where private surgeons go for better facilities such as MRI than what their town private hospital offers.

Capacity to serve the masses is a big problem, as is case management systems. We all know the stories from workers that spend a day to see somebody and then next month when they go for follow-up – start again.

Public-private-partnerships may be the route?

But if government wants to tell me which provider my family must use : forget it. That is a fundamental right we have.

You are beginning to sound like our politicians, many of whom praise the high standard of some public schools, yet pretty much all of them send their kids to private schools managed by the former colonialists.

The failed vaccine procurement and rollout have already proven the the government is incapable of running an NHI. Couple that with all the PPE theft and inflated tenders by incompetents and the future of the NHI is clear. It will be an unmitigated disaster. Problably a crime against humanity.

Is the writer of this article on the planet where we all are? The existing health services of government are in such total disarray that private medical aids thrive despite the lack of affordability. People have no confidence in the ANC to manage anything-just look at the non existent vaccine programme-and now want to control medical services. The ANC has a track record of non delivery-why would this change for NHI.

The answer is simple-give the entire NHI to a discovery to manage-government sends its entire health budget to them and suspends the labour relations act to the industry.

I understand the need for political proctology but this article is simply taking that too far!

Agree Sam and when I see such sycophantic and appeasing articles I wonder why. My skepticism about SA tells me that it is for money, loot, filthy lucre. Banks see advantages in financing this socialists’ thieving frenzy and some existing medical aids think that government (aka ANC elite cadres) may need help to skim off the loot (i.e. “empowerment” partners).

In my view there is zero intention to provide better healthcare; SA’s history under the ANC regime tells us this very clearly from the Arms Deal onwards. NHI is a scam based on a Cuban sales pitch but not even a pyramid scheme; just an excuse to loot. I’m not sure why the media is scared to outline it as such.

Well, if Absa is in favour of the NHI it must be a jolly good idea.

The state in which the SA “diplomat” in Vienna left the flat after he evacuated, is an accurate display of the mindset of the people he represents. They want to mingle with the sophisticated crowd in Vienna, while their own level of sophistication is on the level of the bush-toilet, not even the pit latrine. The debt/GDP ratio is nearing 100% and they want NHI. The ANC is delusional. They can’t even afford the social grant or the salaries of government employees any more.

They provide health services like they provide water and sanitation. Service delivery is imploding everywhere while they plan an NHI scheme. The people who vote for this party are irrational and delusional. They struggle forever to fire their own SG in Luthuli House. How will they implement anything on a national scale?

Cabinet ministers and ANC have no faith either …….they only send their families to Private Hospitals !!

Taxpayers better assume that the current model, whereby 10m members of private medical receive tax relief, is at best going to inflate away or even be scrapped.

NHI was one of the big reasons why I am currently busy with the emigration process. As someone in my early 30s I shudder to think the state in which healthcare will be in when I will be 70 or 80. With the implementation of NHI I expect the private system to collapse under the massive increase of patients. The fact that government will through legislation be in control what rates hospitals can charge and the fact that a near insolvent government will be the one then having to pay the hospitals will render the risks too great for any new private investments to try and get some balance in the supply / demand equation.

Therefore I will happily go to a country where there is also tax on healthcare but where I can actually go to a public hospital and the level of care is world class and better than many of the local private hospitals let alone the public ones.

The private health sector spending is financed by the 20% of the population. The public health sector spending is also financed by the same 20% of the population. That is the tax paying population. The government is so resolute in burdening this tax paying population even further.

Economics lays the rule of finance, its legislative principles of being constrained by a profit/loss account should be respected at any given time. Politics however, disregards what Economics stands for. Economics oversees production and S.A Politics is a prodigal that will always have an insatiable appetite to spend and squander the hard toiled produce of the economy. To exacerbate matters, S.A politics will borrow the produce of other economies of other countries only to squander it yet again through theft, corruption and incompetence and lack of accountability.

NHI in unnecessary. There are sufficient funds to fix the current public health facilities. The problem is the leaks of funds from the sector.

P.S: Canada’s universal health care program is not to be used as an example of how NHI will work in S.A. Canada respects Economics.

I find it utterly astonishing how divorced from reality some people are with statements like this: “The overwhelming need for the implementation of the NHI”.

Sir, were you not around when billions were yet again stolen during the pandemic for PPE, cleaning services and every imaginable medical item. Do you not understand that everything the ANC manages turns into corruption and theft?

Anyone who thinks this same government (that has destroyed the existing public healthcare system), will somehow manage a system 3 or 4 times its size and budget and magically its all going to turn out just dandy its totally naive or has no common sense.

I find it shameful that ABSA would even allow Mr Koranteng to post this destructive view under his professional title and not in his own personal capacity.

Absolute commie propaganda garbage. Government looking at what the wealthy spend on healthcare in the private sector and thinking “Mmmm, we want to get our hands on that”.

“Having a single buyer with a standard list of approved medical procedures covered, medicines and prescribed healthcare partners to deliver these can reduce the cost of medical services entirely. Price limits for procedures and medicines in government contracts with healthcare providers could also reduce costs.” – Yes, because setting prices for scarce products/services works so well in every other socialist nation. When you set limits on prices for bread and milk, you get food shortages.

Read some history please. We are not a first world country – stop thinking we can apply their solutions here

“Having a single buyer with a standard list of approved medical procedures covered, medicines and prescribed healthcare partners to deliver these can reduce the cost of medical services entirely. Price limits for procedures and medicines in government contracts with healthcare providers could also reduce costs. This will be achieved through the scale and bargaining power that a single buyer of the healthcare services presents.”

In a non ANC led country the above may apply but here we have the ANC with a track record of corruption and inserting middlemen with political connections to fill their pockets at the expense of the taxpayer and the citizens of the country who rely on these services. Ace’s sons involvement with the Covid 19 procurements is an example of this.

As for price controls, it ignores the basics of economics. If price is limited then the supply declines. That translates into doctors and healthcare professionals emigrating.

The recipe for a disaster!

The heading should read as, “emigration, were are we today?”

“This disparity in resources, where half of healthcare spending is used in the private sector for a minority of the population, is the key driver behind the idea of the NHI.”

Socialism also sounds like a good idea but it is anything but the supporter of social justice which provides equal opportunity and benefits to all who participate instead this pronoun means you will be a servant to a ruler, hence the “Ruling Party” words used in the media, this is to remind you of our place in society.

The separation of business from politicians together with free market policy can be used to ensure a society where resources are equitably shared and used with in the laws that are created by elected government at the behest of the voters.

The NHI like every other SOE will be corrupted to its core, providing jobs for votes, jobs for life and misery through increased inflation. This will be another centrally controlled war room that is used to loot tax payer monies.

Surely this socialism bubble must burst, when will the great constitution of SA stand up for its people and not just become another white piece of paper with words on it?

So if I understand the “logic” – because 20% of the population have decided to buy their own healthcare services which are better than that provided by public healthcare, this is unfair and the money they are paying for this needs to be appropriated to be spread to the other 80% so that they have to get in line with those that cannot afford it? While we are at it, some people also pay for and have better houses than others, so let’s nationalise housing, how about transport – what is this nonsense that some people can afford cars and others have to use taxis? Same for security, who do the rich people think they are to pay for their own security, government should be trusted to keep all people safe after their guns have been taken.

This article is absolute socialist dribble!

After over 50 years as a client of Trust Bank /Absa ,if these are the people they employ ,then Capitec I’m on my way to see you.

The fact that this ABSA analyst thinks that NHI is even worth discussing, illustrates that not only is our government delusional, but this delirium has now possibly spread to sections of corporate sector. Let me make it clear. No. South Africa doesn’t even remotely come close to having the money or the capacity to implement a national health service.

South Africa’s main challenge is to try and incentivize skilled people to stay in the country, somehow prevent the collapse of Eskom and stop the implosion of hundreds of municipalities dotted through out the country. Any further talk than this is just a pipe dream. There will be no NHI for the next 100 years. If by chance, there was anyone insane enough to divert massive amounts of resources to it, it will for 100% result in a cesspit of corruption that will sink the country for decades.

I think that the NHI is far too ambitious. The state hospitals tend to be run down, and the administration for citizens is a nightmare. Hidden amongst them are centres of excellence. Rather tackle the problem one hospital at a time and whilst your at it sort some of the procedures and admin out. I’ll give a couple of examples:

People who live in Alexandria have to come through to the Livingstone hospital to collect their repeat drugs.This involves a day off work and a patient bus. Surely the drugs could be taken to Alexandria by a courier and dished out there.

The wards at the Provincial hospital in Uitenhage are one of thhe areas of excellence. However the follow up is atrocious. It involves getting there at 7am basically queuing up all morning for test results back from the path lab. 5 trips later to be told everything is fine have a nice life. They could have sent an SMS.

There are so many areas that can be improved and fairly quickly, it just needs a bit of common sense.

End of comments.

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