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NHI Company news South Africa

The reality of South Africa's looming healthcare costs: Medshield's Kevin Aron unpacks the NHI

While the NHI promises to revolutionise healthcare in South Africa, it has many challenges. Most commentators and industry stakeholders have raised several concerns regarding its feasibility, sustainability, and potential impact on the quality of care. On the positive side, the NHI aims to provide universal healthcare for all citizens, addressing the inequalities in the current system where only a minority have access to private healthcare. It will cover health benefits costs for every South African, employed or unemployed, poor or wealthy, rural or urban, without any of us having to pay when we need the services. The NHI will ensure no one is chased away because their benefits and funds are exhausted. These are lofty aims, but the reality is that there is not enough money available to fund a healthcare system with such high aspirations.

Once the NHI is implemented, every South African will have to register with the NHI, likely through a primary accredited healthcare provider. After receiving the needed care, the NHI will pay providers directly for patient services. The Fund will comprehensively cover the costs, meaning patients will not pay out-of-pocket for services covered by the NHI, thus eliminating financial barriers to healthcare. Unfortunately, the NHI benefits package has not been made available, so at this stage, one cannot determine what will be covered in the NHI and what will not be covered. 

A shock to the current system

The current two-tier system of healthcare provision has not sufficiently catered for good quality healthcare for all, specifically in the public sector. This system has precluded people experiencing poverty, or those without medical aid, from accessing a large number of health professionals, services and facilities. NHI aims to establish a single pool of healthcare funding for private and public healthcare providers and will pay both these providers on the same basis while expecting the same standard of care from them. It is however uncertain whether private healthcare providers will accept the rates to be paid by the NHI and the government has provided no information on what these rates would be.

The reality of South Africa's looming healthcare costs: Medshield's Kevin Aron unpacks the NHI

For South Africans without medical aid or in lower income groups, the NHI will be beneficial as it will offer more equitable access to healthcare services and allow them to consult private healthcare practitioners and use private healthcare facilities and practices, with the NHI footing the bill. Not only will it provide healthcare to those who are not members of a medical aid, but the NHI purports to improve the resourcing of public hospitals and healthcare services as the burden of care will be more evenly distributed.

The NHI will shock the system for South Africans who do have medical aid. Those accustomed to private care may have to settle for lower standards while continuing to pay a similar or higher fee. South Africans within a certain income bracket will have to make mandatory monthly payments towards healthcare and carry a higher tax burden. It is questionable whether the current base of taxpayers will be able to afford the costs of the NHI.

Section 33 of the NHI Bill outlines that once the NHI is fully implemented, medical schemes can only offer coverage for services not included in the NHI, effectively replacing their current role. Dr. Larisse Prinsen notes that medical schemes must shift to providing "complementary or top-up cover" for services outside the NHI's scope, with no co-payments required for NHI-covered services. While the NHI will not eliminate medical aid schemes, their function will change, focusing on non-NHI reimbursable services. Concerns have been raised about the potential impact on medical aid schemes and individual choice, likening it to limitations seen in private education or security. However, private healthcare providers will remain operational, and the National Treasury anticipates full implementation will take up to 30 years. The Department of Health however predicts that a fully functional NHI could be implemented in a much shorter period, notwithstanding that no details on the implementation have been provided.

A balanced perspective of the current debate

One of the critical aspects of the NHI is its role in fostering coordinated universal care by integrating primary, secondary, and tertiary care levels into a seamless system. The NHI will introduce provider accreditation standards, requiring public and private healthcare providers to meet specific standards. While it may improve service quality, it may also result in fewer accredited providers, especially in the private sector. The NHI will, therefore, introduce a structured referral system that requires patients to consult with a primary healthcare provider before accessing specialist services. It will optimise resource use and ensure appropriate care at the right level. Private providers may need to adjust to these new standards. It should be noted that South Africa already has too few Specialists practising in the Private sector and there is a high risk of Specialists deciding not to accept the NHI rules or payment rates and rather emigrate to other countries where they will be paid higher amounts for their services.

Ongoing debates about the increased taxes and significant investments in healthcare infrastructure and human resources raise questions about the NHI's viability. There are concerns that the government's cost projections are overly optimistic and that the actual costs could be much higher, making the system unsustainable. Critics argue that the NHI could strain the economy, especially if taxpayers cannot bear the additional financial burden. Furthermore, corruption risks and mismanagement of funds are also significant concerns, and therefore, it is crucial to ensure transparency and accountability in the Fund's operations for its success.

The NHI aims to standardise care quality across all providers, but this could stifle innovation in the private sector. According to the NHI Impact Survey, many fear that the NHI will lead to higher taxes without necessarily improving healthcare outcomes. The NHI may also exacerbate existing healthcare workforce challenges, such as shortages of skilled professionals and uneven distribution of workers, requiring urgent attention to ensure universal access to quality care. Balancing the need for consistent standards with flexibility is crucial for providers to innovate and improve care delivery.

There are expected to be significant legal challenges to the NHI, primarily related to the fairness and rationality of the laws and their constitutionality. Critics argue that the law was pushed through without adequate stakeholder engagement, making it unimplementable and financially unsustainable. This potential unsustainability is a challenge because there needs to be overwhelming public support and trust to succeed. The NHI is expected to face numerous court battles, with questions about whether it aligns with South Africa's constitution.

Transforming the healthcare economy

Overall, if implemented, the NHI will transform South Africa's healthcare landscape significantly. The implemented NHI will base contributions on individual affordability through taxes and exceptional contributions, with the NHI Fund covering healthcare costs directly during provider visits. This system aims to improve access for those facing financial or geographical barriers, make healthcare more affordable through pooled funds, and promote equity.

Service delivery will change as the NHI Fund takes on the role of purchasing services, which could affect how healthcare is organised and managed. The focus on quality will enhance scrutiny of healthcare services, while the healthcare workforce may see shifts in demand, roles, and training. Governance is a key issue, especially the oversight over the NHI Fund and how effectively money is spent. The vision of an NHI is commendable, but many challenges and risks exist that must be managed with transparency.

Importantly, whilst the NHI is not in place, existing medical aid coverage will remain intact, allowing beneficiaries on medical schemes continued access to its health benefits and services.


About Kevin Aron

Kevin Aron is the principal officer of Medshield Medical Scheme.
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