Understanding the National Health Insurance (NHI) Bill


Much debate has taken place around the new National Health Insurance Act (NHI). We support the establishment of the NHI Fund as part of an integrated model towards achieving universal health coverage (UHC) in South Africa and making sure that everyone has access to quality healthcare when they need it. We would like to provide some additional information to answer any questions you may have.

We are supportive of structural change that assists in strengthening and improving the healthcare system for all South Africans, and we are committed to assisting where we can in building it, and making it workable and sustainable, seeking to ultimately strengthen both the public and private healthcare systems for all South Africans.

While the NHI is a huge, complex and multi-decade initiative and a considerable amount of effort is needed to make it workable, in this brief note, we review some of the key issues arising from the NHI Act and then look at the NHI policy process going forward.

The role of medical schemes once the NHI is implemented

A central issue is the future role of private healthcare and medical schemes once the NHI is implemented. The NHI Act states that when the NHI is 'fully implemented", medical schemes will not be able to provide cover for services that are paid for by the NHI.

Our strong view is that limiting the role of medical schemes would be counterproductive to the NHI because there are simply insufficient resources to meet the needs of all South Africans. Limiting people from purchasing the medical scheme coverage they seek will seriously curtail the healthcare they expect and demand. It poses the risks of eroding sentiment, and of denuding the country of critically needed skills, and is impacting negatively on local and international investor sentiment and business confidence.

Crucially, by preventing those who can afford it from using their medical scheme cover, and forcing them into the NHI system, this approach will also have the effect of increasing the burden on public funding which taxpayers need to cover. We believe that limiting the rights of citizens to purchase additional health insurance, after they have contributed to the NHI is not necessary to achieve the objectives of the NHI. It would also be globally unprecedented as in virtually every other country with some form of NHI, citizens are free to purchase additional private health insurance cover, including cover that overlaps with services covered by the national system.

We are seeking every opportunity for constructive engagement with the National Department of Health and the Presidency to highlight areas that need to be amended to prevent violations of the constitutional rights for medical scheme members and all citizens. At the same time we will take the necessary steps to ensure that the rights of medical scheme members are not compromised as we seek to broaden access to healthcare for all South Africans.

for everyone (rich or poor) but the constitution also prohibits unreasonable limitation of existing rights (i.e. access to healthcare) and mandates government to consider "other measures", within "available resources" in compliance to Section 36 (1) (e) "less restrictive means to achieve the purpose" during any policy reform or amendment.

A restriction on choice of medical scheme cover is not dissimilar to limiting the rights of citizens to purchase private education for their children or private security, on the basis that the public system already provides state schooling and police services.

We are very concerned that there are substantial risk and harms that this approach of limiting the role of medical schemes will cause. We are of the view that an integrated health financing model which will build on the current (but transformed) health system would facilitate achievement of UHC for South Africa faster and in a less risky manner to the economy, and the national health system in general.

Even on the current framing of the NHI Act, medical schemes will continue to cover all of the healthcare services which they currently cover for the foreseeable future for a number of reasons:

  • South Africa's weak macroeconomic outlook which has led to contraction of the GDP over several years means that increasing taxes to fund NHI is not feasible in the current economic climate
  • The removal or reduction of medical scheme tax credits will increase the tax burden for medical scheme members and may impact on their ability to afford private cover thereby increasing the burden on the public sector. This in particular for low-income medical scheme members.
  • Amendments to taxes require a Money Bill which is the ambit of National Treasury, and this requires an impact analysis on the social and economic effects. The proposals in Section 49 of the NHI Act are factually inaccurate and do not appear to be consistent with these principles.
  • There is uncertainty as to when the NHI will be considered "fully implemented", and this is most likely to be quite far in the future due to resource constraints and the need for health system improvements, including infrastructure revitalization.
  • There is no clear definition of services to be covered by the NHI, and it appears that this definition will be expanded on an incremental basis as affordability allows.
  • There is no costing of NHI health service benefits including the costing of the transitional arrangements.

The financing of the NHI system

The NHI Act makes no reference to the likely costs of the NHI once fully implemented.Any fundamental change to public health delivery that improves quality and access and seeks to contract with private providers will require substantial additional funding. We understand that National Treasury will soon be publishing a costing document, and that this is likely to be based on an incremental approach to providing NHI benefits.

While the NHI Act specifies that payroll taxes and a surcharge on personal income tax could be considered as sources of funding, such taxes would need to be determined by National Treasury. At the presentation of the Act, the Minister of Health indicated that no tax changes are envisaged over the 3-year period of the current Medium Term Expenditure Framework.

Our analysis shows that NHI funding of R200bn would require massive changes to tax policy which the fiscus cannot necessarily accommodate, for example:

  • Collecting R200bn from VAT would require an increase in VAT from 15% to 21.5%. OR
  • Collecting R200bn from Personal Income Tax means that tax rates would need to increase by 31% across the board - each taxpayer will need to pay almost one-third more than their current tax payments which is a massive erosion of take-home pay. OR
  • Collecting R200bn as a payroll tax would require a collection of around R1,072 per employee per month. This increases to around R1 565 per employee per month for only those employed in the formal sector.

None of these options are affordable or realistic.

Based on the above, in our view, there are material challenges to raising new revenues to supplement the current government budget for healthcare, and this is unlikely to change in the foreseeable future. This suggests that the rollout of the NHI will be slow unless there is a substantial improvement in the country's economic prospects.

The role of private hospitals and health professionals

The NHI Act envisages that the NHI Fund will contract on a voluntary basis with private hospitals and health professionals to supplement the current public sector delivery system.

For the foreseeable future, we expect that the NHI will contract with some GPs to supplement primary care services, and also that it will contract for certain high priority services to address specific gaps in public sector provision. If this is achieved, it will already be a significant step forward for access to care in South Africa.

Beyond that, we expect that the vast majority of NHI services will continue to be delivered by public sector clinics and hospitals, and that private hospitals, specialists and other providers will continue to be funded by medical schemes.

We have a valuable, highly skilled and world-class healthcare professional community in South Africa. These professionals work hard, provide excellent care, and are committed to our country.

We will continue to advocate for the private sector especially the doctors, on their right to work in an optimal working environment , fair remuneration and their retainment within the National Health System whilst promoting sustainability of the industry, quality health outcomes and ideal patient care.

The NHI Act Process

The NHI Act was approved by the Portfolio Committee on Health in May 2023, and it was passed by Parliament in June 2023 and the sent to the National Council of Provinces ("NCOP") for concurrence.

On 6 December 2023, the NCOP passed the NHI Bill, and submitted it to the President for assent. Unfortunately, the NCOP did so without any substantial amendments to the Bill. This despite significant concerns raised by multiple stakeholders throughout the parliamentary processes regarding the financial, constitutional, and operational viability of the NHI as proposed.

On 15 May 2024, President Cyril Ramaphosa signed the Bill into law in Pretoria and on 16 May 2024 was gazetted as the NHI Act but with no effective dates yet stipulated.

We see no scenario in which there is sufficient funding for a workable and comprehensive NHI in its current form - hence our conviction that private sector collaboration is vital, and that full implementation of the Act remains a long way off - likely decades.

Significant flaws in the Act and the legislative processes followed in promulgating the Act, will also likely result in the Act being challenged on numerous fronts, leading to further likely delays. Since 2011, Discovery has focused on constructive and collaborative engagement with our partners in government, business, and civil society through every step of the NHI legislative process. This remains our approach into the future, with the objective of achieving an NHI that is to the benefit of all South Africans.

Concluding remarks

While the NHI Act certainly raises some serious concerns. We recognize the need for health system changes to improve healthcare for all in SA. We believe that the integrated UHC model provides an opportunity for government to increase access to health care in a way that is affordable and efficient.

This should leverage on the strengths of the key elements of the current (possibly transformed) public and private healthcare system, and we remain confident that the outcome will be rational and workable taking into consideration of our current fiscal space and prevailing macro-economic conditions.

Discovery is committed to playing its role in building a positive future - for our members, South Africa's healthcare professionals, and for all South Africans.

The Discovery Health Medical Scheme is an independent non-profit entity governed by the Medical Schemes Act, and regulated by the Council for Medical Schemes. It is administered by a separate company, Discovery Health (Pty) Ltd, an authorised financial services provider and administrator of medical schemes. 

Log in

Please click here to login into Discovery Digital Id

Please click here to login into Discovery Digital Id