National Health Insurance (NHI): A viable option for SA’s healthcare sector?

Will government implement a national health insurance plan? Is it viable? Or will our country’s future more likely continue to include a mix of both private and public healthcare systems?

Astronomical costs

According to Patrick Masobe, MD of V-Med, a healthcare administration provider, the cost of setting up an NHI plan would be astronomical.

“To fund such a scheme, Government would need to find an additional R100 billion over and above the R120 billion currently spent on healthcare – effectively more than doubling the current healthcare expenditure. Given the total government revenue of around R650 billion in 2009/2010, the funding of a NHI plan would require an estimated 15% rise in taxation. These realities make the NHI a less than feasible plan financially,” says Masobe.

Duplication and inefficiencies

“A national health insurance system would further repeat and parallel systems already in place, wasting valuable resources. The administration fees for a national system would also be very high, amounting to around R8 billion a year,” says Masobe.

In addition, the infrastructure does not exist to implement NHI logistically. “A recent study conducted by the Financial and Fiscal Commission, a government body that advises parliament on the allocation of resources, revealed that it will take 15 years to get the country’s hospital facilities, equipment and staff back up to scratch,” notes Masobe.

“Furthermore, studies have shown that an estimated R20 billion will be required to find and train the doctors and specialists needed to make a comprehensive health plan work practically. The huge deficit in the number of nurses must also be addressed - an estimated 170 000 new nurses are needed for NHI to work.”

Feasibility in question

In short then, a NHI scheme is not as feasible, either financially or with regard to the resources and infrastructure required to implement it.

Moving forward

The more likely scenario, moving forward, is that South Africa will continue to have a combination of both a public-funded health system and privately-funded medical schemes. “This is the only sensible option, even as much room for improvement exists in both areas.

“In the public system we need to increase funding in line with the needs of our citizens. We need to improve the state of public hospitals and increase the recruitment and training of doctors and nurses. What is vital is better governance and management of resources, including consistent accountability throughout the public health system. The district health system needs to become more coherent and effective, especially in rural areas that suffer from high incidences of TB and Aids.”

Risk equalisation fund

The private healthcare system must become more affordable, adds Masobe. “This can be remedied by setting up a risk equalisation fund mechanism which has been successfully used in other countries around the world, allowing healthier and younger segments of the population to subsidise the elderly and the sick. In addition, providing subsidies for low income earners will ensure they also have access to reasonably priced healthcare.

“A risk equalisation fund is vital to bring lower income earners into the medical aid system. The state should refocus existing subsidies to better fulfil their health mandate to citizens,” explains Masobe. “Plans to roll out the risk equalisation fund have been stalled at government level since the NHI concept was first posited. The evidence then appears to point overwhelmingly to NHI as an ill-advised and non-viable future healthcare option for South Africa in the short and long term.”