Fix the basics before idealistic NHI bill

 Fix the basics before idealistic NHI bill

Tyren van der Spuy

The National Health Insurance (NHI) bill aims to pool resources and utilise them to ensure that all South Africans have access to quality healthcare. Unifying healthcare services certainly could possess some merits and could facilitate a more coherent response to national issues such as a viral outbreak like COVID-19. Improving the standard of healthcare and eliminating the cost barrier for all South Africans is an important step towards eradicating poverty and represents an ideal scenario for the overall health of South Africa.

Though it is a noble goal, it is not immune to some concerns of a practical nature. The change to a universal health insurance scheme will be both difficult and expensive. Therefore, other problems South Africa faces which, upon solving them, would have carry-over benefits to the healthcare industry, should be considered and perhaps prioritised over the implementation of the NHI bill.

The tax burden

There are valid concerns to be raised around the implementation of the NHI bill. A 2017 whitepaper estimated a cost of R256 billion by the planned 2025 implementation of the NHI, adding to the already bloated healthcare budget. However, a 2020 Medical Brief article pegs the value closer to R700 billion, which is a concerning sum considering South Africa’s already precarious levels of debt.

The NHI is to be funded through direct and indirect taxes. The World Health Organisation (WHO), amongst other credible sources, agree that less than 20% of the population can afford private healthcare. If the entire population begins using private healthcare services at no upfront cost, this minority group will have to cover the costs of their own access to healthcare plus most of the amount required to cover those who cannot currently afford private healthcare. It seems likely that not all members of this 20% would be able to afford this increased medical cost, and the increased tax burden would be especially stifling to an economy attempting to recover from the COVID-19 pandemic.

Loss of professional insurers

Insurance is an entrenched field in South Africa, which attracts well educated individuals and is responsible for providing many high income jobs. South Africa risks pushing a lot of these skilled, high income earners out of the country if they are made redundant by a national medical aid scheme. Furthermore, the duality of national and private insurance will result in an increased administrative burden, both during the expansion of the NHI, and once it is fully implemented and private insurers still cater to procedures which the NHI does not intend to cover.

Poor government track record

Unfortunately, the South African government does not have a superb track record, and frequent allegations of corruption or incompetence do not encourage the public to be overly trusting of new public projects which require significant capital investment. The NHI bill is essentially asking the public to trust the government with the management of a large chunk of capital which would otherwise go to the private sector. Furthermore, it is conceivable that government is motivated to push the NHI bill in an attempt to garner political support from the majority of South Africans who would most benefit from its implementation. This is not a far cry from the opportunistic behaviour of some politicians during protests relating to university fees.

Eliminate load shedding, improve education

Prioritisation of issues is an important step in considering the NHI bill. Eliminating load shedding would boost the economy (Efficient Group found that a 2019 growth reduction caused by load-shedding translated to R8.5 billion of lost GDP). This would bring private healthcare into the reach of more South Africans, reduce hospital expenditure on generators, and prevent loss of life caused by power outages. Ultimately, this would make more government revenue available for potential use for public healthcare. Increasing generation capacity through renewable energy also means a lesser reliance on fossil fuels, which have a negative impact on respiratory health and can exacerbate respiratory diseases such as tuberculosis.

Similarly to the energy sector, improving education will improve the output of the economy through the addition of skilled workers to the labour force while also addressing the numerous shortages listed on the critical skills list drafted by the Department of Home Affairs, some of which are related to healthcare. Reducing unemployment, which now sits above 30%, will increase tax revenue and empower more South Africans to cover their own medical expenses. Improved education could also reduce accidents that are a result of ignorance (such as consumption of harmful substances) which would lower the burden on public healthcare.

Address violent crime and road safety

South Africa is unfortunately a violent nation. A 2020 Bloomberg article indicates a murder rate of 36 murders per 100 000 citizens, compared to the international average of 7 per 100 000. Addressing violent crimes requires a multifaceted approach of economic empowerment (to prevent crimes performed due to unemployed South Africans becoming desperate), shifting the culture of violence, more effective policing, and providing effective rehabilitation for drug-addicted South Africans. Though this is not a simple task, it is arguably a greater humanitarian crisis of which the resolution would significantly lower the burden on hospitals, particularly for patients admitted to intensive care units.

Road safety is another concern. Though good progress has been made in recent years, there is still room for improvement on the South African road fatality rate of 25.9 fatalities per 100 000 (compared to the global rate of 18.2 per 100 000) which the WHO reported in 2018. Vehicular accidents clearly send plenty of victims to the emergency room, placing a significant stress on an already taxed public healthcare system. Channelling funds into improving road safety could prevent further loss of life, reduce the burden on hospitals, and lower the economic cost of accidents due to public and private property damage. An improvement could be realised through more rigorous training & testing of drivers before awarding licences, and cultural shifts in public awareness of driving under the influence and distracted driving. The Arrive Alive association reports that proper maintenance of roads would reduce fatalities by 5%.

Quality water and sanitation

Though there has been a steady improvement in the availability of water and sanitation services, many South Africans still do not have sufficient access to clean drinking water. Worse still, some areas do not have waste removal and treatment systems, or have systems which are dysfunctional. A Trade and Industrial Policy Strategies (TIPS) study, based on data obtained from the Community Survey conducted by Statistics South Africa in 2016, indicates that while 93% of households used an improved water source and 80% used an improved sanitation facility, the percentage of households which were sufficiently served was only 43% and 25%, respectively (based on the distance to the service point, frequency and duration of service interruptions, respondent’s perception of the service, and the extent to which services were shared). The accumulation of waste due to poor sanitation services presents a high risk for the transmission of disease, especially for young children growing up near areas where waste collects. Improving sanitation services would lower the burden placed on healthcare by water-borne diseases, while also lifting more South Africans out of poverty by preventing work absenteeism due to illness.

Improved efficiency needed

It is also necessary to consider what could be done to directly benefit the public healthcare system without placing any additional burden on public funds. An article published by Victor Ngobeni in  2020 considered the technical efficiency of provincial public healthcare in South Africa. The article found that negligence by health professionals resulted in provincial health departments receiving claims estimated at R80 billion in 2017/18. Furthermore, the study found that the mean technical efficiency scores ranged from 35.7% to 87.2%, indicating significant potential for savings by improving efficiency. This suggests that the central issue to the South African public healthcare system is not so much so a lack of funding, but rather an inefficient use thereof coupled with poor management, which does not bode well for the proposal of a bureaucratic insurance scheme which may increase complexity.

The ideal scenario

Free access to healthcare for all is an ideal scenario and represents a good long term goal. However, rushing towards it in an attempt to leapfrog to the standard of more advanced economies could prove disastrous. The government could enjoy a more efficient use of its resources by focusing on other public services which are lacking, yet would have knock-on benefits to healthcare if they were improved, and should therefore triage the various arms of public service delivery. The greatest direct, short-term benefits to the healthcare industry would come from an improvement in the delivery of services under current resource constrains, and an increase in the operational efficiency of public facilities. Finally, continued improvements in the delivery of these services, coupled with a tighter grip on corruption, would have citizens more readily accept the NHI bill once South Africa is in a secure enough economic position to properly implement it.

Tyren van der Spuy