/ 20 June 2023

National Health Insurance: South Africa’s great equaliser?

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The need to tackle racial inequality in health is worldwide

Private healthcare in South Africa is exceptionally good. Broadly speaking, the hospitals are clean, quiet, efficient and staffed with more than enough friendly and highly skilled doctors and nurses. That’s my experience as a patient, anyway. 

Most middle-class South Africans pay a monthly premium to a medical aid scheme, and most private hospitals deal with claims directly with those medical aids. It’s quick and efficient, and so most middle-class South Africans enjoy world class healthcare. 

The government healthcare sector, on the other hand, is mostly a shambles. Countless millions have disappeared down the drain of irregular expenditure, as we have new born babies in neonatal wards lying in cardboard boxes, people giving birth in casualty because there’s no room in the maternity wards, and patients bleeding to death in the hallways. I feel dreadfully sorry for anyone forced to use government-run hospitals.

What better vote-winner than telling those (the poor majority) using government-run facilities that they will soon have access to the private healthcare system?

This is effectively what the National Health Insurance (NHI) proposes: the government will set up its own medical aid scheme that in many ways functions like the existing ones. 

Patients will go to private and government hospitals, and those hospitals will claim from the government-run medical aid scheme. Every South African (and, I presume, every foreign national paying tax to the South African Revenue Service) will be forced to become a member of this scheme, meaning every South African is equally eligible to use the private hospitals. 

As the NHI bill currently stands, private medical aid schemes such as Discovery Health will not be allowed to cover any procedure covered by NHI, and assuming the coverage is relatively broad, that wouldn’t leave much for the existing medical aid schemes to cover.

This is a radical change in the system, and one that could affect every South African. 

For the poor South African who happens to be assigned to a private hospital, this could mean an improvement to their healthcare, at least in the short term. Once in full effect, the private hospitals will be filled to capacity, but a private hospital at full capacity would still be a significant improvement on Charlotte Maxeke Johannesburg Academic Hospital. 

And even the quality of care at the hospital should improve as the demand on their services is relieved by the private sector. So, good news there. The poor certainly deserve better than they currently have.

On the other hand, for the middle class South African, who will probably be paying every bit as much for healthcare as they were before (and possibly more, depending on income), this move may entail a substantial downgrade. Those nice quiet hospitals will no longer be nice and quiet, the patient-to-nurse ratios will increase, and (heaven forbid), there’s always the chance they’ll have to go to a government hospital.

In a way it’s a win for reducing inequality in both directions: the poor get better healthcare, and the rich get worse. 

How could the healthcare of the middle-class not deteriorate? The numbers just don’t add up. Currently, 52% of the money spent on healthcare is spent by 16% of the population. 

Most of the middle-class cannot afford to spend any more on healthcare than they already do, so assuming the total pot remains roughly the same, that’s a lot less money per head for the middle class. 

Less money means lower quality healthcare — enough to send many looking for work abroad. Of course, thousands of doctors might well do the same themselves, particularly those working in private hospitals seeing their working conditions deteriorate. Fewer doctors, and fewer taxpayers, will not be great for the success of the NHI.

Perhaps more puzzling is how the government expects to be able to fill the private hospitals to capacity, using the same money that only fills them to 60%. The middle-class will no longer be paying their premiums to Discovery, but to the government instead — but the amount cannot go up too much, or millions would be defaulting on their bonds. 

To fill those hospitals, you’d have to charge far more tax than medical scheme members currently pay in premiums. That is simply not affordable for the majority.  

The NHI is, at its heart, a noble idea. In a country with a high GDP, low unemployment and a trustworthy government, it might well be a good solution. Unfortunately, South Africa is not that. 

This country has low economic growth. It has one of the highest unemployment rates in the world, a small tax-base, and the ruling party is frequently caught up in corruption scandals. 

Nearly every state-owned entity is either bankrupt or dysfunctional or both (probably largely due to corruption and mismanagement at those institutions), and even the department of health itself is riddled with corruption allegations. 

Who could blame anyone for assuming the NHI kitty will likely just be one more trough for the politicians and their friends to feed from? Simple inductive reasoning suggests that the per-capita spend will be spread even thinner than it should be. 

But even giving everyone the benefit of the doubt, I cannot conceive how there will be sufficient money to maintain the quality of healthcare of South Africa’s taxpayers. That may not trouble the majority, but a serious decline in healthcare for the middle-class might well result in a huge uptick in emigration (access to good healthcare is a deal-breaker in a way that 24/7 electricity is not), and a corresponding drop in tax revenue – this means less money for schools, roads, higher education, as well as healthcare. 

The government doesn’t pay for anything. Taxpayers pay. If the taxpayers evacuate, those NHI benefits for the poor could quickly be reversed in more ways than one.

The doctors I’ve spoken to, and the medical aid schemes themselves (in public, at least) don’t seem too concerned for the time being. There will be many legal battles involving the existing medical aid schemes (which would be forced to make thousands redundant), private hospitals, and other stakeholders, concerning the bill’s constitutionality. 

This could take a very long time, and those doctors are not anticipating any real changes for at least 10 years, by which point the bill might have been changed beyond recognition.

Perhaps, by the end of it all, some private hospitals will be able to opt out of NHI clients, and the medical schemes will still be able to offer cover for those hospitals. I doubt many will be able to afford double premiums, so that’s not going to help much, but at least the taxpayers won’t need to pack their bags too quickly.

Professor Benjamin Smart is a director of the Centre for Philosophy of Epidemiology, Medicine and Public Health at the University of Johannesburg. 

The views expressed are those of the author and do not necessarily reflect the official policy or position of the Mail & Guardian.