NHI white paper sketchy on cost to SA taxpayers

Aaron Motsoaledi
Aaron Motsoaledi

The National Health Insurance (NHI) white paper has finally been released, and every South African now has a chance to go through it and submit comments.

The paper, released on Friday by Health Minister Aaron Motsoaledi, lays the foundation for moving towards universal healthcare coverage, which aims to give everyone access to decent medical services, irrespective of whether they are rich or poor.

However, many were expecting that the 90-page document would provide clarity on how the NHI would be financed and how much would be needed to run this ambitious plan.

The white paper, however, contains very little about how much it will cost taxpayers to finance it. The only figure mentioned is R256 billion by 2025. This is the same figure that was quoted in the green paper published five years ago.

How will the NHI be financed?

Motsoaledi said it was difficult to provide an exact figure of how much it would cost to finance the NHI as that depended on the public health
system improvements and medical scheme regulatory reforms.

However, he said: “The cost of the NHI is in our hands. It will cost what you desire it to be.”

It is clear from the NHI white paper that the South African public will finance it. Four potential sources – direct taxation (taxes on income and wealth), indirect taxation, payroll taxation (typically collected from employers and employees) and premiums (membership contributions) – have been listed as options for funding the NHI.

The white paper includes five possible scenarios of tax implications to fund NHI, one of which is a 4% surcharge on taxable income by 2025.

There is a section that breaks down the current expenditure in both the private and public healthcare sector, which stretches from the national health budget, defence department, correctional services department, Road Accident Fund (RAF) and medical aid member contributions to out-of-pocket payments by medical aid members.

Motsoaledi said all this money would be pooled together to fund the NHI, but he was careful not to say whether the total would be enough.

“We believe there is a lot of money for healthcare in South Africa, but it’s all sitting in different places. Some of it is in the military, RAF and other areas.”

According to the white paper, the South African health expenditure in the current financial year sits at R377 billion.

In the 2011/12 financial year it was R263 billion, which was just above what the government estimated in 2010 that the NHI would cost.

Dr Humphrey Zokufa, executive director of the Board of Healthcare Funders, said these figures showed that South Africa could afford the NHI.

“What needs to be done is for National Treasury to pool all the money together because right now it is all over the place and not being used correctly,” he said.

What you should know about the NHI

. The NHI is the finance system designed to pool together funds in an effort to provide quality healthcare services to all South Africans based on their needs and irrespective of their incomes.

. It will work in a similar way to medical schemes, in that patients will go to accredited doctors and hospitals without paying upfront, and the NHI Fund will reimburse doctors and hospitals for the services they provide.

. The NHI system will be implemented in different phases over the ensuing years and it is expected to be up and running by 2025.

. The NHI will provide comprehensive personal health services. However, it would not cover everything for everyone, Motsoaledi said. He did not reveal what the NHI would cover. Services, he said, would range from the lowest level of care to specialised care.

. Contributions to the NHI Fund will be compulsory, but those who want top-up cover will have an opportunity to pay for it themselves.

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July 2020

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