NHI feels like an ill-considered choice

SOUTH Africa feels like an out-of-control ship bearing down on an iceberg. Those at the helm are too determined to keep barrelling along at full steam.

Policies which will doom South Africa continue to be punted.

The government seems set on expropriation without compensation despite the damage it will do. Then there is the Eskom bailout, which will put more pressure on a strained fiscus and taxpayer base.

The government is so constrained by the ideology that it will not contemplate privatisation. In the face of an unemployment rate of nearly 30%, the government indicates it intends to double down on empowerment policies which have done little to improve many poor South Africans.

Implementing the National Health Insurance is another symptom of a ship in the hands of an incompetent crew. NHI will provide all with free, quality healthcare. It will be funded through the Health budget and increased taxes. People who paid medical aid premiums will, instead, pay the money over to the government.

Providing all with free, quality healthcare is a noble goal. However, we do not have the money or the tax base for such a huge undertaking.

There have been warnings from almost every quarter that the NHI will be a failure, with dire consequences. Editorials in newspapers have been almost unanimous in their criticism, as have most professional medical associations, which warned of an exodus of medical professionals. Some of the ANC’s union allies have criticised the bill, which is telling. Equally telling is that NHI pilot projects in 11 districts failed to increase the level of healthcare in those districts.

It is unclear how it will be funded. Intellidex analyst Peter Attard Montalto estimates that there will have to be an additional payroll tax of nearly 3%, another almost 3% surcharge on taxable income and a VAT increase of nearly four percentage points (to give us a VAT rate of nearly 20%).

Ensuring all South Africans have high levels of healthcare can be done without destroying private healthcare. The first requirement is to fix the public health service through merit-based appointments, strict accountability for poor performance, and effective action against corruption and wasteful spending. Public-private partnerships could be used to improve public facilities.

The burden on the public system should be reduced by enabling increased access to private healthcare. Low-cost medical schemes and primary health insurance policies should be allowed, while poor households should be helped to join the schemes or buy the policies through tax-funded health vouchers.

Medical scheme membership and/ or health insurance cover should be mandatory for all employees, with premiums for lower-paid employees buttressed by employer contributions.

Medical schemes and health insurers would have to compete, which would encourage innovation and help to hold down costs. Private providers should also be allowed to provide more day hospitals, as well as train doctors and other specialists.

The good ship South Africa needs a change of course to avert disaster. Implementing the NHI will guarantee a collision with the iceberg.