Understanding the National Health Insurance (NHI) Bill

We are supportive of structural change that assists in strengthening and improving the healthcare system. We are committed to assisting where we can in building the healthcare system and identifying workable and sustainable reforms that would increase access to care for all South Africans.

The NHI is a huge, complex and multi-decade initiative and a considerable amount of effort is needed to make it workable. In this brief note, we review some of the key issues arising from the NHI Act and address the NHI policy process going forward.

What will the role of medical schemes be once the NHI is fully implemented?

A central issue is the future role of private healthcare and medical schemes once the NHI is implemented. The NHI Act states that when the NHI is 'fully implemented', medical schemes will not be able to provide cover for services that are paid for by the NHI Fund. The Minister of Health has stated that he does not expect medical schemes to be affected by this provision for the next 10 to 15 years.

Our strong view is that limiting the role of medical schemes is not only unnecessary for attaining the objectives of the NHI, but would be counterproductive to the objectives of the NHI because there are simply insufficient resources to meet the healthcare needs of all South Africans. Limiting people from purchasing the medical scheme coverage they seek will seriously reduce access to healthcare. It also poses the risks of high out-of-pocket expenditure, and of depriving the country of critically needed healthcare professionals. This provision in the Act is impacting negatively on local and international investor sentiment and business confidence.

Crucially, by preventing those who can afford it from purchasing medical scheme cover and forcing them to rely solely on the NHI system, will have the effect of increasing the burden on public funding. We believe that limiting the rights of citizens to purchase additional health insurance, after they have contributed to the NHI is not necessary to achieve the objectives of the NHI. It would also be globally unprecedented as in virtually every other country with some form of NHI, citizens are free to purchase additional private health insurance cover, including cover that overlaps with services covered by the national system.

We are seeking every opportunity for constructive engagement with the National Department of Health and the Presidency to highlight areas that need to be amended to prevent violations of the constitutional rights for medical scheme members and all citizens. At the same time we are taking the necessary steps to ensure that the rights of medical scheme members are not compromised as we seek to broaden access to healthcare for all South Africans.

We are very concerned that there are substantial risk and harms that this approach of limiting the role of medical schemes will cause. We are of the view that an integrated health financing model which will build on the current (but transformed) health system would facilitate achievement of universal health coverage for South Africa faster and in a less risky manner to the economy, and the national health system in general. Even on the current framing of the NHI Act, medical schemes will continue to cover all of the healthcare services which they currently cover for the foreseeable future for a number of reasons:

• South Africa's weak macroeconomic outlook which has led to contraction of the GDP over several years means that increasing taxes to fund NHI is not feasible in the current economic climate
• Amendments to taxes require a Money Bill which is the ambit of National Treasury, and this requires an impact analysis on the social and economic effects. National Treasury has indicated that there is limited scope to increase taxes in the current economic climate.
• There is uncertainty as to when the NHI will be considered "fully implemented", and this is most likely to be quite far in the future due to resource constraints and the need for health system improvements, including infrastructure revitalisation.
• There is no clear definition of services to be covered by the NHI, and it appears that this definition will be expanded on an incremental basis as affordability allows.
• There is no costing of NHI health service benefits including the costing of the transitional arrangements.

How will the NHI be financed?

The NHI Act or supporting policy papers do not provide an assessment of the likely costs of the NHI once fully implemented. Any fundamental change to public health delivery that improves quality and access and seeks to contract with private providers will require substantial additional funding.

We understand that National Treasury expects the Department of Health to provide them with a detailed roll-out plan and costing plan, before considerations can be made regarding additional revenue mobilisation.

While the NHI Act specifies that payroll taxes and a surcharge on personal income tax could be considered as sources of funding, such taxes would need to be determined by National Treasury. Given the current economic constraints of the country, we do not expect any increases in taxes for the NHI in the short-medium term.

The National Department of Health has previously indicated that they would require an additional R200 billion per annum in tax revenue to fund the NHI. Our analysis shows that NHI funding of R200bn would require massive changes to tax policy which the fiscus cannot necessarily accommodate, for example:

• Collecting R200bn from VAT would require an increase in VAT from 15% to 21.5%. Or collecting R200bn from Personal Income Tax means that tax rates would need to increase by 31% across the board - each taxpayer will need to pay almost one-third more than their current tax payments which is a substantial erosion of take-home pay. None of these options are affordable or realistic.

Our analysis also suggests that even if it was possible to collect these additional taxes, it would not be sufficient to provide comprehensive healthcare to the whole population. This suggests that the rollout of the NHI will be slow unless there is a substantial improvement in the country's economic prospects.

What will the role of private hospitals and health professionals be under NHI?

The NHI Act envisages that the NHI Fund will contract on a voluntary basis with private hospitals and health professionals to supplement the current public sector delivery system.

For the foreseeable future, we expect that the NHI will contract with selected private GPs to supplement primary care services, and that it will contract for certain high priority services to address specific gaps in public sector provision. If this is achieved, it will already be a significant step forward towards progressing access to care in South Africa.

Beyond that, we expect that the vast majority of NHI services will continue to be delivered by public sector clinics and hospitals, and that private hospitals, specialists and other providers will continue to be funded by medical schemes.

We have a valuable, highly skilled and world-class healthcare professional community in South Africa. These professionals work hard, provide excellent care, and are committed to our country.

We will continue to advocate for the private sector especially the doctors, on their right to work in an optimal working environment, fair remuneration and their retainment within the National Health System whilst promoting sustainability of the industry, quality health outcomes and ideal patient care.

What was the process for passing the NHI Act into law?

The NHI Act was approved by the Portfolio Committee on Health in May 2023, and it was passed by Parliament in June 2023 and the sent to the National Council of Provinces ("NCOP") for concurrence.

On 6 December 2023, the NCOP passed the NHI Bill and submitted it to the President for assent. Unfortunately, the NCOP did so without any substantial amendments to the Bill. This despite significant concerns raised by multiple stakeholders throughout the parliamentary processes regarding the financial, constitutional, and operational viability of the NHI as proposed.

On 15 May 2024, President Cyril Ramaphosa signed the Bill into law in Pretoria and on 16 May 2024 was gazetted as the NHI Act. As of April 2025, no effective dates have been stipulated by the President which means that the NHI Act has not yet been put into effect.

We see no scenario in which there is sufficient funding for a workable and comprehensive NHI in its current form - hence our conviction that private sector collaboration is vital, and that full implementation of the Act remains a long way off - likely decades.

Significant flaws in the Act and the legislative processes followed in promulgating the Act have also resulted in the Act being challenged on numerous fronts. This is likely to lead to further delays.

Since 2011, Discovery Health Medical Scheme has focused on constructive and collaborative engagement with our partners in government, business, and civil society through every step of the NHI legislative process. This remains our approach into the future, with the objective of achieving an NHI that is to the benefit of all South Africans.

Concluding remarks

While the NHI Act certainly raises some serious concerns, we recognise the need for health system reform to improve healthcare for all in South Africa. We believe that the integrated healthcare system that includes both the public and private sectors provides an opportunity for the country to increase access to health care in a way that is affordable and efficient.

Healthcare reform should leverage on the strengths of the current public and private healthcare system. We remain confident that the eventual reform will be rational and workable taking into consideration of our current fiscal constraints and prevailing macro-economic conditions.

Discovery Health Medical Scheme is committed to playing its role in building a sustainable healthcare system - for our members, our healthcare professionals, and for all South Africans.