SA pledges fiscal discipline in sweeping health reform

A proposed switch to universal health coverage in South Africa will be managed in a fiscally responsible way, a senior presidential aide told Reuters, forecasting the landmark reform would cost the state $2.2 billion (R30 billion) per year by 2025/26.

The National Health Insurance (NHI) programme, to be debated in parliament soon, is one of the country’s biggest policy changes since white minority rule ended in 1994, and a cornerstone of government plans to fix a crisis-ridden system in which deep racial disparities persist.

Against a backdrop of a struggling economy and a corruption-riddled corporate sector, some opposition politicians and analysts have however questioned its affordability.

Responding to that concern, Olive Shisana – a special advisor to President Cyril Ramaphosa – said the programme would be phased in over a number of years.

“This government is not going to do something that will collapse the economy,” she told Reuters in an interview.

“(The plan) is for gradual, incremental implementation in a fiscally responsible manner.”

Expenditure for NHI in the current fiscal year, which began on April 1, is budgeted at around R2 billion. 

Shisana said this would rise to around R33 billion ($2.2 billion) in the 2025/26 fiscal year.

NHI is designed to improve the quality of public health services and change the way private companies in the sector can operate.

Fewer than 20% of South Africa’s 58 million people can afford private healthcare, while a majority of poor black people queue at understaffed state hospitals short of equipment.

To keep costs within budget, Shisana said the government would initially focus on a set of targeted interventions. Those could include hiring more doctors and improving hospital infrastructure in the public system.

At a later stage, the government is considering extending a medicine distribution programme for chronic diseases and rolling out a payment system for general practitioners based on the number of patients they serve and the health conditions in which they operate.

When the programme is fully launched, at a date yet to be determined, private medical insurance schemes won’t be allowed to cover services reimbursed by a central NHI Fund. Private hospitals and clinics will accredit with the fund.

Alex van den Heever, a professor at the University of the Witwatersrand who specialises in health, suggested Shisana’s assumptions on spending would not stretch to universal coverage.

“NHI envisages a shift to centralised medical cover, R30 billion won’t buy you that,” van den Heever said.

He estimated a full-scale rollout of NHI would involve raising tax revenue upwards of 3% of gross domestic product, or well over R100 billion.

The government introduced NHI legislation to parliament this month, but lawmakers have yet to debate the proposals.