Budget 2014: Where we are with the NHI

At a seminar co-hosted by the Budget Expenditure Monitoring Forum (BEMF), Section 27 and Alternative Information and Development Centre (AIDC) yesterday, Daygan Eager from the Rural Health Advocacy Project (RHAP) did a presentation on what the recent budget tells us about progress on National Health Insurance (NHI).

Eager said that the term National Health Insurance “is misleading because it is about more than insurance… it refers to how health care is financed in South Africa, who pays and who benefits. But, also changing how health care is delivered and accessed. Fundamentally, it is about equity, and the redistribution of health care resources and benefits.”

Eager explained that it is important to differentiate between equity and equality, as “you can’t talk about treating people equally” when such marked structural differences still exist. Therefore, if you don’t have income you don’t contribute to the fund. If you do, you are taxed accordingly.

Eager pointed out that healthcare spending makes up 8.5% of South Africa’s GDP, with private spending making up 49.3%, public spending 48.2% and funding 2.5%. Per capita expenditure for medical aid scheme members totaled R11 150 (for 16% of the population) while per capita expenditure in the public sector amounted to approximately R2 750 (for 84% of the population).

NHI has a phased implementation process with a 14-year time frame. South Africa is currently in Stage 1, which is focused on strengthening of health system, improving the service delivery platform and policy and legislative reform. The white paper has been before the outgoing cabinet but they have not responded to it so now the responsibility will fall to the newly appointed cabinet.

So far, the implementation of NHI has seen the establishment of the Office for Health Standards Compliance, a baseline assessment of public sector facilities conducted in 2012, and the NHI project has been piloted in 11 districts since 2012.

Posing the question “What can the 2014 budget tell us about NHI?” Eager said it is important to remember, “the budget is, arguably, the government’s most important policy document. It communicates what government priorities really are… over the next three years”.

He said R1.8 billion has been allocation for NHI piloting and development (direct funding) over the next three years, including R1.2 billion for contracting with General Practitioners and developing new reimbursement mechanisms for central hospitals. A further R222 million will be transferred through the NHI grant to strengthen district structures, improve procurement and pilot innovations. R164 million has been set aside for international health and development i.e. facilitate multilateral cooperation and observing the healthcare systems of China, Cuba etc.

R103 million has been set aside for health information management and Monitoring and Evaluation, R92 million for sector wide procurement (reform of medicines supply such as direct delivery), R8 million for programme management and R6 million for technical assistance for policy and planning (information repository). Furthermore, R18.1 billion for national infrastructure spending over the next three years will contribute to supporting NHI reforms.

The estimated cost of NHI by 2025 is R225 billion, yet the estimated allocation from government revenue is R180 billion. Eager explains that there is a lack of clarity about where and how the shortfall will be made-up. Will it be via additional income taxes, VAT – often seen regressive as poor people have a greater burden, or innovative mechanisms such as earmarked taxes and levies like sin tax?

The biggest current challenges with NHI is private sector resistance to reform – notably from medical aid schemes and providers and a lack of public buy-in. Furthermore, when it comes to individual interests versus public good, many middle class South Africans are not willing to cross-subsidise the poor. Another stumbling block is that National Treasury has yet to release its financing paper so their position is unclear. Generally, Eager said that there is a lack of clarity and transparency about where we are with NHI.