NHI update from Dr Ron Whelan, CEO of Discovery Health

We are grateful for Dr Whelan's comprehensive update on the National Health Insurance (NHI) after our AGM. We encourage you to view the recorded presentation to gain a thorough understanding of this complex subject. The main points of his presentation were:

• NHI is now an act of law, but certain sections still need to be proclaimed.
• Discovery unequivocally supports universal health coverage and believes that a workable NHI is central to achieving this. The current NHI Act, however, is unworkable without private sector collaboration and funding.
• Discovery sees no impact on medical schemes for the foreseeable future for the following reasons:

Significant funding gap and no clear financial plan or Money Bill for the NHI

Given South Africa's current healthcare expenditure, the NHI's estimated annual costs range from R480bn to 520bn. If all 60 million citizens were to access this fund and receive healthcare services from the NHI, an additional R200bn in taxes would need to be raised. To fund the NHI through taxes would mean a 31% increase in personal income tax (risking a skills exodus from South Africa), a 6.5% increase in VAT (which would adversely affect the poor), or a tenfold increase in payroll tax (which is unsustainable). Raising R200bn is a daunting, if not impossible, task given South Africa's fiscal situation, as confirmed by the treasury

Implementing the NHI is extraordinarily complex

It would necessitate a complete overhaul of both the public and private health systems, a task of enormous magnitude. This transformation would require significant resources and investment and would be unprecedented on a global scale. The current public provincial healthcare funding would need to transition to national funding, a change outlined in the NHI Act to only commence in 2032. The NHI would be responsible for administering the healthcare funding of 60 million people. In comparison, Discovery Health, with 5,000 staff members, administers 3.5 million members of medical schemes. The state would need between 50,000 and 60,000 employees to administer benefits for the NHI

Wide-ranging and unprecedented legal challenges

A broad spectrum of stakeholders, including healthcare providers, political entities, civil society, the medical scheme industry, and economic interest groups, are likely to present extensive and unprecedented legal challenges. These challenges could result in prolonged litigation. The focus of these legal disputes will be on constitutional, technical, and various procedural flaws in the NHI Act for all citizens. Section 33 only imposes restrictions on medical schemes once the NHI is fully implemented. However, due to the aforementioned challenges, full implementation could still be decades away.

Despite the flaws, Discovery fights for a workable NHI to the benefit of all South Africans, including potential liquidation. The goal is to foster a collaborative model for funding and implementation, involving both the private and public sectors. The private sector, with its vast experience and resources has much to contribute to a workable NHI.

Published June 2024