Companies providing medical aid, like Discovery, could face a fall off of around 5% to 10% of medical aid scheme members due to affordability after NHI is implemented. Picture: Simphiwe Mbokazi/Independent Newspapers
NATIONAL Health Insurance (NHI) “will be a systemic shock to the medical system” when it becomes a reality, Insight Actuaries & Consultants joint CEO Barry Childs has warned.
Childs was talking at the Nedbank Healthcare Conference yesterday, which was held at an opportune time as the country grapples to understand the implications of the BHI Bill that President Cyril Ramaphosa signed on Wednesday.
However, Childs said that in the meantime there was no need to panic or cancel medical aids as the process of implementation would take nearly 10 years.
A tax credit on the medical aid schemes would be removed, of which there was no Treasury papers on, but which they had calculated at roughly 14% of “your medical aid contribution, so this was meaningful”.
The NHI would mean that it might become unaffordable to lower income earners on medical aid schemes.
Anywhere from 5% to 10% of medical aid scheme numbers would “fall off”, Childs said, adding that people would also take a little a bit less cover due to affordability.
He said there had been a lot of arguing around the bill, trying to get on the same page and talking past each other.
“The courts can now hear the expert testimony to help us decide who’s right and who’s wrong,” Childs said.
“It is such a massive change. It is complicated. A number of acts will have to change. A number of financial flows will have to change,” Childs said.
“This will take a very long time. I know about five or six court cases in different provinces that will be launched at the Constitutional Court.”
This would tie up NHI for years in court as the government also had to set up the boards to administer its implementation, and the funds.
Another hurdle to NHI was the government’s current subsidised medical aid contributions at roughly R50 billion to R60bn to the Government Employees Medical Scheme (GEMS) as an employee benefit.
“The problem if you take this away, what will be given back, cash? But there is no money to do that. Will they get the same access to services?” Childs said.
“In public, the unions are supportive. But in private, unions won’t put this on the negotiating table. We expect sharp resistance there.”
Matthew Parks, the spokesperson for Cosatu, in response to this said while NHI would absorb some functions of the Road Accident Fund and Compensation Fund for Occupational Injuries and Diseases relating to medical costs, “Cosatu supports the NHI as we need to put in place universal health care ensuring all South Africans have access to quality healthcare”.
Childs said another challenge to NHI was that the provinces would also put up resistance when the NHI started to appropriate the provincial equitable share of health funds and centralised power at a national level.
Another hurdle was tax. Treasury could also not raise VAT. He said NHI probably would be a combination of payroll tax and personal income tax.
“The government can’t wave a magic wand and raise another R250bn in taxes. It is far from a foregone conclusion it would go to healthcare, such as paying down debt or job creation,” he added.
Anél Bosman, the group managing executive: Nedbank CIB, said the signing of the NHI Bill was “a critical moment” in South Africa’s health care journey, and the private and public sector would have to see how to promote this agenda.
There were big questions such as the funding of it, affordability, administrative efficiency and addressing the current disparities.
One of the key concerns in the health sector was the shortage of 200 000 beds. South Africa had to figure out how to finance the beds, while giving fiscal investors confidence to be able to address this.
Discovery Health CEO Dr Ronald Whelan said they employed 5 000 people to administer benefits for 3.5 million medical scheme members.
Whelan said NHI would have to administer benefits for 60 million lives, which required an estimated workforce of 65 000 to 75 000 people.
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