NHI rethink is needed

The National Health Insurance (NHI), the ANC government’s grand plan for improving the nation’s health, is sending all the wrong signals to potential investors. For evidence of this, look no further than SA’s health stocks, some of which took a severe knock in the wake of last week’s publication of the NHI Bill.

SA’s biggest health and life insurer, Discovery, led the dive. But other companies that have interests in private health care, from hospitals to medicines, also went down. There are certainly multiple factors at play with these stocks, but for skittish foreign investors it doesn’t matter that the bill’s sweeping reforms could well take decades to come to fruition.

Negative headlines about its chilling effect on the private health-care sector are enough to trigger a sell-off or make them think twice about putting their money into SA.

NHI has already done harm. For the past decade, it has distracted the national health department from getting on with fixing the public health system and allowed it to abdicate its stewardship of the poorly regulated private health-care sector. The publication of the bill, which is about to begin its passage through parliament, is only going to deepen the damage.

NHI is being positioned by the health department as the panacea to the problems gripping both public and private health care. But this is a government with a dismal track record in implementing many of its own health policies, ranging from the provision of abortions to mental health services.

The state has proved so vulnerable to corruption that investors are rightly worried NHI may do more harm than good. They fear NHI will break what little still works in health care and are horrified at the prospect that their staff may be compelled to use a state-run service with no scope to purchase better care.

The bill proposes setting up a central fund, overseen by the minister of health, which will pool finances to purchase services on behalf of patients. Everyone will be expected to contribute according to their means, so that the rich and the healthy subsidise the poor and the sick. Medical schemes, which currently enable 8.9-million people to pre-fund their access to private health care, are to be relegated to providing only “complementary cover” when the NHI is fully implemented, leaving their future and that of their administrators in doubt.

And while the fund promises to contract with private hospitals and doctors, their willingness to do so is an open question unless the fund has the money to offer attractive rates.

The bill comes in the wake of repeated disclosures of the government’s failure to manage its own businesses, ranging from debt-ridden Eskom to the serially bailed out state-owned airline SAA. Things are so bad the national broadcaster, the SABC, cannot even guarantee coverage of local soccer matches.

Public trust in the government is at a low and the fiscal environment is bleak, yet the ANC is stubbornly pushing through expensive reforms that the country simply cannot afford.

The last time the Treasury modelled the cost of NHI was in 2011, when the economy was in a far better state than it is now. At that stage, the Treasury was forecasting that NHI would cost R256bn by 2025/2026 in 2010 prices, and would face a funding shortfall of R72bn if the economy grew at 3.5% a year, rising to a shortfall of R108bn if the economy weakened to 2% growth.

It proposed various options for raising revenue for the fund, including a payroll tax and a surcharge on income, and scrapping medical scheme tax credits. The Reserve Bank is currently forecasting economic growth of just 0.6% in 2019, Eskom’s latest bailout has blown a massive hole in the budget and taxpayers simply cannot take any more pain.

If President Cyril Ramaphosa is serious about attracting $100bn in investment over the next five years, NHI needs a serious rethink.

INVESTORS FEAR THAT NHI WILL BREAK WHAT LITTLE STILL WORKS IN HEALTH CARE