Health Minister Dr Aaron Motsoaledi says his only knowledge of what some commentators have described as a “compromise” to National Health Insurance (NHI) is what he has read in the media.
The compromise, which has been proposed by the Hospital Association of South Africa (HASA), is to make it compulsory for everyone in formal employment to take out health insurance.
According to an article published by City Press, the proposal has received “high-level support in the ANC”, particularly from “senior members close to President Cyril Ramaphosa”.
The article quoted an unnamed government source – said to be a member of the ANC’s national executive committee – as saying: “The middle-ground option will give us a chance to show our members, who have been alienated by the NHI, that we do not want to take away their healthcare.”
The report also said there is “a significant faction” in the ANC – including Motsoaledi – that remains “unyieldingly committed” to establishing an NHI system.
Motsoaledi told Newzroom Afrika on Tuesday he was “surprised” when he heard that some people “in my own organisation” were “already warming” to HASA’s proposal.
“So, I have to find out what are you warming to and who is warming to it, and what is it all about […] I went to the Presidency because they said the president and his allies are warming to it. It’s only Dr Motsoaledi and his allies who are dead against it. And I wanted to know what is this that the Presidency is warming to because we don’t have any proposal on the table. And up to now we still don’t have it.”
Earlier in the interview, Motsoaledi said the government was not establishing NHI for the benefit of business.
“We are not implementing universal coverage for business. We are doing it for South Africans, especially the poor ones. They are the ones who are going to be beneficiaries.”
He alleged business has the attitude that it is entitled to “make the rules” and everyone must simply obey “without questioning or complaining”.
Mandatory cover proposal
HASA’s proposal was presented at the association’s conference last week.
HASA represents the owners and managers of most of the private hospital beds in South Africa. Its members include the JSE-listed groups Life Healthcare and Netcare, Mediclinic, and independent groups such as Lenmed and Joint Medical Holdings.
The proposal is to make it mandatory for South Africans who are formally employed, together with their families, to belong to a medical scheme or have some form of health insurance. This will free up resources in the public healthcare sector to treat those in informal employment, the unemployed, and the indigent.
According to HASA, the number of people who could potentially over time be covered by private insurance would increase from 9.2 million to 27.5 million out of a population of 63 million. This estimate is based on a formally employed population of 11.5 million and an average beneficiary ratio of 2.4.
Shifting more people onto private insurance would result in the state healthcare sector having to look after 56% instead of 85% of the population.
HASA said the latest per capita public expenditure based on a consolidated health budget of R271 billion is R5 054, excluding users of medical schemes. If mandatory coverage were introduced for those in formal employment, per capita public expenditure on users of the public healthcare system would increase by 52% to R7 659.
HASA envisages implementing mandatory cover in three phases.
Phase 1 will involve including the formally employed who are above the tax threshold and their dependants. This will expand coverage from 9.2 million to 15.4 million. The completion of Phase 1 would expand public per capita spend by 12.9% at current levels.
Phase 2 will include those in formal employment who are below the tax threshold and their dependants. This will increase coverage to 27.5 million and increase public per capita spend by 52%.
Phase 3 “will allow for the expansion of the economy through recovery and an increase in employment. This will have further benefits to South Africa’s healthcare system, with research showing that for every 1 million formal jobs created, the public health system would benefit with a reduction of approximately 2.4 million people it will no longer have to serve. Additionally, this will add a 7% increase from Phase 2 on per capita public health spend.”
HASA quoted Dr Richard Friedland, Netcare’s chief executive, as saying that mandatory medical cover for the formally employed has been “well researched” for more than two decades and is a “workable solution that if implemented will be quick to roll out and in a very short time provide enhanced healthcare to all South Africans”.
He said the proposal is not new. The ANC’s 1994 Health Plan recommended mandatory cover for the formally employed. In 1997, the National Department of Health’s Social Health Insurance Working Group recommended that mandatory cover for formal sector employees should be confined to those above the income tax threshold.
According to Friedland, more than 61% of African countries have some form of mandatory cover, which also exists in Asian countries such as China and Japan, and in Europe and South America.
Impact on employers
In an interview with Alec Hogg, Friedland said HASA is “very confident” that mandatory cover will cost substantially less than NHI. He said NHI contemplates increasing healthcare spending by R200bn, but this figure dates to 2010 and 2011, and Business Unity South Africa and Business for South Africa estimate the additional cost of NHI is closer to R500bn. This additional expenditure would have to be funded by massive tax increases, which the country cannot afford.
Friedland said mandatory cover will address the problem of anti-selection, where only those who are sick remain on a medical scheme and the healthy stay off them. With mandatory cover, the rich subsidise the poor, the young subsidise the old, and the healthy subsidise the unwell.
According to the actuarial analysis HASA has seen, medical scheme contributions could be reduced by up to 30% “almost overnight” if mandatory cover were implemented.
Hogg asked Friedland whether mandatory cover would result in small businesses not employing people because they could not afford to subsidise employees’ medical scheme contributions.
“You raise a very valid point, and I think for small businesses and others there are solutions,” Friedland replied. HASA wants to take its proposal to the government to make sure “this burden on corporate South Africa or on the South African public is limited, but it is certainly far more affordable than what is being suggested by the NHI”.
