Unhealthy hole in the fiscus

South Africa’s healthcare system is grossly inequitable and even the middle class is squeezed between rocketing private costs and miserable state facilities.

Something has to change. The National Health Insurance scheme, done right, can drive more equity and better quality. Plans by Health Minister Aaron Motsoaledi to leverage the launch of the NHI off improvements in the quality of current state health infrastructure are a good start.

There are many caveats, however, not least the quality of management and the prospect of Intaka-type corruption.

In just two years from now—as early as 2014-2015—there will be a gaping R6-billion hole for financing healthcare left unfunded in the medium-term expenditure framework.

Budget Review points out that, in the medium term, general taxes will remain the primary financing mechanism for the public healthcare system and NHI pilot projects.

But it makes it clear that in the long term other sources will be needed to stop the gap. Possible options could include a payroll tax on both employers and employees, higher value-added tax; a surcharge on taxable incomes, or a combination of these.

This is in a context in which spending on health care is already roughly 4% of gross domestic product. According to preliminary modelling, to fund the NHI this spending will have to increase to 6% by 2025 to meet the targets set for 14 years hence.

Successful national healthcare systems in other parts of the world have taken several decades to implement. Is our 14-year target not too ambitious?

The number crunching has only just begun and already it is revealing the major flaws in the implementation of the NHI.

Are we politically and economically ready for this?


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