Health Minster Aaron Motsoaledi said on Thursday that the National Heath Insurance (NHI) would be funded in part by extra contributions by employers and people who earned above a certain threshold.
While private healthcare would still be an option, individuals would have to fund this separately, as the NHI contributions would be compulsory.
Public healthcare has to be “radically” overhauled in order for the NHI to be effective, Motsoaledi said.
Speaking in Pretoria about the release of the green paper on the NHI, Motsoaledi described the NHI as “universal healthcare coverage” which would allow all South Africans access to decent health services, regardless of their financial situation.
The policy paper on the NHI was presented to Cabinet on Wednesday and will be released for public comment on Friday. South Africans will have three months to comment on the document. It will then be made into draft legislation which will also be made available for public comment before being submitted to Parliament.
Motsoaledi called the first steps towards establishing the NHI “historic”. He explained that the NHI would be implemented over 14 years, with the first five years being used as a process of “building and preparation” for universal healthcare.
The health minister called the improvement of service in South Africa’s hospitals “nonnegotiable”.
“Whether we like it or not, the bulk of South Africa’s healthcare infrastructure resides in the public sector and our task is to overhaul it so people will choose to go to public facilities”.
He admitted that a great many people “continue to die prematurely” and unnecessarily from poor government health services.
But the minister suggested that the NHI would allow the majority of the country’s citizens access to good healthcare.
South African citizens would be allowed to continue using private healthcare schemes but will not be exempt from paying towards the NHI. Earners above a certain income bracket would be legally obliged to contribute to the NHI fund.
The health minister and Finance Minister Pravin Gordhan could not say at what income threshold the tax would kick in, explaining that the finer details of funding still had to be worked out.
Gordhan did say, however that the NHI would be funded by tax, mandatory contributions from employers and earners in higher income brackets. He also said users of the system may have to pay and public private partnerships would be investigated.
Cosmetic procedures such as voluntary plastic surgery and “botox” would not be covered by the NHI, explained Motsoaledi.
Both ministers admitted that more value needed to be seen for the money already spent on healthcare. Motsoaledi said that South Africa “already spends 8.5% of its GDP on healthcare, far above international averages”.
He said we were not seeing value for our money and something was wrong with the high expenditure and poor health outcomes. Gordhan agreed saying South Africa needed better outcomes for the money spent on health and education. He suggested “tough questions needed to be asked” in this regard.
The health minister could not say whether government medical aid schemes would be phased out when the NHI is fully implemented in 14 years time.
The NHI does not mean there will be a war between private healthcare and the public sector, said Motsoaledi. But he added that the high cost of private healthcare had to be addressed.
The department of health is conducting an audit of public health facilities in the country. After the audit is complete, 10 sites will be chosen for the pilot stage of the National Health Insurance Scheme, which will begin in 2012.
Although taxpayers will be paying extra for the NHI when the programme is formally rolled out in its entirety, the pilot project that starts next year will be paid for by a “conditional grant” that will be allocated in the 2012 budget.
The minister said the first five years of the NHI would be the most difficult to implement as it was during this time that the quality of government healthcare and infrastructure had to be improved, and the amount of medical equipment in hospitals increased.
An NHI fund also had to be established, a human resource plan would have to be put in place and information systems would also have to be developed.