The principle of NHI is right, the devil is in the detail

2019-08-19 14:10

There is bias in both the for and against arguments. The bottom line is that saving costs through centralised pricing was unachievable to the private sector. They tried every idea, including standard tariffs and cost saving measures, but costs continued to spiral, which made it increasingly unaffordable for the state’s own hospital network but as much so for private medical aid clients. It was a disaster waiting to happen that would have collapsed the existing system under the massive weight of runaway costs.

As a small, developing nation we cannot afford such costs, which already “tax us” heavily. But, as Jan Gerber rightly observes, the fund’s pool will pay private and public providers, so is likely to see more resources flowing to existing state hospitals – to address your somewhat unfounded concern about the state of such institutions – I visit them regularly on business and they are nowhere near as bad as you make them out to be.

What no one gets is that it will not be the cost behemoth of universal health care. Private and public sector funding of hospitals and clinics is separate from the NHI, which is an insurance model that will use a fund to pay existing provider claims and incentivise them to enhance their practices. 

It is not a tax trap per se. Currently average medical aid costs, excluding own expenditure, is about 4-5% of gross income, of which the state pays 1% or so on rebates. The proposed tax is nearer to 3-4% of income. 

What medical aid users now pay for medical aid, will be substituted with a dedicated tax on the same basis as current medical aids, which cross-subsidise older and less healthy clients at the expense of young and fit clients. That’s how it works now and how it will work in future. And the referral to hospitals will be guided by approved practitioners not by patient choice.

9% of GDP is spent on healthcare in SA, about R450bn, of which R180bn is state expenditure and R270bn private, but that means private has about seven times the allocation of total annual health expenditure, per capita. The imbalance is significant. To bring all uncovered individuals into equitable care, would be either prohibitive or run the risk of private sector disinvestment until everyone is equally badly off. That is not the desired outcome, but that is where the debate should center. The principle of NHI is right, the devil is in the detail. 



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