How health plan could hit you

2011-08-20 16:31

Wealthy South African taxpayers could pay more than R20 000 a year – or R1 800 a month – in additional taxes for healthcare in terms of the government’s National Health Insurance (NHI) scheme.

While the NHI green paper released for comment last week is thin on ­numbers, calculations based on existing facts – including the R255 billion bill the State has attached to the NHI by 2025 – produce some startling answers.

A best-case scenario could see health-care costs drop, although those calculations are less certain (see below).

However, in a worst-case scenario – in which public health services do not ­improve and medical schemes remain as tightly regulated as now – calculations show you could expect a hefty hit to your wallet for additional healthcare costs.

Medical aid provider Resolution Health produced the following estimates for City Press based on taxpayers’ total taxable income:
» If you earned R100 000 a year, you could pay an additional R208 a month for health care;
» R200 000 a year – R455 more;
» R300 000 – R746 more; and
» R400 000 – R1 131 more.

Taxpayers already contribute R17.50 toward healthcare from every R100 in tax paid, which will rise to R21.40 by 2025.

Existing tax rebates for medical aid contributors will fall away. Professor Alex van den Heever from the Wits School of Public and ­Development Management warned that “taxpayers could end up contributing an additional 3% of GDP for services they won’t use and still have to buy private insurance.

“But if the Department of Health ­manages to improve the health system and everyone is happy to use it, medical schemes could become more competitive and offer cheaper top-up insurance-type packages for special procedures. People could spend the same as today, or even less.”

But, in the worst-case scenario, with medical schemes remaining as regulated as they are today – healthcare taxes could almost double for taxpayers in lower income bands.

Resolution Health’s principal officer, Mark Arnold, said the calculations were vague since the government task team looking at health levy issues did not expect results before the end of six months.

But the calculations were worth ­attempting, he said, “because much of the fear and trepidation about NHI comes from the salaried classes who say they are already paying tax and buying medical aid, and now they will be taxed more. People forget that taxpayers are already paying for all healthcare anyway (through income tax and medical schemes).”

Van den Heever said that the numbers in the green paper were “so vague as to be nonsensical” and that medical aid members would be unlikely to switch even with a vastly expanded public ­primary care system.

“What income earners want protection for is catastrophic care, not primary care.”

National Consumer Forum chairperson Thami Bolani said access to quality healthcare was a basic consumer right and, while it was early days, people needed to speak up during the public hearings.

He said the forum would debate the plan at its conference in November.

NHI: 3 scenarios

The NHI green paper does not provide information about a levy or from what income level it will be imposed. “The most we can do is speculate and sketch best- and worst-case scenarios: In a worst-case scenario, that levy is going to be R21 662.50 a year if you’re earning R600 000 or more,” says Resolution Health principal officer Mark Arnold.

In the best-case scenario, government could get the extra R155 billion-odd it will need from budgets like defence. Or public health infrastructure could be working well by 2025 and people would not need the same comprehensive set of benefits from medical schemes, says Arnold, who is optimistic about business opportunities for medical schemes under the NHI.

In a middle-of-the-road scenario, “medical insurance, instead of being R33?000 a year, might now be R22 000 a year, so you might recover part of your private scheme payment,” says Arnold.

Econex economist Mariné Erasmus is pessimistic about less money spent overall on health, because with private insurance – or top-up cover for access to faster, higher-quality care, or co-payments as stated in the document – “total health-care spending may be more than the current 8.5% of gross domestic product”.

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