Funding issue still the biggest stumbling block to NHI – legal expert


The successful implementation of the National Health Insurance (NHI) programme hinges on its funding model, according to a legal expert.

Speaking to Fin24 by phone on Friday, partner at law firm Hogan Lovells Ian Jacobsberg said the objectives of the programme to improve general primary healthcare and access to all South Africans cannot be faulted, and that the ideas behind it are good.

However, there are questions about its successful implementation, particularly through the enablement of finances.

“We know current state facilities are under-resourced and I think if one reads the white paper, even the minister himself acknowledges there is a disparity between available funds and the funds necessary to achieve objectives and to get NHI fully operational,” he said.

“There is the question of the funding model. The funding model is quite up in the air.”                                         

Government is allocating an additional R4.2bn to the NHI programme, the national budget for 2018 revealed.

Medical tax credits funding - a vicious circle?

The white paper suggested that medical tax credits be removed and in turn fund the NHI, Fin24 reported. The tax credits are meant to “reimburse” those making use of private healthcare". But Jacobsberg said this option could end up being a “vicious circle”.

“A lot of people who currently finance their own medical aid are only able to do so because they receive the tax credit. If taking away the tax credit is the only way to fund NHI, then NHI would have to be fully operational for people to be able to afford to lose their tax credits,” said Jacobsberg.

“It’s a bit of a chicken and egg (situation).”

Jacobsberg also pointed out that former finance minister Malusi Gigaba did not take away the medical tax credits. “I think there was recognition certainly in the absence of an operational national health system, it is not feasible.”

Another option for funding could see government incorporate state-owned medical aids into NHI. Currently government subsidises employees’ medical aid through state-owned medical schemes, as a private sector employer would for its employees.

“That is probably the starting point before they look at private sector medical aids.

“The implementation will certainly depend on the usual problems – the usual issues we have of political will, financial resources and the correct use of financial resources and the priorities in the national budget,” Jacobsberg said.

“The white paper is realistic that the funds in the current financial circumstances of the country do not exist to fund NHI properly,” he emphasised.

Last year the Davis Tax Committee warned in a report that even though government expects NHI to cost R256bn, this figure is set at 2010 prices.

By 2025, there could be a funding shortfall of R72bn, assumed at an average growth rate of 3.5%.

Jacobsberg pointed out that the country’s gross domestic product has been growing at a slower rate over the past few years.

The Davis Tax Committee indicated the shortfall could be worse.

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