Pressure Grows for NHI Compromise Ahead of Cabinet Lekgotla

By Chris Bateman

Whether or not the ANC and DA can find common ground on the future of medical schemes is set to be a major test of South Africa’s Government of National Unity. Ahead of a Cabinet lekgotla where the issue is expected to be on the agenda, momentum has been gathering behind a compromise option.

Little more than a month after President Cyril Ramaphosa signed the National Health Insurance (NHI) Act into law in May last year, the ANC entered into a government of national unity (GNU) following a large drop in their share of the vote in South Africa’s 2024 elections. This raised questions over the future of NHI, given that the second largest party in the GNU, the DA, is vehemently opposed to NHI.

The NHI Act has not yet been promulgated and could be amended if the ANC and DA agree to do so. But whether the parties can agree to a compromise remains unclear, especially since there appears to be a hardline faction in the ANC that is committed to NHI as currently encapsulated in the NHI Act. As it stands, the Act foresees a dramatically reduced role for medical schemes whereby they will not be allowed to cover services that are already covered by the NHI fund.

Also in play are at least four High Court challenges to NHI legislation – by the Board of Healthcare Funders (BHF) challenging Ramaphosa’s assent to the NHI Bill just before the elections last year, Solidarity, and the SA Private Practitioners Forum, both claiming government overreach which impacts on people’s right to choose their own health cover and run their own businesses. The South African Medical Association (SAMA) is also preparing a legal challenge.

Two proposals

Meanwhile, momentum has been growing with two compromise proposals: one from Business Unity South Africa (BUSA), the country’s apex business organisation broadly representing the banking, mining and retail sectors, but more pertinently here, the Health Funders Association, the Hospital Association of South Africa, and the Innovative Pharmaceuticals Association of SA. The other is from the United Healthcare Access Coalition (UHAC), a large coalition of healthcare worker groups including, among others, SAMA, the South African Private Practitioners Forum, and the Progressive Healthcare Forum.

BUSA last year met with Ramaphosa and, on his request, provided a detailed yet currently “confidential” proposal, wanting key sections of the NHI Act amended and/or thrown out to enable medical schemes to remain in play by punting mandatory health insurance.

“The BUSA proposal is being processed by the Department of Health and National Treasury. Once processed, a response to BUSA will be formulated accordingly,” presidential spokesperson Vincent Magwenya told Spotlight this week.

The fundamental difference between the two objecting groups is that the UHAC thinks the NHI Act should be thrown out completely and replaced with their detailed blueprint, while BUSA wants the existing Act amended to accommodate private funders. In its proposal, the UHAC urges implementation of long delayed fundamental systemic reform in both healthcare sectors to enable what they say would be efficient, pragmatic and more politically neutral, consultation-driven universal healthcare measures.

We understand that in a meeting between the two groups, shortly before BUSA lodged its proposal with the Presidency, not enough common ground could be found to join forces.

But there are significant overlaps in their proposals. Both groupings embrace mandatory health insurance and dismiss a single central fund as envisaged under NHI as dangerous and financially unfeasible.

DA spokesperson for health, Michelle Clarke, said her party backs mandatory insurance. She also said the party agrees with the UHAC proposals – and would not hesitate to mount a legal challenge should the NHI go ahead without substantial amendments.

Mandatory health insurance was part of government’s longer term health reform plans until the pendulum swung in favour of NHI at the ANC’s national conference in Polokwane in 2007 when Jacob Zuma became president of the party. The idea was placed back in the spotlight last September when Dr Richard Friedland, immediate past CEO of the Netcare Hospital Group and a key member of BUSA’s health delegation, made the case for it at the HASA conference.

Under mandatory health insurance, everyone who is in formal employment, or who earns above a certain threshold, would be forced by law to be a member of a medical scheme. This, it is argued, would result in medical scheme membership swelling substantially and pressure being taken off the public healthcare system. It is also expected to result in medical scheme premiums being reduced because more healthy, younger people will join the schemes. People who are unemployed or who cannot afford health insurance will still be taken care of by the public healthcare system, which would also take paying medical aid members.

Friedland said at the time that mandatory healthcare insurance would triple the medical scheme market from 9.2 million to potentially 27.5 million beneficiaries over time and reduce those dependent on the state from 53.8 million to 35.5 million.

This week Friedland declined to reveal the contents of the BUSA proposal, saying it was with Ramaphosa and thus confidential.

Meanwhile, Health Minister Dr Aaron Motsoaledi last week rubbished media reports that the cabinet lekgotla scheduled for month end would be taking on board the BUSA proposal. He did however confirm that he will shortly announce which of the far-ranging and long-outstanding recommendations of the Competition Commission’s Health Market Inquiry (HMI) into the private healthcare sector will be implemented, something many have been calling for in recent years.

Far-reaching reforms

Adjunct Professor Alex van den Heever, Chair of Social Security Systems Administration and Management Studies at the University of the Witwatersrand, who with Dr Aslam Dasoo, founder and chair of the Progressive Health Forum, forms part of the UHAC, said their fundamental point of departure is that the status quo is unacceptable.

According to the UHAC report, irregular provincial health expenditure levels provide a proxy indicator for corruption. The combined irregular expenditure for eight of the nine provinces from 2017/18 to 2022/23 consistently averages around 12.3% (around R9 billion per annum) of non-personnel expenditure compared to 0.1% for the DA-run Western Cape.

“The difference in performance between the Western Cape and the other eight provinces is reasonably attributable to governance differences,” the report reads.

Observes Van den Heever: “We’re losing an enormous amount of performance in the public sector because of political appointments into the system. It compromises leadership and results in a massive waste of resources. The Western Cape shows you the difference governance can make.”

He said that in the “dismally” regulated private sector, funding the pooling system was identified as a problem even before 1994, “but you don’t now disrupt the system to amalgamate into a monopoly fund to solve this (i.e. NHI). Risk equalisation would force medical schemes to compete on the value of what they cover, and nobody would be discriminated against in accessing healthcare.”

Van den Heever says the NHI intention to increase taxes and move funding money from the private to the public sector is “unworkable”.

He added: “The way to address pooling problems is to separate pooling from purchasing. The NHI process has pooling and purchasing in the same organisation, centralising everything – which is highly inefficient, unworkable and with negative consequences all the way through.

“The UHAC proposal separates them out with the provinces and medical schemes remaining as purchasers while strategic pooling or resource allocation is a national function. So, risk equalisation and taxation form part of strategic national pooling functions, while the purchasing and provision of health services are protected from political appointments – including national ministers and provincial MECs.”

Dasoo, who is also a founder member of trade union NEHAWU, said the UHAC collaborative proposal draws on all the research developed over several decades including the Taylor Commission, which made recommendations on an effective social security system for South Africa, the HMI, and numerous other official inquiries.

Dasoo described the UHAC report as “everything that the NHI is not. This health pathway requires easy legislative changes and is within current fiscal constraints. We can start the process immediately. It requires a change in governance structure of the provincial health systems where politicians relinquish all direct authority they have over health care institutions and instead focus on strategic policy.”

BHF hearing in March

A spokesperson for the BHF, Zola Mtshiya, confirmed their NHI legal challenge, set for hearing in March, but said the BHF was only invited to sign up to the UHAC proposal after it was made public. The BHF represents most medical aid schemes – except for the largest, Discovery Health.

BHF Managing Director, Dr Katlego Mothudi, said his organisation is “engaging the association [UHAC] on the document”. he added: “We welcome the willingness to collaborate as an industry as strengthening health systems is everybody’s business.”

Cabinet lekgotla next week

Despite all these developments, whether the ANC is open to a potential compromise on NHI remains unclear. On the one hand, the presidency says they have asked Treasury and the Department of Health to consider the BUSA proposal, on the other, Motsoaledi has rubbished suggestions that the ANC’s position on NHI has shifted and appears committed to an NHI system that dramatically limits the role of medical schemes. His position is thus incompatible with that of the DA.

According to media reports, things got very heated between Motsoaledi and DA ministers when NHI and the future role of medical schemes were discussed at a Cabinet meeting last October.

The matter is likely to again be on the agenda at the Cabinet lekgotla set to take place next week.

Asked about how the GNU might eventually influence universal healthcare, Clarke said: “ANC arrogancy has tapered down a lot compared to what I’m used to. There’s a lot more transparency – but we cannot allow for a very badly written law with huge implications for people’s lives and the economy to go ahead.”

Foster Mohale, spokesperson for the national health department, declined to provide comment for this article, referring Spotlight to the Presidency and Motsoaledi. “What I can say is we’re still working on the Health Market Inquiry recommendations and will let you know when there’s an announcement,” he said.

Magwenya did not provide responses to most of Spotlight’s questions, other than saying that both Treasury and the health department are considering the BUSA proposal and confirming that the President had met with BUSA.

Republished from Spotlight under a Creative Commons licence.

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