File photo by James Oatway
The Health Funders Association this week launched a legal challenge against the National Health Insurance Act, saying it was unaffordable, unworkable and unconstitutional.
President Cyril Ramaphosa signed the Act into law in May last year, days before the country headed to the polls for general elections.
The ANC, which governed the country solely until being forced into a national coalition after the polls, says the NHI is intended to provide universal and comprehensive health coverage to all South Africans.
But it has faced fierce criticism from the private healthcare sector and parties such as the Democratic Alliance, which was the official opposition until it joined the government of national unity last year.
Health Funders Association chief executive Thoneshan Naidoo acknowledged this week that “South Africa needs a healthcare system that delivers equitable, quality care to all [and] we fully support that vision.”
But he added: “In its current form, and without private sector collaboration, the NHI Act is fiscally impossible and operationally unworkable, and threatens the stability of the economy and health system, impacting everyone in South Africa.”
The association filed its application at the Pretoria high court, joining five other medical entities that are fighting the law.
The association, which represents 20 medical schemes and three administrators, collectively covering 46% of the private healthcare market, said it was taking this legal step to help ensure that the national health reform is “grounded in constitutional principles, financial realism and patient choice”.
It argued that the framework in its current form was not fiscally feasible and would also have adverse effects on South Africa’s healthcare and economic outcomes.
“The steep tax increases required to fund the NHI will reduce disposable income, curb consumer spending across all sectors of the economy and may well trigger an exodus of high-income taxpayers,” it said.
“At the same time, destabilising the private healthcare sector will deter investment, put jobs at risk, and slow GDP growth in a sector that contributes over 4.3% to South Africa’s GDP.”
The association’s position is premised on a report by Genesis Analytics, published this week, which showed that the “NHI Act requires unsustainable tax increases while reducing healthcare access for medical scheme members”.
It said the analysis also revealed South Africa’s racially diverse medical scheme membership, in which more than 68% of members are black, Indian or coloured, and up to 83% earn less than R37 500 a month.
“The proposed NHI would, therefore, disproportionately impact working-class households who currently rely on medical schemes for quality care.”
Modelling by Genesis Analysis showed that it would be impossible to raise the funds required for NHI, “even under the most optimistic assumptions”.
“For NHI to fund a level of care equivalent to what medical scheme members currently receive, as government has indicated is the intention, the Genesis model shows that personal income tax would need to increase by 2.2 times (a 115% increase in tax) from the current average rate of 21% to an average of 46% of income.”
This, it said, would push marginal tax rates in the lowest income bracket from 18% to 41%, and in the highest bracket from 45% to 68%.
Building its case, the association said the Genesis model projected that more than 286 000 additional healthcare professionals would be required to fulfil the NHI vision.
This is more than twice the number of general practitioners, nurses and pharmacists and three times the number of specialists.
“NHI will therefore place significant pressure on healthcare workers and addressing these capacity gaps will require significant time and investment,” the association said.
Naidoo added that South Africa does not have enough skilled workers to deliver the NHI’s mandate.
“By driving down service tariffs, the NHI risks accelerating the emigration or exit of healthcare professionals from the sector altogether.”
The country is already facing a medical professional “brain drain”. A survey conducted last year by the South Africa Medical Association, which represents approximately 17 000 doctors across South Africa, showed that as many as 38% of its members intended to leave the country in response to the implementation of the NHI scheme.
Last month, Ramaphosa defended the Act after the Board of Healthcare Funders, which represents most private medical schemes, said he flouted his constitutional duty by failing to scrutinise its constitutionality when he signed the NHI into law.
It added that the president ignored submissions that pointed to the patent constitutional defects in the legislation. The Pretoria High Court ruled in favour of the board.
Ramaphosa launched an appeal, arguing that the court lacked jurisdiction in the matter and erred in finding that his decision to sign the new law was reviewable.
The court found no merit in his argument on the separation of powers and said the step of assenting to a Bill was but part of a lawmaking process that was a reviewable exercise in public power.