By Dr Paula Armstrong

On 21 June 2018, the Minister of Health, Dr Aaron Motsoaledi released the National Health Insurance Bill (NHI Bill) and the Medical Schemes Amendment Bill (MSA Bill). The Minister explained that the overarching objectives of the bills are the achievement of universal access to healthcare and the lowering of healthcare costs. We assess whether the NHI Bill and the MSA Bill are sufficient to achieve the twin objectives of increasing access and decreasing cost.

To the extent that all South Africans are currently able to access healthcare in the public sector, being charged according to their income and ability to pay, one could argue that South Africa already has universal access to healthcare. However, there are unacceptably large disparities in the quality of healthcare in the country, and the standard of healthcare available in the public sector is abysmally low. Approximately 84% of the population make use of the public healthcare sector, and the quality gap between the public and private sectors is wide and expanding. For the Minister’s objective to have a meaningful impact on health outcomes in South Africa, the NHI Bill would need to ensure universal access to quality healthcare.

So how does the NHI Bill propose to remedy the state of healthcare in South Africa? The South African public healthcare sector is riddled with governance and operational failures that have the left the system on the brink of collapse. The dire state of the system is well documented. One would rationally assume, then, that a plan put in place to remedy the situation would focus extensively on issues of governance and operational efficiency.

However, the NHI Bill is conspicuously silent on governance and operational features of the healthcare system. The NHI Bill effectively provides for the establishment of the National Health Insurance Fund (NHIF). According to the Bill, the NHIF is a central fund that will be the sole purchaser of a predetermined basket of healthcare services across the country, in both the public and private sector. The NHIF will procure this basket of healthcare services for all NHI beneficiaries, and these services will be free to registered beneficiaries at the point of access. Contributions to the NHIF will be mandatory for those who can afford to contribute.

The NHI Bill therefore provides for the establishment of a strategic procurement fund, and the Bill leaves underperforming provincial systems of healthcare delivery largely intact. It is doubtful that a strategic procurement fund will meaningfully improve access to high quality healthcare if it does not specifically address the governance and operational failures in the system.

We mention above that the NHIF will provide a distinct basket of healthcare services, which will be free of charge at the point of access. The Bill provides for the establishment of a Benefits Advisory Committee to determine what these benefits should be. However, the Bill requires that the Benefits Advisory Committee take account of the funds available in determining what should be included in this basket of services. Herein lies a fundamental stumbling block to determining what services will be procured by the NHIF. Determining the funding requirements of the NHI has been a notoriously difficult task.[1] The Davis Tax Committee highlights the vast range of estimates of the cost implementing the NHI, and the Minister himself has commented on the impossibility of calculating the cost of such a system. Indeed, without a clear indication of what the NHIF will procure (i.e. what benefits will be covered) funding calculations are impossible. Yet the Bill requires the Benefit Advisory Committee to determine benefits based on the funds available. It seems impossible then to determine which healthcare services will ultimately be provided by the NHIF.

An important provision in the NHI Bill and one that is potentially problematic from an economic perspective is the establishment of the Health Benefits Pricing Committee, which will recommend and determine the price of the health benefits that will be provided by the NHIF. Failure to apply the prices decided by the Pricing Committee will result in practitioners losing their accreditation to supply services to the NHIF. The impact of regulating prices amongst healthcare practitioners (particularly those in the private sector) on the incentive to continue to practice is worrisome. It is likely to be challenging to arrive at prices that satisfy both practitioners and the NHIF.

In terms of lowering the cost of healthcare, the likelihood of the NHI and MSA Bills achieving this objective will depend on which services are covered by the NHIF and what this means for medical scheme membership going forward. The MSA Bill stipulates that medical schemes may not cover health services procured by the NHIF. Schemes may only cover services not provided by the NHIF, and in this sense may provide “top-up” or supplementary healthcare cover. The NHI Bill explains that medical schemes may cover healthcare services for individuals not eligible for NHIF cover, services accessed outside of the referral pathway,[2] and for services not deemed necessary by the Benefits Advisory Committee. The impact of these stipulations on medical scheme membership and the size and composition of risk pools will determine what the ultimate effect will be on medical scheme premiums. It will therefore determine the impact on the affordability private healthcare cover in South Africa.

Much uncertainty and confusion surround the future of healthcare in South Africa at the moment, and future blog posts will deal with more detailed aspects of the NHI and MSA Bills. The probability that the NHI and MSA Bills will achieve the objectives of universal healthcare and decreased cost seems low and much debate is likely to characterise the healthcare arena in months to come.

[1] Econex has done work on the financing of the NHI, available here.

[2] The NHI Bill stipulates that registered NHI beneficiaries must access healthcare through their primary healthcare provider, after which they may be referred to other parts of the healthcare system (e.g. specialist or hospital care).

Author/s: Dr Paula Armstrong

Nothing in this publication should be construed as advice from any employee of Econex and should be seen as general summaries of developments or principles of interest that may not apply to specific circumstances.