The National Health Insurance (NHI) Bill, tabled last week in Parliament, has been forwarded to the chairperson of the Portfolio Committee on Health, Dr Sibongiseni Dhlomo.

Dhlomo said the committee will meet and discuss the programme of the NHI Bill, which will have an extensive public consultation process.

Analysts and economists meanwhile, have been digesting the plan and its implications for the economy.

While the bill lays out the groundwork for the NHI and how it will be funded, it still lacks much-needed detail, particularly when it comes down to exactly how much the scheme is going to cost each year.

The original NHI white paper estimated that the scheme would cost the economy around R256 billion a year – however, former health minister Aaron Motsoaeldi admitted that this was a “guesstimate” that was thumb-sucked by a local firm.

The Department of Health said that National Treasury plans to release a revised paper with a revised costing estimate.

According to Intellidex analyst Peter Attard Montalto, NHI is expected to cost an additional R165 billion to the fiscus in current prices, per year from 2026, based on PwC estimates used by the Davis Tax Committee (DTC) in 2017.

In its findings on the NHI and its implications for South Africa, the DTC said that even at R256 billion a year, in a 3.5% GDP growth environment the scheme would still likely hit a shortfall of around R72 billion by 2025. At a growth rate of 2% the shortfall would be R108 billion.

South Africa’s projected growth rate for 2019 is 0.6%.

Deputy director-general for NHI, Anban Pillay has moved to allay fears of immediate taxes – saying that no new taxes will be introduced in the short term, and will only be introduced in the ‘late stages’ of the scheme’s rollout, once it is up and running.

However, the bill was explicit that its funding will come from taxes in the end.

This includes:

General tax revenue, including the shifting funds from the provincial equitable share and conditional grants into the Fund;
Reallocation of funding for medical scheme tax credits paid to various medical schemes towards the funding of National Health Insurance;
Payroll tax (employer and employee);
A surcharge on personal income tax, introduced through a money Bill by the Minister of Finance and earmarked for use by the NHI fund.
Attard Montalto said that no specifics for these taxes were given in the published report, but the DTC previously determined an option that included many of the taxes that the department has now said it will eventually be implementing.

These early projections included a 2% increase to payroll tax on employers and employees, a 2% surcharge on taxable income and a 2.5 percentage point increase in VAT.

However, these figures were based on 2010 pricing, Attard Montalto said, and overestimated fiscal buoyancy.

“Overall the DTC outlined that NHI would only be feasible with strong growth in the economy, and seeing new revenues directed towards NHI,” he said.

In line with current buoyancy rates, the DTC’s original figures would result in a shortfall of around R45 billion a year, and a negative impact on wider tax collection maybe of the order of R50-75 billion.

“This would mean by our calculations the funding wrapper would need to be more like 2.7% payroll tax, 2.7% surcharge on taxable income and 3.5 percentage point increase on VAT – and that is only to address the NHI hole, not the wider revenue shortfalls,” he said.

Attard Montalto said that Treasury likely wants to avoid a tax ‘doom cycle’, and is thus focusing more on the expenditure side than revenue side (ie, funding by reprioritising budgets), but the wider risks of the scheme still persist – specifically medical workers salaries under NHI, and emigration of skills.

“Overall we think NHI is unworkable in the current economic and fiscal context, even if sorely needed. Indeed it can do more harm than good at a macro level,” he said.

“The implications need to be thought through.”

Article from BusinessTech

The National Health Insurance bill published on Thursday (8 August) fails to answer a number of key questions around universal health coverage.

According to the Institute for Race Relations, these issues include the final costs of the system, and exactly which benefits will be covered.

“The main purpose of the NHI bill is to establish the NHI fund and its nine sub-units, allow the appointment of a host of advisory committees to help guide the Fund, and introduce a state-controlled Appeals Tribunal to decide on people’s complaints against the fund,” it said.

“But neither the bill nor its explanatory memorandum answers any of the key questions about the NHI.”

Below it outlined some of the key issues that have not been adequately addressed by the bill:

1. What NHI will cost?

The IRR noted that current costs for healthcare in South Africa is over R450 billion, based on both public and private healthcare spending – for true universal healthcare, costs could at least amount to that.

Original estimates for the cost of the scheme were put at R256 billion a year – however it is now up to National Treasury to determine the true costs. For now, it’s unknown.

2. How will it be financed?

While the bill has earmarked payroll and other taxes to be levied in time, it would be on an already overburdened tax base, the IRR noted.

Beyond the broad plans, there were no specifics about when these taxes will come, or how big they would be. The NHI director general noted that the taxes would only be a ‘late game’ addition to the funding, once the scheme was close to full implementation.

3. What benefits will it cover?

The NHI Bill does not go into the specifics on what will be covered. This is because coverage under the NHI is expected to evolve over time. For now, all we know is that coverage is to be “bureaucratically decided” at some point, the IRR said.

4. How will the supply of healthcare services be increased to match demand?

The IRR noted that the scheme faces a supply/demand problem with many public facilities not qualifying to participate in the scheme, and private healthcare practitioners may opt to rather emigrate.

Assessments of the NHI trials have already revealed some major issues at some state hospitals in the early testing stages for the scheme – while the issue of healthcare workers willing to leave and actively leaving the country ahead of the system is well-reported.

5. How will the enormous administrative burden be met?

The state has an extremely poor track record when it comes to fiscal management and running state companies.

While the NHI is not a state owned entity, it still follows similar structures – and will be bigger than Eskom in fiscal scale, which carries with it much bigger risk.

The IRR highlighted the problem of cadre deployment and inept leaders (and a general lack of skills to manage the scheme) as something that needs to be addressed.

6. How will corruption be curbed?

South African state institutions already face major problems with inflated prices tainting up to 40% of procurement, the IRR said. With the NHI and procurement falling to one person (or at least on department), this opens up the whole scheme to corruption.

The Department of Health has only said that it ‘stands ready’ to combat any corrupt activities related to the scheme.

7. Why are medical schemes being so drastically limited?

The role of medical aids under the NHI is one of the biggest sticking points. Under the NHI, medical aids are not allowed to cover the same services that are covered by the NHI, which will ultimately limit consumers’ choice in where to receive healthcare.

The IRR argues that this will limit the possible membership pool of private medical aids, and end with the result of making these schemes completely unaffordable to all but the very rich.

Under the NHI, the State will control every aspect of healthcare, the IRR said.

“This means the State will decide on the healthcare services to be covered; the fees to be paid to doctors, specialists, and other providers; the medicines to be prescribed; the blood tests to be allowed; the medical equipment to be used; the health technologies to be permitted; and the prices to be paid for every item, from aspirins and ARVs to sutures and CAT scanners.

“The government claims these controls will be effective in cutting costs and enhancing quality. But the huge bureaucracy needed to implement them will be costly in itself – while pervasive regulation will also stifle innovation, reduce efficiency, and promote corruption.”

Article by BusinessTech

The Department of Health published the long-awaited National Health Insurance Bill on Thursday (8 August).

The bill promises universal health coverage for all South Africans and is set to bring big changes to the country’s health industry – including how South Africans pay for health coverage and a changed role for medical aids.

One industry which is also likely to see a major shake-up is private hospitals.

The bill states that all South Africans covered under the bill must register as a user with the NHI fund at an accredited health care service provider or health establishment.

Whenever users need to access healthcare, they will first need to visit this primary facility. This facility may then refer the user to a specialist or another facility.

The bill states that if these ‘referral pathways’ are not followed, users will not be covered by the NHI fund and will have to pay out of pocket or make use of a medical aid.

While the NHI bill does not specify if ‘accredited health care service providers’ will be limited to public hospitals, it does set out a minimum set of requirements that need to be followed before a hospital is given accreditation.

These requirements include:

• A minimum required range of personal health care services as specified by the minister; 
• Allocation of the appropriate number and mix of health care professionals;
• Adherence to treatment protocols and guidelines, including prescribing medicines and procuring health products from the formulary; 
• Adherence to health care referral pathways;
• Adherence to the national pricing regimen for services delivered.

Also, as previously covered, medical aids will also be prevented from covering services that will be covered under the NHI, limiting options for those seeking private healthcare.

Impact on industry

The Hospital Association of South Africa has previously warned that the NHI could lead to the loss of up to 132,000 jobs, and impact the industry’s investment in South Africa.

According to the group, close to R180 billion is spent on private healthcare in South Africa each year – a third of which is spent on private hospitals.

The three JSE-listed hospital groups – Netcare, Mediclinic and Life Healthcare, which make up about two-thirds of the sector – contribute about R55.5 billion to GDP a year.

It warned that if the state did not purchase any private hospital services under the NHI, 99,600 jobs may be lost in the private sector, and R31 billion could be shed from the GDP.

In a situation where the prices are capped at 23% lower than they are at present, 132,000 jobs may be lost, it said.

Article by businessTech

Experts have warned that the incoming National Health Insurance (NHI) may be dead on arrival as a large number of doctors plan to leave South Africa or have already left.

The incoming NHI will rely on a large network of doctors to service patients around the country, with government promising ‘universal health coverage’.

However, the Sunday Times reports that the bill has renewed fears about mass emigration of doctors and other health professionals, which would kill any health plan that relies explicitly on there being more doctors.

Speaking to the paper, Dr Chris Archer, CEO of the South African Private Practitioners Forum said that his members are extremely concerned and that the bill may drive emigration as “those who want to leave see it as a reason to do so”.

Profmed medical aid CEO Craig Comrie said that health professionals are already emigrating.

Comrie said Profmed’s members are mainly health professionals, of whom 17% leave each year. This rose to 30% in June and July.

Alex van den Heever, Wits School of Governance professor, added that he expects medical professionals to emigrate in their hundreds, joining their countrymen in countries like Dubai and Australia.

Research

These concerns align with research published by Solidarity, which has previously warned that the introduction of the NHI could lead to a mass exodus of doctors from the country.

One of the most worrying findings in the survey was that 83.2% of healthcare workers believed that private health professionals will leave the country if the NHI is implemented. 43% of the respondents said that they themselves would consider emigrating.

There was also a firm belief that the scheme would completely destabilise the country’s healthcare as a result.

The major points of concern are:

• Shortages of specialists, doctors, nursing staff and other healthcare workers;
• Financial management of the NHI;
• Purchasing and distribution of medicines and equipment; and
• Maintenance of infrastructure and equipment.Article by BusinessTech

The Department of Health has published its revised National Health Insurance Bill, promising to bring universal health coverage to every South African.

Since being mooted, the NHI has faced constant controversy including questions around how it will be funded, which medical issues will be covered and how private medical aid users will be impacted.

These concerns have been compounded by a lack of clarity from government, and a pilot project which showed ‘mixed results’.

However, minister of Health Dr Zweli Mkhize has made it clear that his department will tackle these issues ‘as and when they appeared’, and that the NHI will be introduced ‘whether you like it or not’.

“I believe that too much discussion, analysis and diagnosis has been done and it is time for us to jump into implementation,” Mkhize said in his departmental budget speech in July.

“If we continue analysing the problem we will never end up tackling the problems.”

The revised NHI Bill published on Thursday (8 August) appears to answer at least some of the questions around the bill, including how it will be funded, what will be covered, and when the timeframe around when the NHI will be rolled out.

Who will be paying for the NHI?

While the bill is still light on some specifics around funding for the NHI, it is clear that South African taxpayers will be paying for a portion of the service.

The bill states that funding for the NHI will be collected ‘in accordance with social solidarity’ through a number of direct and indirect taxes.

These taxes include:

• General tax revenue, including the shifting funds from the provincial equitable share and conditional grants into the Fund;

• Reallocation of funding for medical scheme tax credits paid to various medical schemes towards the funding of National Health Insurance;

• Payroll tax (employer and employee);

• A surcharge on personal income tax, introduced through a money Bill by the Minister of Finance and earmarked for use by the NHI fund.

“Once appropriated, the revenue allocated to the fund must be paid through a budget vote to the fund as determined by agreement between the fund and the minister and subject to the provisions of the Constitution and the Public Finance Management Act,” the bill states.

The National Treasury had previously estimated that the cost of the NHI will be R256 billion, but this figure is set to change after the publication of this revised bill.

What will happen to medical aid?

Once the National Health Insurance has been fully implemented as determined by the minister through regulations in the Gazette, medical schemes may only offer complementary cover to services not reimbursable by the fund.

This echoes previous statements by Mkhize, where he said that medical aids should not cover services that fall under those covered by the NHI, and only cover those that do not.

Research published by Solidarity has previously warned that the introduction of the NHI could lead to a mass exodus of doctors from the country.

According to the report, the overall sentiment among healthcare professionals towards the NHI is generally negative, with many complaining about a lack of information around the whole scheme, and worries that the plans will completely destabilise healthcare in the country.

Who will the NHI cover?

The NHI will cover all South African citizens, permanent residents, refugees, inmates and certain groups of individual foreigners.

The bill states that asylum seekers or illegal foreigners will only be entitled to emergency medical services and services for ‘notifiable conditions of public health concern’.

All children, including children of asylum seekers or illegal migrants, will be entitled to basic health care services in line with the Constitution.

The bill states that a person seeking health care services from an accredited health care service provider or health establishment must be registered as a user of the NHI fund, and must present proof of such registration to the health care service provider or health establishment in order to secure the health care service benefits to which he or she is entitled.

The bill indicates that registration is not optional and that the above group of people must all  must register as a user with the Fund at an accredited health care service provider or health establishment.

Children will be considered registered from birth.

The bill does not specify exactly what medical services will be covered, but does state that all users will  ‘receive necessary quality health care services free at the point of care from an accredited health care provider or health establishment upon proof of registration with the NHI fund’.

When will the NHI be introduced? 

While the bill does not appear to have a hard starting date for the introduction of the NHI, it does state that the system will be implemented in a multiphase approach.

The current timeline stated in the bill is as follows:

• September 2019 – March 2021:  Initiate the establishment of the NHI Fund whilst simultaneously introducing a national quality improvement plan that helps facilities to be certified and accredited to provide health care services to be funded under National Health Insurance (‘NHI’). During this phase health facilities that are certified and accredited will start to provide health care services for users of the fund;

• May 2020 – March 2021: The fund and its executive authority will bid for funds through the main budget as part of the budget process to expand coverage using certified and accredited public and private sector health facilities. This phase will focus on fully establishing the purchaser-provider split and associated reforms, such as changing provider payment mechanisms and the implementation of the Fund’s institutional arrangements

• April 2021 – March 2022:  Shift some of the conditional grants such as the National Tertiary Services grant and the HIV/AIDS and TB grant from the Department of Health into the fund and continue with step 2.

• April 2022:  Shifting some or all of the funds currently in the provincial equitable share formula for personal health care services (currently the main public health funding stream to the fund to gradually extend these delivery and management reforms to all districts and public hospitals

• The final phase will largely relate to expanding coverage in terms of being able to accommodate the maximum projected utilisation rates and gradually increasing the range of services to which there is a benefit entitlement. In a favourable economic environment, there will be an initiation of the evaluation of new taxation options for the fund including evaluating a surcharge.

  Article by BusinessTech

Parliament is set to release the National Health Insurance (NHI) Bill by 9am on Thursday morning. Here is how healthcare in South Africa is likely to change.

1. Will you be able to have a comprehensive medical aid?

No. Once the NHI has been fully implemented, your medical scheme will not be allowed to cover any health services that the NHI offers. You will have to use the NHI for those services. Your medical aid will only be able to provide you with complementary cover, in other words, services that the NHI doesn’t cover. By when will your medical aid, in its current form, disappear? According to the Bill, the NHI Fund needs to be up and running by 2026 through a system of “mandatory prepayment”.

Many experts, however, argue that the NHI will take much longer to take off.

2. What services will the NHI cover?

The Bill doesn’t specify what services the NHI would cover, but it does mention that there will be “comprehensive healthcare services”. A benefits advisory committee, appointed by the health minister, will decide which services will be offered. The Bill says these services will be available for free, so there will be no co-payments

The NHI won’t pay for treatment when it can demonstrate that “no medical necessity exists for the healthcare service in question”, when the medicine or treatment is not included in the NHI’s list of medicines, also known as the formulary, and when “no cost-effective intervention exists for the healthcare service”.

According to the Bill, the NHI will start to buy healthcare services for children, women, the elderly and people with disabilities by 2022.

3. Will you be able to go to a specialist directly?

No — if you do, the NHI won’t pay for it. You will have to register at an NHI-accredited primary healthcare facility, and, each time you need healthcare, you will have to go to that facility. You will only be able to consult a specialist if the doctor or nurse at your primary healthcare facility deems it necessary to refer you to one. If you’re travelling and fall ill, you’ll be able to go to an accredited facility in the area you’re visiting.

4. What happens if you’re an asylum seeker or an undocumented migrant?

You will only be able to access emergency medical services and services for ‘notifiable conditions of public health concern’, such as TB. HIV treatment is also likely to be available to asylum seekers and illegal immigrants, as HIV is infectious and it is in the best interest of the country to treat everyone who is infected with the virus to prevent its spread. The children of asylum seekers and migrants, however, will be entitled “basic healthcare services” provided for in the Constitution.

If you’re a registered refugee, you will be entitled to all services, provided that you have registered for the NHI by using your refugee identity card.

The NHI will also cater for ‘individual foreign nationals’ determined by the home affairs minister, after consultation with the minister of finance.

5. Who will pay for the NHI?

In short, taxpayers. The Bill says the money will be collected “in accordance with social solidarity” through payroll taxes for employees and employers, a surcharge on personal income tax, the reallocation of medical scheme tax credits and general taxes. Money that Treasury currently allocates to provinces through the ‘provincial equitable share’ and ‘conditional grants’ will be shifted to the NHI Fund.

Article from NEWS 24

One of the top priorities requiring urgent action is Eskom, which Brown says is the ‘very sick’ elephant in the room

SA is running out time and money to ease a cash crunch at state-owned companies,  the CEO Nedbank said,  the latest business leader to express frustration at the pace of turnaround efforts at parastatals that also include debt-laden Eskom.

Fixing the state-owned companies, many of whom are losing money and survive on cash injections for the government, is vital to President Cyril Ramaphosa’s drive to revive the economy and shore up investor confidence.

NHI has remained a noble pipe dream stymied by unachievable ambitions and a funding requirement quite out of reach for a bankrupted country

Even in a country desensitised to bonkers ideas, the mutterings of health minister Zweli Mkhize about SA’s plans for National Health Insurance (NHI) were hard to stomach. For years, NHI has remained a noble pipe dream stymied by unachievable ambitions and a funding requirement quite out of reach for a bankrupted country.

Consider the maths. This year, the government allocated R222.6bn to health care. Most of the budget was earmarked for salaries. And yet NHI, by the most conservative estimates, would cost more than that entire budget. It’s a staggering sum — especially when we don’t know yet whether NHI will work.

Speaking last week, as he revealed the results of 11 NHI pilot studies, Mkhize seemed unchastened by the unconvincing findings. Though the pilots cost more than R4bn, a team evaluating the project said they couldn’t conclude it had improved the health of residents in any district where it was trialled.

Yet Mkhize was adamant: NHI is going ahead — damn the obvious glitches. This is why, last week, an NHI Bill was delivered to parliament.

When pushed on how exactly it would work, Mkhize revealed a disturbing underpin for NHI: the government will bar people who have paid for private health care from seeing specialists, unless there’s a compelling reason. “It is not my right to see a specialist because I can afford it. It is a distortion of how the system should be working,” he said.

For Mkhize to begin dictating what medical care you can buy is a slippery slope.

It’s hard to disagree with the Capitalist Party, which argues that it would be outright tyrannical to vest responsibility for deciding who gets critical health care in the people least qualified to make that call: state bureaucrats.

Here, it’s difficult to see too many scenarios in which doctors, nurses and specialists are not encouraged to flee, rather than work in a system held together by a strip of plaster and noble intentions.

During last week’s briefing, Mkhize was visibly frustrated by the questions about the role of the private sector. “Some people say NHI is unaffordable. What is unaffordable is the rising cost of [private] care,” he said. He stressed that the public health sector is riddled with corruption and must be fixed.

Now, Mkhize is right that medical aid is increasingly unaffordable. But the government isn’t paying for it — taxpayers who are already paying for the crumbling public system are then paying again for private medical aid out of their own pockets. Why pay more, if the government can’t be bothered to fix what it has?

Mkhize’s unconvincing answer is that the rich should subsidise the poor in the new scheme.

Here again, he gets it horribly wrong. For a project as immense as NHI, you can’t get away with just extracting more from the rich — you’ll have to plunder the middle class too. Rough estimates by finance gurus suggest that NHI could add at least two percentage points to personal income tax, or it would have to be funded by another hike in VAT. It’s risky to think citizens will just calmly accept this.

And, as it is, the wealthy and the middle class already subsidise medical treatment for the poor: where does Mkhize think the R222bn that goes to SA’s public hospitals comes from? In theory, that tax money should buy a thriving public health sector. In practice, it buys a dysfunctional system where theft of resources, crippling inefficiency and accountability-free hospitals are the order of the day.

But marshalling private sector resources into fixing that won’t produce a better result, because this isn’t a money problem. It’s a management problem. Until the government takes a harder line with public sector trade unions, and begins firing people who are incompetent, it won’t get value for its R222bn, or however much it throws at the problem.

Perhaps Mkhize knows this. Perhaps he’s just invoking the politics of desperation by launching a kite that has little hope of remaining in the sky. But abdicating responsibility, and asking the private sector to fix what he won’t, means NHI is doomed to fail.

article by FinancialMail