Last week’s parliamentary exchanges have revived the debate around the National Health Insurance (NHI) once again. President Cyril Ramaphosa and health minister Aaron Motsoaledi insist it remains a go – even with a myriad legal challenges ranged against it. Currency asked Alex van den Heever, chair of Social Security Systems Administration and Management Studies at the Wits School of Governance about the latest developments.
Ramaphosa is saying that NHI is still government policy and will move ahead – even if the courts delay the law’s formal rollout. What do you think?
One needs to distinguish between proceeding with the NHI Act itself and proceeding with activities that are only loosely associated with it.
If you look at the recent budget, there are items labelled as “NHI funds”. In reality, these allocations are largely for hospital rehabilitation and facility upgrades, which would be required regardless of the NHI. They are not specific to the NHI model.
There may also be limited ICT-related expenditure and some pilot initiatives around district contracting arrangements. These are relatively modest activities. The department of health can also draft regulations for discussion, or request the promulgation of certain sections of the legislation, but it cannot assume these will, in fact, be brought into force.
There are 14 court cases against the policy, which, in the words of Ramaphosa and health minister Aaron Motsoaledi, could retard its implementation by years. Surely, NHI is all but dead?
There are substantive institutional and constitutional reasons why the policy is difficult to implement. A large part of what the NHI Act proposes is not contained directly in the legislation itself. Many of the key changes would require separate approval by Parliament.
For example, the model implies a centralisation of the health budget. This would involve recalibrating the provincial equitable share, removing health allocations from provinces, and shifting purchasing authority to a single national fund. Provinces would effectively become operational agents of a national purchasing structure.
That type of restructuring has major constitutional implications. It would require approval through broader parliamentary processes and engagement with multiple institutions. It is unlikely that these processes will go smoothly – as the ANC is a minority party.
What about the implications for medical schemes?
A significant part of the proposed restructuring depends on the introduction of a “pre-funding” tax. That would require introducing additional tax measures and major fiscal reforms. As South Africa is already at tax capacity – this is unlikely to prove feasible. When at tax capacity, new taxes effectively reduce tax revenues through the behavioural knock-on effects.
Such reforms would also require agreement from the National Treasury and Parliament, which appears unlikely.
Even adjustments such as removing medical tax credits, if permitted, would not automatically translate into additional health funding, because the resulting revenue, to the extent it materialised, would accrue to the government as a whole and would not necessarily be prioritised for the health budget.
In practical terms, many of the financial changes implied by the NHI require separate fiscal decisions, which are independent of the Act itself – and are unlikely to be supported or to result in additional appropriations.
Have they begun restructuring the budget to shift from provincial allocations to provider reimbursement?
No. That kind of restructuring would require extensive involvement from the National Treasury, particularly through changes to the Division of Revenue Act.
The provincial equitable share functions as an unconditional block grant allocated to provinces, serving as an alternative to raising taxes in accordance with their own taxing powers. Provinces, therefore, retain discretion over how those funds are prioritised across their constitutional mandates – a major one being healthcare services.
Restructuring that arrangement to centralise purchasing would therefore involve significant fiscal changes and arguably an attempt to circumvent the Constitution.
These issues are also central to several of the court challenges currently before the judiciary.
Treasury sent a signal in the budget as well – there was no dedicated NHI funding…
Correct. There is no allocation for a national purchasing fund.
What is labelled as NHI funding largely consists of facility rehabilitation programmes and other conditional grants. These are investments in infrastructure rather than funding for the purchase of healthcare services through a central fund and would happen in any event. They are not specific to the NHI policy framework.
So, the fiscal architecture required for the NHI model is not currently present in the national budget framework.
Where does this leave the policy politically as local elections approach?
The NHI has primarily been a top-down policy initiative rather than a demand that emerged strongly from the public. The public wants access to quality healthcare – but not NHI.
The failure of NHI as a policy, therefore, does not necessarily translate into immediate electoral consequences, as no one asked for this. It is just embarrassing.
Had so much time not been wasted on NHI, real pragmatic policies could have been implemented that would have progressively improved universal coverage in South Africa. The real political question is why real improvements to the health system have been ignored for over twenty years.
What are the deeper design issues with the policy?
One of the structural features of the model is its adoption of a relatively crude zero-sum approach – typical of populist policies.
Policy proposals structured in that way tend to generate significant contestation, because they deliberately polarise stakeholders. It does this to generate strawman opponents that can be demonised instead of engaged.
Mature policy processes seek win-win consensus-making rather than stark win-lose options. In this instance, the win-lose approach suffers from the rather devastating fact that it is also unimplementable.
How does one resolve the current situation?
In practical terms, the future of the Act will likely depend on two parallel processes: First, the constitutional court challenges will determine whether key provisions of the legislation are lawful.
Second, broader political and policy processes will determine the direction of health system reform.
In the meantime, implementation is likely to remain limited to health system needs unrelated to NHI, rather than the envisaged structural transformation.
You’ve argued that South Africa already has universal health coverage in a technical sense. Can you explain that?
In a technical sense, everyone in South Africa has some form of coverage. Individuals either receive pre-funded care through the public health system or through medical schemes. The central challenge is therefore not basic access, but rather quality, governance, system performance and financial sustainability.
It is also often overlooked that there is already substantial cross-subsidisation within the current system. Medical scheme members contribute at least 75% of the revenue that finances the public health system, while also paying for their own private coverage from their disposable income.
South Africa also has relatively low levels of out-of-pocket expenditure by international standards (11th lowest in the world), which suggests that financial risk protection is comparatively strong.
The major weaknesses in the system relate primarily to governance failures in the public sector and structural regulatory issues in the private sector, driving cost increases.
Much of the technical work required to address these problems already exists. For example, the Health Market Inquiry produced extensive recommendations for regulatory reform in the private sector.
What is required is sustained institutional reform and implementation capacity across the entire health system. Unfortunately, none of this is going to happen while a narrow political fixation with NHI crowds out all necessary reform.
The corruption is in the procurement of goods and services that cannot be insourced. The corruption arises from the capturability of the procurement processes by members of the executive. They sterilise the accountability systems from the top and all procurement rules are circumvented. The entire public procurement system needs to be revised.
Top image: Rawpixel/Currency collage.
Sign up to Currency’s weekly newsletters to receive your own bulletin of weekday news and weekend treats. Register here.
