Healthcare rationing under the NHI Act: A price too high

South Africa’s proposed National Health Insurance (NHI) Act aims to provide comprehensive healthcare to all. While the goal of universal health coverage is widely supported, the chosen approach raises serious concerns.

Chief among them is the risk of widespread healthcare rationing. This is not a theoretical concern. It is a likely outcome, supported by modelling and real-world examples from South Africa and other countries.

Independent analysis of expert economists at Genesis Analytics shows that to deliver comprehensive healthcare at the same level as current medical scheme cover to all 61 million South Africans, the NHI Fund would require R941 billion⁽¹⁾ per year. This already assumes ambitious efficiency savings of 45.5 percent⁽²⁾. Even if this funding were somehow secured, the harsh truth remains: there is no healthcare without healthcare workers.

Even under best-case assumptions, modelling by Genesis Analytics indicates that South Africa would need 286,000⁽³⁾ additional healthcare professionals to provide comprehensive healthcare. This includes doubling the number of general practitioners, nurses and pharmacists, and tripling the number of specialists, which is simply impossible to achieve in the medium term. Without the required funding and workforce, rationing is unavoidable.

What is healthcare rationing?
Rationing arises when the healthcare system cannot meet the demand for care. It takes two forms, explicit and implicit.

Explicit rationing includes transparent rules that formally restrict access. Under the NHI Act, this could take the form of:

• Mandatory referrals preventing direct access to specialists
• Exclusion of certain high-cost or limited-benefit treatments from the benefit package
• Cost-effectiveness decisions that deprioritise specific groups, such as denying dialysis to older patients or intensive care to premature babies under one kilogram

Explicit rationing is fair but it requires the disciplined application of well-established rules on a consistent basis by the entire healthcare provider team.

Implicit rationing happens in a more haphazard way through systemic constraints. Patients may qualify for care, but cannot access it due to:

• Delayed surgeries from full operating theatres or equipment failures
• Long waiting lists for oncology, orthopaedics or mental health services
• Stockouts of life-saving or chronic medicines
• Doctor shortages, especially in rural clinics, where one provider may serve thousands

Implicit rationing often means that non-transparent individual rationing decisions are made, and this often means that the well-to-do are often favoured at the expense of the poor.

The expert analysis by Genesis Analytics confirms that both types of rationing would become widespread under the NHI Act. In a scenario where current healthcare budgets are pooled without additional resources, access to care for existing medical scheme members would fall by 43%. Services would be allocated not based on clinical need, but on scarcity.

South Africa’s rationing reality
Rationing is already a reality in our country’s public healthcare system. Premature babies weighing less than one kilogram are frequently denied admission to neonatal intensive care units, as limited bed availability means priority is often given to newborns with a greater chance of survival. Cancer patients in Gauteng, KwaZulu-Natal and the Eastern Cape often face delays of several months before starting radiation treatment. Some do not survive the wait. For others, treatment delays may nevertheless compromise the effectiveness of therapies like chemotherapy and radiation, reducing the chances of successful outcomes.

Orthopaedic surgeries like hip and knee replacements are routinely postponed for more than a year. Cataract operations and other routine procedures are delayed due to broken equipment or the absence of basic supplies.

These are not rare exceptions. They reflect a system already overburdened. The healthcare coverage system established by the NHI Act would significantly increase the number of patients reliant on public health services, yet it provides no clear plan for how existing capacity constraints - such as shortages of healthcare professionals, hospital beds, essential medicines, and medical equipment - will be resolved. This expansion of the patient base, in the absence of corresponding increases in resources and infrastructure, raises the likelihood of widespread rationing of care, longer waiting times, and diminished access to timely and effective treatment for all users of the system.

The constitutional position
In Soobramoney v Minister of Health, the Constitutional Court affirmed that while everyone has a right to access healthcare, this right is expressly limited by the State’s available resources. The Court held that rationing of healthcare resources is constitutionally acceptable, provided it is based on rational and fair criteria, and is applied consistently. The State is required by section 27 of the Constitution to take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of the right to healthcare.

The concern is not that rationing exists, but that the model envisaged by the NHI Act would lock all South Africans into a healthcare system that rations by default and bars alternatives. Section 33 of the NHI Act prevents medical schemes from covering any service included in the NHI benefit package once the system is declared fully implemented. This means that patients who are delayed or denied care in the public system cannot turn to their medical scheme. Their only legal recourse would be to pay out of pocket, which most people cannot afford.

Lessons from the United Kingdom
Supporters of the NHI Act often cite the United Kingdom’s National Health Service (NHS) as a model. Yet the NHS offers clear warnings about the risks of rationing, even in a well-funded public healthcare system where full alternative private healthcare services are also accessible.

The UK population is just under 60 million. Yet more than seven million people are on NHS waiting lists. Over 300,000 have waited more than a year for hospital treatment, including cataract removals and joint replacements.

• Knee and hip replacements are supposed to be completed within 18 weeks, but 40 percent of patients wait longer
• Elective surgeries may be delayed by up to two years
• One in five cancer patients does not begin treatment within 62 days of urgent referral
• High-cost medications for cancer, autoimmune diseases and rare conditions are often not approved
• Fertility treatment availability varies by region, with some areas offering none
• NHS dental appointments are so scarce that some patients pull out their own teeth or pay privately, despite being eligible for state care

The NHS spends around 4.5 times more per capita than what the NHI Fund would spend under the current legislative design of the NHI Act. If a high-income country like the UK must ration care despite its resources, South Africa cannot avoid the same outcome with fewer resources.

Importantly, the UK does not ban insurers from covering healthcare benefits that are covered by the NHS and this means people have the opportunity to access private care when they cannot access the NHS. This also eases the pressure on the NHS as anyone purchasing private cover is still funding the NHS through their taxes.

The real cost of Section 33
Section 33 effectively removes the ability of patients to seek alternative healthcare funding if the public system fails. A mother waiting 16 months for breast cancer treatment will not have been able to buy medical scheme for that care because section 33 would prevent the coverage of any care that is covered by NHI. A child requiring urgent surgery may face delays with no backup option. Section 33 forces everyone into the same queue but removes the safety valve of private cover which effectively improves access for everyone.

This is not the progressive realisation of healthcare envisioned in section 27 of the Constitution. It is a step backward that undermines individual rights and limits access.

A better path: HFA’s hybrid multi-fund model
The Health Funders Association (HFA) proposes a hybrid multi-fund solution which retains the NHI Fund and a common benefit package for all but allows medical schemes to continue offering cover in a reformed environment to reduce costs and improve quality of care. This model combines public funding with individual choice and flexibility.

Under HFA’s proposed model, medical schemes would receive an amount from the NHI Fund to deliver the core package. Individuals could top up for additional benefits outside of the package. High-cost members who remain on medical schemes would not be a drain on the NHI risk pool, leaving more resources for the public system. This strengthens financial sustainability and protects vulnerable groups.

Conclusion
Universal health coverage is about delivering healthcare where and when it is needed. The NHI Act, in its current legislative form, risks entrenching a system where rationing is widespread and alternate funding mechanisms are prohibited.

Our Constitution demands fairness, reasonableness and choice. HFA’s hybrid proposed multi-fund model offers a more workable path. It ensures universal access while preserving the right to choose. It combines equity with flexibility. It protects public resources while improving outcomes. It is a model South Africa needs and can sustain.

(1) Page 75 of Economic analysis of the impact and feasibility of the NHI Act https://hfassociation.co.za/nhi_documents/Genesis%20Analytics%20Report.pdf
(2) Page viii of the Economic analysis of the impact and feasibility of the NHI Act https://hfassociation.co.za/nhi_documents/Genesis%20Analytics%20Report.pdf
(3) Page 69 of the Economic analysis of the impact and feasibility of the NHI Act https://hfassociation.co.za/nhi_documents/Genesis%20Analytics%20Report.pdf