Putting NHI into effect will take years — Treasury

The government’s plans for National Health Insurance (NHI) were likely to take many years to implement as there was limited scope to fund it with higher taxes, a senior Treasury official told the annual Board of Healthcare Funders (BHF) conference on Wednesday.

The BHF is an industry association for medical schemes and administrators and its annual conference attracts many of the most influential private healthcare sector players. Top of mind for many of them is NHI, a set of sweeping health reforms the ANC government intends to implement to achieve universal health coverage.

The first legislation for the scheme, the NHI Bill, was passed by parliament in December but has yet to be signed into law by the president. How it will be financed has yet to be finalised but the health department has previously said it expects to raise an additional R200bn for NHI with taxes.

“It is quite likely the evolution of NHI will be gradual over many years (and it is) likely it will not be promulgated all at once,” said the Treasury’s chief director for health and social development, Mark Blecher.

The current financial environment had created budget pressures throughout the government and it would be difficult to generate additional funding for health by raising taxes, he said.

Rising debt servicing costs, which already constitute a fifth of government revenue, have reduced the funds available for government’s spending plans over the medium term. The Treasury said in the February budget its debt service costs were expected to rise from 20.7% of revenue in 2023/2024 to 22.1% of revenue in 2026/2027.

It was difficult to make the case for increasing the proportion of public money set aside for health as it was already high relative to many other countries, Blecher said.

SA allocated 13%-14% of its budget to health, more than triple the share set aside by India (3.7%) and double that of Egypt (6.8%), he said. Moreover, many countries that spent less on health were achieving better health outcomes, he said, citing Indonesia as an example.

Government health expenditure was 5% of GDP in 2021 in SA, compared to just 2.2% of GDP in Indonesia, yet life expectancy in SA was far lower, he said. Life expectancy in SA in 2019 was 66 years, compared to 71 years in Indonesia, according to the World Bank.

“We do need to move forward to NHI but we need to realise the fiscal constraints we are working under … and not being unrealistic about what the public sector can and cannot do,” he said.

“I think colleagues should perhaps not be unnecessarily nervous about the future because changes will be long and involve many stakeholders,” he said.

The health department’s director-general Sandile Buthelezi said NHI would be phased in over time.

“We see the first three to five years as just dealing with the fund,” he said, referring to the establishment of the NHI Fund, which the bill says will be the sole purchaser of services acquired from accredited public and private sector providers.