National Health Insurance, or the NHI, is the single biggest indicator of whether the Government of National Unity (GNU) will work, whether the public and private sectors can genuinely co-operate in the best interests of the country and, ultimately, whether South Africa can move forward economically while reversing the ever-widening inequality gap.
That is my belief. The NHI is the test. Currently, we are failing the test. The old guard in the government will not budge on its ideal of universal health care at the same level for all, while the private health-care sector wants to maintain its hold on the slowly decreasing segment of the population that can meet its spiralling charges.
The big squeeze
Medical scheme contributions have traditionally been about three percentage points above the inflation rate. South Africans who are fortunate enough to belong to a medical scheme, a mere 15% of the population, are being squeezed. If your income goes up by the inflation rate but your medical expenses go up by three percentage points more than that, it means that a larger proportion of your income each year is going to meet those expenses – and that is unsustainable.
You’re also being squeezed from the other side. In addition to increasing your contributions annually, the medical schemes quietly subtract benefits or tighten the criteria for accessing benefits. It’s like chocolate bars: not only does the price of the bar rise; it shrinks in size.
The people most affected are pensioners, the very people whose health-care needs are highest. And, like most people who battle to afford the contributions, the reason they hang on to membership is that it covers hospital expenses, the prescribed minimum benefit conditions and emergencies. If you opt out, you’re penalised if you ever want to join again. The medical schemes have got you by the you-know-what.
In defence of the schemes, they face two massive headwinds: the surging costs of imported medicines and medical equipment, with the weak rand adding to their woes, and the problem of claims fraud and abuse, without which we would all be paying far lower contributions.
Pie in the sky
Getting back to the government’s solution for ending the regime of a greedy private health sector, we come face-to-face with the biggest elephant in the room, how the NHI will be funded. The other elephant is that a centralised state-run system would be prone to corruption and mismanagement, especially considering the government’s track record in this respect.
A single level of care for all is pie-in-the-sky thinking. It might have been former British prime minister Tony Blair who said, although I cannot find a reference to it, “the government’s job is to look after the poor and vulnerable; the rich can look after themselves”.
The approach, to my mind, offers the most practical, feasible way forward. Forget about how the top 1% of the population spends their money on medical treatment. If they cannot get it here, they’ll fly off to another country to get it, and possibly stay there, as will the many high-charging specialists put out of business. The role of the government should be to provide a decent, basic level of health care to the other 99%.
And here’s the rub: if you build a cost-effective and efficient public health-care service, a sizeable portion of people who belong to medical schemes only for the hospital benefits will abandon the schemes and make the leap.
That’s the first step. Get our public health service properly functioning again, with well-run hospitals and primary care facilities, using the health budget. Then, entice private health-care practitioners into a network of services providers, in the same way that the medical schemes are doing. Use a carrot, not a stick. Along with that, you can have a state health insurance scheme (I won’t call it the NHI), with contributions tiered according to income, to which anyone not belonging to a private scheme must belong, which should be able to compete with the private schemes.
A concession by the private health-care sector should be stricter control over pricing, and I think here particularly of the specialists who, it seems to me, can charge whatever they like.
Public health expenditure
Speaking on the NHI at the recent Foresight 2024 conference hosted by Insight Actuaries and Consultants in Cape Town, Barry Childs, the joint CEO of the firm, said South Africa assigned more public funds to health care than many countries with similar-size economies. He said that in the 2023/23 financial year, the state budgeted 14% (R267 billion) of total expenditure on health care, or 12% if you factor in the government’s debt servicing costs of R356bn (yes, R100bn more than goes to health).
“This is already close to what governments historically agreed to as a target spending level for health (15%). Combining all South Africa’s health expenditure into the NHI would push government health spending far out of line with international norms and unbalance South Africa’s overall government expenditure,” Childs said.
Comparing countries, he said only the governments of high-income countries allocated more of their budgets to public health. In 2022, high-income countries allocated around 20% to health, upper-middle-income countries around 10% and poorer countries around 5%.
It’s not that we don’t have considerable funds for health care; it’s how that money is being used.
If egos can be set aside and the GNU can come up with a workable national health system, I, for one, will be reassured that South Africa has, indeed, turned a corner.
* Hesse is the former editor of Personal Finance
** The views expressed in this column do not necessarily reflect the views of Independent Newspapers.
PERSONAL FINANCE