NHI will cost same as current healthcare

The latest research from the University of Cape Town’s health economics unit has found that spending on the national health insurance system (NHI) would roughly match what government currently spends on healthcare. This is according to the unit’s director, Di McIntyre.

The health economics unit is due to release the report in the next few weeks. In recent months Econex director Nicola Theron has said the NHI would be unaffordable, at a minimum cost of R196-billion, and the South African Institute of Race Relations has warned that the NHI will threaten private healthcare.

But McIntyre said it was misleading to speak about how many billions of rands the national health insurance system would cost. “Yes, it will cost a lot of money, but what we’re talking about is something that is growing in line with GDP,” she said.

McIntyre said that even with the NHI and substantial increases in health-system utilisation, healthcare spending in the next 10 to 15 years would remain at roughly 8% of GDP. As it stands, South Africa spends just more than 8% of GDP on healthcare, more than any other country on the continent.

It is more than most upper middle-income countries and similar to some high-income countries. In real terms the healthcare budget for this year was R18-billion, and the budget for 2010-2011 will increase 16% to R21-billion. Yet, provincial health departments are chronically under-resourced and further hindered by poor management, fraud and inefficiency.


According to the public interest law firm, Section27, and the Rural Health Advocacy Project, which last week published leaked copies of the provincial assessment reports compiled during former health minister Barbara Hogan’s tenure, provincial health departments were R7.5-billion in debt as of April 2009. A 25-member ministerial advisory committee has been thrashing out ideas relating to the NHI since late last year.

Bevan Goqwana, the chair of the parliamentary portfolio committee on health said he expected the health department to report to Parliament on its progress within the next few weeks. Meanwhile, health sector stakeholders are showing a surprising degree of optimism regarding the NHI.

A snap poll at an NHI dialogue hosted by auditing firm KPMG in Parktown this week found that 47% of those in attendance thought the NHI would bring positive change.

Sven Byl, the global executive director for the healthcare sector at KPMG, warned stakeholders that they should make their voices heard in policy discussions because it would be difficult to change policy once it had been approved.

Byl said there was no right answer when it came to setting up an NHI system. Instead of copying what had been done in other countries, government should adapt elements that could work in the local context. The move towards universal health services is a growing trend around the world, though the financing models used to fund these systems differ from country to country.

Other global healthcare trends identified by Byl include the move towards electronic record-keeping and towards “alternative care settings”, such as clinics or the home. Byl said that in his native Canada, the state could deliver care for $1.60 a patient a day in the community, whereas it cost $3.50 in a hospital.

Byl singled out Singapore as the “future of how you develop a healthcare system”. The city-state spends 4.1% of GDP to insure all five million of its inhabitants. Government covers 80% of the total bill in acute care hospitals and patients pay the rest through a medical savings scheme.

In contrast, though 64% of South Africans rely exclusively on the public health sector, most of the money spent on healthcare is in the private sector.

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