Green paper indicates that NHI might not cost an arm and a leg

The green paper on the proposed National Health Insurance (NHI) has come under heavy scrutiny by the South African public in recent weeks, most especially the tax-paying community who are concerned about the possibility of tax increases to cover the costs of the system’s implementation.

Speaking on the eNews channel’s Morning News Today programme, Lullu Krugel, senior economist from KPMG explains these fears. “The bottom line is the pool of South African taxpayers is not big. The majority of the public is unemployed, so the government depends on the minority to contribute taxes. The ideal situation, to implement the NHI, would be in a growing economy where more people that are employed can contribute.”

Are concerns for a tax hike justified? The government has budgeted R112bn on the health system in 2011/12, increasing to over R120bn in 2012/13; whereas the green paper estimates that the NHI would cost approximately R125bn during that same period (2012). That does leave a funding gap, albeit a relatively small one.

“We’re in a relatively stable fiscal situation in South Africa, and we’d not like to unnecessarily grow public debt. However, it appears that the Department of Health has thought really hard about how they want to spend the money. The possibility of a tax increase is there, but it’s more conservative than people thought it would be,” said Krugel.

Perhaps more crucial to the implementation of the NHI is the immediate overhaul of the current public healthcare system. “The first five years will be about getting the public health system right,” said Dr Anban Pillay from the Department of Health (DOH). “This includes getting the efficiencies right, locating where expenditure is wasteful, rooting out corruption, improving management, and more.”

“Individuals will not be asked to make any contribution to the NHI until the public health system is up and running, and of an appropriate quality.”

More definitive figures on the cost of the new healthcare system will emerge, once the policy proposal is finalised together with the Treasury within the next six months. In the meantime, the DOH has indicated that it intends to initiate a pilot project next year.

“It’s not a big bang approach, as many South Africans were worried about in the beginning,” said Krugel. The quality of healthcare provided by the NHI could also be held in check by partnering with the private sector. “It’s good news to see in the green paper, that the government plans to engage with the private sector. There are definitely skills there that can be used.”

While much uncertainty still remains over the finer details of the implementation of national health insurance in South Africa, the green paper released by government and the input from stakeholders gives much to be optimistic about.

As Dr Pillay points out: “An important principle in the document, and we’ve made this very clear, is that South Africans will not be paying more for the NHI than what they are currently paying for their medical scheme. The intention is not to put households into greater debt.”