Constitutional Court fires a warning shot across NHI’s bow

The Constitutional Court has struck down provisions in the National Health Act that would have allowed the state to dictate where private doctors can practise – a ruling that bodes ill for the broader legal battle over the National Health Insurance (NHI) Act.

Formally, the judgment dealt with sections 36-40 of the older National Health Act. Politically and economically, however, it travels much further: into the fraught terrain of how South Africa intends to fund, organise and command its future health system.

In a unanimous judgment written by justice Kate Savage, the court confirmed the 2024 ruling of the Pretoria high court that the provisions were unconstitutional, finding them irrational and an unjustifiable limitation on the right to choose a trade, occupation or profession. 

The provisions would have required health establishments, agencies and providers to obtain a “certificate of need” from the director-general of health before operating, expanding beds, acquiring prescribed technology or providing prescribed services. The court severed the provisions from the act.

A ‘central pillar’ of NHI

On one reading, this is a relatively narrow administrative-law defeat for the state. On another, it is a constitutional flare sent up over the entire architecture of NHI. 

The government itself described the certificate-of-need scheme as a “central pillar” in the implementation of NHI, whose objectives include universal health coverage and the elimination of fragmentation in healthcare funding. That matters because the court did not reject the objective of broader access to healthcare. Quite the opposite: it acknowledged the deep inequities in South African health provision. What it rejected was the state’s chosen mechanism.

NHI seeks to consolidate all purchasing power in the state, reduce the role of medical schemes, and use public financing to buy health services in a more equitable way. But the judgment suggests that even noble redistributive aims cannot rescue a system that gives sweeping power to the executive without a rational, workable and rights-sensitive framework.

The funding issue

Alex van den Heever, chair of social security systems administration and management studies at the Wits School of Governance, says the parallels with the NHI Act are difficult to ignore. 

“There are great similarities,” he explains, between the certificate-of-need framework and NHI. In both, the state has produced “a very draconian framework that has been poorly thought through” and “marketed on equity grounds”.

His concern is not that the government may never regulate the private sector. Nor is it that equity is an illegitimate goal. It is that the funding logic has to match the policy instrument. In the private sector, he says, people access services through medical schemes or out-of-pocket payments. 

“You can’t actually send a doctor to practise in an area where people can’t pay,” Van den Heever says. If the aim is to address the needs of the majority who cannot afford private healthcare, “then it’s only tax-funded distribution of health services that you’re talking about. That has got nothing to do with a certificate of need”.

That is the funding issue at its sharpest. If South Africa wants equal access to healthcare, the question is not merely where doctors are told to stand. It is who pays, how much is paid, what services are bought, from whom, at what price, and under what enforceable rules. A certificate issued by Pretoria cannot, by itself, create solvent patients, viable rural practices, functioning hospitals or enough tax revenue to cover a vastly expanded public purchasing system.

Diagnosis matters

The court was careful not to substitute its own policy preferences for those of parliament. It is accepted that broadening access to healthcare is a legitimate government purpose. But it found that the means chosen were not rationally connected to that purpose. 

The provisions allowed extensive discretion, left much to future regulation, and failed properly to account for the rights and interests of health providers. In the court’s words, they placed severe limitations on professional choice, location, profitability and financial sustainability, and were not adequately tailored to balance the rights and interests at stake.

Much of the NHI framework similarly depends on future regulations, ministerial discretion and administrative systems that are not yet fully specified. Van den Heever says this is one of the central vulnerabilities: “You only find out what’s going to happen when you see the regulations.” In his view, leaving so much to ministerial regulation risks “bypassing public engagement and the responsibility of parliament”.

The government may still argue, with some force, that the NHI Act is a different statute, aimed directly at pooling funds and purchasing services, rather than merely licensing facilities. Courts will decide the NHI challenges on the basis of their own facts and pleadings. This judgment does not automatically doom the NHI Act.

But it does change the weather. The Constitutional Court has signalled that equity is not a magic word that cures defective legislation. NHI reorganises funding, purchasing and professional autonomy at a scale this country has never attempted. The government’s ambitions need to be matched by a financing model that shows how they will be delivered.

In health policy, as in medicine, diagnosis matters. The court has not yet pronounced on the whole NHI patient. But it has found a worrying constitutional symptom.

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