Roundtable report on the National Health Insurance
Copyright © 2020 Inclusive Society Institute 50 Long Street Cape Town South Africa 8000 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without permission in writing from the Inclusive Society Institute DISCLAIMER Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or those of their respective Board or Council members or Members. All records and findings included in this roundtable report, stem from the discussions that took place during the roundtable dialogue on the National Health Insurance, 2 December 2019 at Deloitte, Woodmead, Sandton, Johannesburg, South Africa.
Setting the scene for the NHI roundtable dialogue – Ms Sue van der Merwe, Chairperson
of the Inclusive Society Institute
Purpose and objectives – Daryl Swanepoel, Chief Executive Officer of the Inclusive
1. Executive Summary of the National Health Insurance Roundtable Dialogue held on
2 December 2019 in Sandton, Johannesburg
2. Desktop review on the potential constitutional implications of the NHI bill
4. NHI ushers in universal health coverage for all in South Africa: An extract from the
presentation of Dr Nicholas Crisp, NHI Fund Developer, Ministry of Health
5. NHI is a healthcare revolution, not a political motivation: Dr Gwen Ramokgopa, former
Deputy Minister of Health and ANC NEC Education & Health Sub-committee member
6. Extracts from presentations by sectoral representatives
6.1 Business proposes joint ranks with government over NHI to balance capacity
6.2. Workers call for urgent quality healthcare from government in response to NHI
6.3. NHI gives rise to constitutional challenges
6.4. NHI presents a golden opportunity to equalise the health system
6.5. Quality and standards: the cornerstones of achieving universal health coverage
6.6. Managing the lifeblood of the NHI
6.7. Integrating family practitioners as gatekeepers to the NHI
6.8. MedTech as a solution to the NHI’s pricing challenges
6.9. Fundamental principles for NHI success: efficiency, quality and responsiveness
6.10. Bringing the frontline of healthcare to the NHI debate
6.11. Fair play in the pharmaceutical trade in Africa
7. Finding pathways to consensus on the NHI (Open discussion)
Setting the scene for the NHI roundtable discussion
Ms Sue van Der Merwe | Chairperson of the Inclusive Society Institute
The Inclusive Society Institute held a roundtable discussion on the National Health Insurance (NHI) system on 2 December 2019, with dialogue continuing from midday until late into the afternoon. The meeting was hosted at Deloitte Place in Sandton, and moderated by Deloitte’s Life Sciences and Healthcare Lead, Ashleigh Theophanides.
The keynote speaker was Dr Nicholas Crisp, NHI Fund Developer in the National Department of Health, who presented on the National Health Insurance Bill. A number of other key South African stakeholders also delivered their input. After which there was an open discussion where the other notable guests in attendance were invited to express their views and concerns.
The primary focus of the Inclusive Society Institute, and to a large degree the dialogue around the table on the day, was to work on and promote a more inclusive society, as its name suggests. There is much noise being made in South Africa’s national discourse about various present-day issues, but not much of it is positive. The institute has been established to create a platform where this discord can be presented and discussed, to find some middle ground in dealing with the pressing issues the country faces.
It may sound overly optimistic but there is more in common between the diverse societal players than one might think. And those commonalities seem to become particularly evident when the nation wins at something – winning the Rugby World Cup this year is case in point. The country’s natural optimism and natural energy as a society comes to the fore in these instances.
But when tackling complex, difficult issues, this optimism risks getting drowned out by the negative talk. The question of the National Health Insurance is one of these stumbling blocks. National discord is not unique to South Africa; anybody who reads the news, will know that. In fact, people worldwide are taking to the streets to voice their arguments against the state of their own societies.
South Africans generally fair better than other countries at getting around the table and thrashing out current issues, coming up with policy platforms, such as the Inclusive Society Institute, that offer a broader network of support for society.
The institute then becomes a valuable resource for identifying areas of alignment and disagreement and finding ways to bridge those gaps. Doing so through robust discussion, keeping an open mind to the perspectives of the various stakeholders around the table, and through undertaking research and analysis of public policy shortcomings. In the foreseeable future, the institute will be organising many more opportunities for dialogue like the NHI roundtable. In addition, it will be producing publications through a variety of media avenues. And all with the intention of seeking to facilitate cooperation with similarly focused international and local institutions.
The NHI discussion has come at the right moment – at a point where government legislation on, and the process in which we progress and go forward with the health of our nation, is at the pinnacle of transformation. Hopefully this dialogue will encourage further debate and discussion on the issue, with the result of finding pathways that could achieve consensus.
1. The Inclusive Society Institute held a roundtable discussion on the Draft NHI Bill on 2
December 2019 at Deloitte Place in Sandton.
2. The keynote speaker was Dr Nicholas Crisp, NHI Fund Developer in the Ministry of
Health, who presented on the National Health Insurance Bill.
3. The primary focus of the Inclusive Society Institute, and to a large degree the dialogue
around the table, is to work on and promote a more inclusive society.
4. The institute has been established to create a platform where discord can be presented
and discussed, to find some middle ground in dealing with pressing issues.
5. The institute is a valuable resource for identifying areas of alignment and disagreement
through robust discussion, and research and analysis of public policy.
6. The institute will be organising many more opportunities for dialogue such as the NHI
7. In addition, it will be producing publications through a variety of media avenues.
8. The intended outcome of the NHI discussion is to encourage further dialogue and debate
on the issue, in order to find pathways that could achieve consensus.
Purpose and objectives
Daryl Swanepoel | Chief Executive Officer of the Inclusive Society Institute
The National Health Insurance Bill (NHI) was tabled in parliament on the 8th of August 2019. The purpose and objective of the bill is to usher in an era of quality healthcare for all, as is envisaged in the Constitution of the Republic of South Africa, Act 108 of 1996. The NHI is the proposed enabling funding mechanism to give effect thereto.
The public responses to parliament’s call for comment on the bill have been profoundly polarised, with proponents in favour of the bill enthusiastically embracing it, and opponents thereto strongly rejecting it. The remarkable feature of the public discourse, however, is that whilst universal support has been registered in favour of the principle objective of delivering an affordable, quality and universally accessible healthcare system, little attention has been given to seeking out a middle ground position on the financing mechanism that could realise it. The Inclusive Society Institute is of the opinion that such a consensus position is achievable and is driven by a desire to find an equitable mechanism for funding universal health coverage responsibly.
The purpose of the roundtable on the National Health Insurance Bill was to take stock of the wide-ranging critique that had surfaced during the parliamentary public comment phase. Its objective was to assess the areas of alignment and disagreement on the bill; and to evaluate the potential to bridge the gaps.
This report does not constitute the policy position of the institute. Instead, it is a summary of the policy positions taken and arguments made in the public debate on the NHI. Given the broad representation at the dialogue, the institute is confident that the reported outcome sufficiently represents all the main aspects that need attention during the upcoming legislative process. It trusts that this report will serve as a useful tool to inform and aid public officials and representatives in their important task of delivering inclusive public policy.
Ashleigh Theophanides | Life Sciences and Healthcare at Deloitte
It is clear from the roundtable presentations and discussions around the recently published NHI Bill and NHI in general, that there are various areas of alignment, areas of disagreement or lack of clarity and some uncertainty on the way forward.
All participants agree that there is a need for universal healthcare (UHC). Many of the providers of the healthcare services have shown a keen desire to be involved in assisting with this process as well as being Providers of the various services.
The idea of a single purchaser model by the State for public healthcare services is generally accepted by most.
The view that the NHI Board be appointed by the Minister of Health, and the CEO of the Board appointed by the Board, seems to be the preferred route for the NHI Fund organisation.
It is also generally accepted that all healthcare providers and stakeholders need to be involved and give their views in order to help shape an effective NHI system.
The need for UHC is welcomed, as there is agreement that the current levels of inequality in the South African health system are not sustainable. In addition, greater levels of collaboration between the public and private sector is welcomed.
Primary Health Care is recognised as the appropriate first stop on the referral network.
There are concerns around the implementation of the NHI. Some of these concerns stem from either disagreement with the high level principles/ proposals stemming from the NHI Bill or lack of clarity around various proposed elements.
One of the main concerns is that the implementation phases of the NHI Bill are based on timelines that do not link back to any measurable milestones and outcomes. This aspect needs further consideration.
There are high levels of concerns with regards to Section 33 in the NHI Bill. It creates uncertainty around the role of medical schemes post the implementation of NHI. The “complementary cover” that medical schemes may provide is not clearly defined, nor is the benefit package that NHI will provide. Further clarity and specifics with regard to the composition, governance, operations, funding and coverage of the Fund is needed to ensure more deliberate debate and consultation can be had.
Funding mechanisms for NHI according to the Bill, include tax revenue, reallocation of funding from medical scheme tax credits, payroll tax and a surcharge on personal income tax. The current constraints within the fiscus, along with the very low levels of GDP growth has raised questions regarding the sustainability of the proposed NHI. In addition, the financial sustainability of the proposed NHI has been further questioned given the lack of clarity with regard to fundamental building blocks such as the benefits that will be covered by the Fund. This lack of clarity has a significant impact on investor sentiment and therefore on the broader South African economy.
It was suggested that the focus should be on fixing the public sector and Dr Crisp confirmed that this is the first priority as without this, NHI cannot be implemented. There is also concern as to how the funds collected will be utilized, due to the failure of many of the SOE’s in South Africa.
Concerns were raised that not all relevant providers and funders of healthcare services were sufficiently included in the NHI deliberations. Further consultation will be needed once further details of the NHI become available. This important process should continue to be as inclusive as possible.
Some argued that the process of imposing a state system while restricting the operations of the private system was unconstitutional and there is no global precedent for this. Further investigation is needed to understand the consequences of this recommendation.
There were also various views that the focus should be on growing the economy first, before tackling NHI. Some participants felt that the timing and priority around this was not ideal. Arguments were also made that the unmet need of the population are so dire that the health system must reform in the next 5 years to ensure South Africa does not fall into social unrest as many other countries have seen in the recent past.
Clarification is required around some of the key issues identified in order to remove uncertainty and provide some degree of comfort to all healthcare stakeholders.
1. Some of these key issues and the way forward with them are briefly summarised below:
2. The benefits package that will be provided through NHI has to be clearly defined
3. The role of medical schemes and the definition of complementary cover needs to be
4. All Providers and Funders of the various healthcare services need to be included in
future discussions around NHI in order to get the necessary buy-in and optimal solutions
for NHI to ensure its success.
5. The Funding mechanisms that will be used for NHI, post determining the benefits to be
provided and the costs of this provision, needs greater clarity.
6. The risk mitigation strategies that are going to be implemented to ensure NHI is
sustainable in the long term needs to be clearly communicated.
7. There is a great desire to get NHI implemented as soon as possible to demonstrate to
the citizens of South Africa that NHI is not a pipe-dream. This however needs to be
balanced with a genuine desire to ensure future credibility and sustainability of the
system. The process should therefore not be unduly rushed.
It is encouraged that future round-tables that allow robust debate to occur continue. This
will contribute to the development of a sustainable and equitable health system for all
Potential constitutional implications
In the course of the dialogue, frequent reference was made to the bill not garnering sufficient support to pass constitutional muster. Therefore, the arguments raised during the roundtable were subsequently subjected to a desktop review in order to flag the potential constitutional implications and challenges. Whilst state law advisor Ayesha Johaar confirmed that the bill had been certified as being aligned with the Constitution (Gerber, 2019), the desktop study revealed various constitutional concerns from a broad spectrum of organisations.
The first argument relates to section 18 of the Bill of Rights, which guarantees every person the right to freedom of association. Some in the legal fraternity argue that by being compelled to associate oneself with the NHI, one’s right to decide with whom to associate – either the NHI or a medical scheme – may be unfairly and unduly limited (Botha, 2019; Kirby, 2019; Van Staden, 2019). In this regard, Professor Shabir Moosa, a professor of Family Medicine and Primary Care at the University of the Witwatersrand and president of the African chapter of the World Organisation of Family Doctors, believes that no citizen can be prevented from having a medical aid scheme offering the full range of services, even including procedures covered by the NHI offering, precisely because the NHI Bill is constitutionally unsound (Medical Brief, 2019).
It is further argued that the freedom to choose healthcare services may well be intertwined with the constitutional right to bodily and psychological integrity entrenched in section 12(2)(b) of the Constitution. This right guarantees all people control over their own bodies (Anonymous, 2019; Botha, 2019).
Another argument relates to section 25 of the Constitution. In essence, the bill does away with a medical scheme’s ability to provide and charge for services rendered under the NHI regime. This, it is argued, may constitute an “unlawful infringement of a medical scheme’s right to property”, which is specifically prohibited by section 25 of the Bill of Rights (Kirby, 2016).
Whilst state law advisor Johaar argues that section 27 of the Constitution, along with the Republic’s responsibilities in terms of international treaties, imposes a duty on the state to take reasonable measures to give effect to the right to healthcare, (Gerber, 2019), others rely on the Constitutional Court ruling in Government of the Republic of South Africa v Grootboom 2001 (1) SA 46 (CC) to support their argument that the current NHI Bill may in fact infringe on their section 27(1) right to access to healthcare. In Grootboom, the court ruled that “the positive rights in the Bill of Rights – those rights that entitle South Africans to services from government, such as housing, healthcare, education, etc. – are themselves also negative rights. Whilst government is expected to progressively make possible the right to healthcare, government may not hinder South Africans from themselves giving effect to this right” (Van Staden, 2019). Yet, even though government may therefore not prevent citizens from providing their own healthcare, the NHI Bill does not include an “opt-out clause”, and clause 33 relegates medical schemes to offering only “complementary cover to services not reimbursable by the Fund” (Van Staden, 2019).
Another area of potential conflict touched on during the roundtable is the potential impact on an individual’s right to freedom of trade, occupation and profession guaranteed in section 22 of the Constitution. Here too the Constitutional Court has provided guidance, this time in Affordable Medicines Trust v Minister of Health 2006 (3) SA 247 (CC), where it held that “there are two components to this right: it is the right to choose a profession and the right to practice the chosen profession”. The court concluded that where a law regulating a profession has a negative impact on citizens’ choice of profession, the statute must be subjected to the rationality test. Some in civil society question whether the NHI Bill in its current form will indeed pass such a test, particularly given its lack of evidence of public purpose as well as the legislature’s failure thus far to present proper financial feasibility studies (Anonymous, 2019; Botha, 2019; Van den Heever, 2019). This is despite the state law advisor’s insistence that “the bill’s provisions connected rationally with constitutional obligations” (Gerber, 2019).
In a similar vein, the civil society organisations Section27 and TAC have questioned the bill’s specific exclusion of applicability of the Competition Act 89 of 1998. Excluding the NHI from the scope of the Competition Act, they believe, is not in the interest of health or of the NHI Fund (Section27 and TAC, 2019).
There is also a suggestion that the bill may fall short of the limitations clause contained in section 36 of the Constitution, which states that “the rights in the Bill of Rights may be limited only to the extent that the limitation is reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom, taking into account all relevant factors, including … (d) the relation between the limitation and its purpose [and] (e) less restrictive means to achieve the purpose” (RSA, 1996). Proponents of this argument emphasise the lack of published evidence to prove that the NHI is indeed necessary to achieve universal access to healthcare, claiming that there are numerous other approaches that could be implemented that would be less restrictive than section 33 of the bill (Anonymous, 2019; Van den Heever, 2019).
Finally, both the roundtable and the subsequent desktop study have found that the vagueness of many aspects of the legislation, including the costing and funding model, and the unpredictability of the legislation’s intended outcomes may constitute sufficient grounds for a constitutional argument. In its founding provisions, the Constitution affirms that the state is founded on, among others, the value of the “supremacy of the constitution and the rule of law” (RSA, 1996). The rule of law suggests that legislation should be clear, unambiguous and provide reasonable certainty and sufficient information to enable those affected by it to respond in an informed manner. This notion was supported in the Constitutional Court ruling in Van der Walt v Metcash Trading Ltd 2002 (4) SA 317 (CC). Here, the court stated an absence of arbitrary power and unpredictability as essential elements of its understanding of the rule of law (Venter, 2011). Furthermore, in Affordable Medicines Trust, the court held that legislation should “indicate with reasonable certainty to those who are bound by it what is required of them so that they may regulate their conduct accordingly” (Constitutional Court, 2005).
Anonymous. 2019. Confidential correspondence between the CEO of the Inclusive Society Institute and academic attached to the University of the Witwatersrand, 5 December 2019.
Botha, C. 2019. Submission on the National Health Insurance Bill [B11-2019] (“NHI Bill”). Cape Town: Centre for Constitutional Rights, The FW de Klerk Foundation.
Constitutional Court of South Africa. 2005. Affordable Medicines Trust and Others v Minister of Health and Another (CCT27/04)  ZACC 3; 2006 (3) SA 247 (CC); 2005 (6) BCLR 529 (CC) (11 March 2005). [Online] Available at: http:// www.saflii.org/za/cases/ZACC/2005/3.html [accessed: 4 January 2020]
Gerber, J. 2019. NHI Bill is constitutional - state law advisers tell Parliament. [Online] Available at: https://www.news24.com/SouthAfrica/News/nhi-bill-is-constitutional-state-law-advisers-tell-parliament-20190829 [accessed: 3 January 2020].
Kirby, N. 2016. Many areas of concern in NHI paper. [Online] Available at: https://www.iol.co.za/businessreport/opinion/many-areas-of-concern-in-nhi-paper-1970022 [accessed: 6 January 2019]
Kirby, N. 2019. No mandatory requirement for South Africans to join fund under NHI bill as currently proposed. [Online] Available at: https:// www.werksmans.com/legal-updates-and-opinions/no-mandatory-requirement-for-south-africans-to-join-fund-under-nhi-bill-as-currently-proposed/ [accessed: 3 January 2020].
Medical Brief. 2019. Little of the criticism of the NHI Bill is ‘constructive’. [Online] Available at: https://www.medicalbrief.co.za/archives/little-criticism-nhi-bill-constructive/ [accessed: 3 January 2020].
RSA. 1996. The Constitution of the Republic of South Africa, 1996. Act 108 of 1996. Pretoria: Republic of South Africa.
Section27 and TAC. 2019. Section27 and TAC NHI Submission November 2019. [Online] Available at: http://section27.org.za/2019/11/56382/ [accessed: 3 January 2020].
Van den Heever, A. 2019. National Health Insurance Policy Bill Review. Expert review of the National Health Insurance bill submitted by the Minister of Health to Parliament in 2019 for submission to Parliament as a response to the request for public comment. Chair in the field of Social Security Systems Administration and Management Studies Wits School of Governance. [Online] Available at: https://docs.mymembership.co.za/docmanager/1e9aea2c-b58d-4aed-b5a2-96187d705aee/00146348.pdf [accessed: 3 January 2019].
Van Staden, M. 2019. Proposed NHI throws constitutional caution to the wind. [Online] Available at: https://www.freemarketfoundation.com/article-view/proposed-nhi-throws-constitutional-caution-to-the-wind [accessed: 3 January 2019].
Venter, F. 2011. South Africa as a “Diceyan Rechtsstaat”, in Matthias Koetter / Gunnar Folke Schuppert, Understandings of the Rule of Law in various legal orders of the World, Rule of Law Working Paper Series Nr. 18, Berlin (ISSN 2192- 6905). [Online] Available at: http://wikis.fu-berlin.de/download/attachments/173736195/Venter+South+Africa.pdf [accessed: 4 January 2020].
In pursuance of its objective to secure inclusive public policy, the Inclusive Society Institute, makes the following recommendations in an attempt to secure broad consensus on the National Health Insurance Bill. The institute is of the opinion that it is possible to achieve such an accord by adopting a rational approach to this important national dialogue.
The state law advisor has certified the National Health Insurance Bill as being aligned with the Constitution. However, given the strongly stated arguments to the contrary, the institute recommends that the relevant parliamentary portfolio committee further interrogate the constitutional arguments being made, and seek a legal opinion prior to finalising its report. This would avoid a Constitutional Court challenge.
The Constitutional Court has cautioned against adopting legislation that is vague and unpredictable. Concerns have been raised with regard to the lack of adequate financial modelling, insufficient clarity as to the prescribed benefits that will be covered by the NHI, and the conflicting provisions on the future role of private medical schemes in sections 8 and 33 of the bill. In this regard, the institute recommends that the relevant parliamentary portfolio committee either seek from the executive, or obtain its own, financial estimates regarding the affordability of the scheme and the fiscal impact of reducing the role of private medical schemes. To avoid vagueness and strengthen predictability, the institute believes that this modelling exercise should be based on the NHI benefits ultimately envisaged, as opposed to relying on a staged approach.
The institute recommends that the relevant parliamentary portfolio committee do a comparative study of the universal healthcare systems and private medical schemes in other jurisdictions. This would ensure that the bill passes constitutional muster as it relates to the limitation of rights in terms of section 36(1) of the Constitution, and specifically the section 36(1)(e) requirement for less restrictive means to be considered to achieve the same purpose. It is proposed that at least the opt-in/opt-out model (e.g. that found in Germany) and the co-existence model (e.g. that found in Ireland) be included in such study.
NHI ushers in Universal Health Coverage for all in South Africa
Dr Nicholas Crisp | NHI Fund Developer in the Ministry of Health
There are some mixed messages about what the National Health Insurance is – and what it is not – floating around in the media, and people themselves have different interpretations and different reasons for either liking the idea of the NHI or disliking it. The fact is, the NHI is a financing system; it is not the healthcare system of South Africa.
It is a chosen route to achieve universal health coverage. The NHI aims to address three problems simultaneously: increasing the number of people who have access to coverage in South Africa, increasing the amount of healthcare they receive (i.e. the benefits available to them), and decreasing the burden on the individual at the point of care, ensuring that when healthcare is needed, people are not turned away simply because they cannot afford to pay for it.
Healthcare is a human right, and access to healthcare in South Africa is enshrined in the Constitution, under section 27. Furthermore, there is nowhere in the world where people would deny the basic principle of access to healthcare or that the level of healthcare received should not be dependent on the financial and social status of individuals, but rather on the ailment itself.
In its present condition, the health system in South Africa is badly failing. The country currently has one of the most inefficient health systems in the world, where the outcomes in no way match the inputs. And this problem not only lies within the public health system; it also spans the private health system.
Each of these systems has its own set of drawbacks and reasons for evolving in the direction it has, but collectively these systems are failing to achieve the outcomes expected from the 8.5% of GDP expended on healthcare.
On one hand, there is the public sector, which is fragmented, poor, inefficient, understaffed and ill-equipped, serving the majority – roughly 85% of the population. On the other, the private sector is fragmented, overserviced, overspecialised, expensive, and serving only roughly 15% of the population. It is unsustainable to have such dichotomous systems running concurrently, using up resources unequally that belong to all people in South Africa. It is simply not feasible for government to fix the one system without fixing the other at the same time.
The whole system needs a facelift – and not just a tinkering around the edges. There are many ways to tighten up both sectors individually – reduce costs, reduce corruption, improve labour relations – but the problem is really systemic in nature. This is the NHI’s underlying proposition: to address the healthcare system as a whole entity.
How will the NHI work in principle? Firstly, it is designed to be one fund; a single pool of resources. The fund purchases services on behalf of everybody who lives in South Africa. That fund then contracts directly with service providers – this is with regards to personal health services. Non-personal health services which are not going to be funded through the NHI will still be funded through the provincial equitable shares in government and through the municipal allocations in local government.
The legislation currently on the table suggests a purchaser/provider split, where the purchaser is a new public entity, defined according to schedule 3A in chapter 6 of the Public Finance Management Act (PFMA). This public entity has very specific powers. It may not borrow, invest, purchase, or enter into agreements with companies. In the most basic sense, the entity acts as an administrator of government business outside of the public service; the administrative purchasing entity for the funds that are channelled through the NHI fund.
Private medical aid will still be made available. According to the NHI Bill, there will be providers from both the public and private sectors. The fund will buy directly from each provider, in the primary healthcare and hospital environments, and on the basis of accreditation. To clarify, accreditation is not the same as compliance with standards – that is the responsibility of the Office of Health Standards Compliance.
The standards are set by government and the Office of Health Standards Compliance then implements those standards. Following from this, the compliant provider will have to approach the fund to request accreditation in order to provide a certain kind of service, or a certain range of benefits of service.
When is the NHI Bill going to be implemented? It will take time to achieve a fully functioning NHI; switching on massive reforms overnight would break what is an already floundering health system.
The process has already started, with the NHI Bill reaching parliament. The National Council of Provinces and the National Assembly are currently in the process of considering the comments on the bill that came in before 29 November and visiting provinces to attain any further comments. There has also been an influx of lengthy petitions which will require a massive amount of administration to get through.
The plan is to implement the NHI Bill in phases, with the expected delivery date being 2025/2026. Presently, the process is in the formative phase, which involves setting up the administrative and operational machinery to run the fund – building up the numbers, designing the administrative standards, the operating procedures, the IT systems, etc.
It is going to take many years of concentrated hard work. There will be lead times; everything has to be published in the Government Gazette as a regulation before being considered, and there is usually a substantial amount of debating before even getting to a draft regulation.
The process as a progressive realisation of the NHI is fundamental to the success of rolling out the new system. There is plenty of evidence to indicate that building the health, and of course the education, of a population leads to economic growth. But the determining factor has to come from a sense of social solidarity, of aiming to create a healthy nation as a whole.
Another point the bill speaks about is portability, wherein no matter where a person is living in South Africa or whether they are regularly travelling within the country, they will have access to the healthcare they need at any given point. Government and the NHI still need to put the mechanics in place to enable that to happen.
The fund will be the purchaser and it will purchase benefits that are ultimately determined and signed off by a Benefits Advisory Committee. There is a huge amount of technical work that needs to be done to define what those benefits will be, to codify them, to cost them, and then to set a price for them. There will be a negotiation around what those prices are, much like in the private sector at the moment. Except, this is for a much bigger entity.
The NHI currently spends between 8.2% to 8.8% of GDP. The NHI should ultimately cost less than 8.5% of GDP owing to efficiencies and savings on systemic improvements. Under the NHI the chief source of income will be money appropriated annually by parliament: general tax revenue, reallocation of funding from medical scheme tax credits, payroll tax and surcharges on personal income tax.
The Constitution states that every person living in South Africa – including SA citizens, permanent residents, refugees, inmates and designated foreign nationals – is protected and must have access to healthcare. The dilemma is that there are many people living in South Africa who are not bona fide refugees or visitors. And so, the bill makes provision for this by limiting protection for those living illegally in the country.
The bigger debate revolves around the public/private question, around what role the private insurance industry will play. There is in fact a very clear role for private providers, suppliers and companies. The question is more: what is the role of medical schemes? This concern is currently in a parliamentary process, but is dealt with in section 33 of the bill, which states that once benefits are included in the NHI package for everybody, they are no longer insurable outside of the fund. Private insurance will only fund benefits that are not included in the package.
There will be options such as top-up and bypassing, but the idea is that all those living in South Africa will start off by visiting a primary healthcare facility of their choice – whether it is a GP in the private sector, public sector clinic or health centre – to register on the NHI system. Today, the public health system already has 44 million people (those previously registered at the public sector clinics) registered on the first part of its digital system, excluding people in the private sector.
There will be predetermined referral pathways to ensure that patients are dealt with at the most appropriate level of care. There will be some measure of choice in the matter: referral pathways will cover a number of options which patients will have the chance to negotiate over.
From the perspective of portability, the NHI system will still detect a patient if they need to visit a different facility or enter the system through a different GP because they are away from where they originally registered, for whatever reason.
There are three reasons for setting the system up this way. First, the NHI wants to track the epidemiological pattern of the users in a given geographical area, so as to ensure that the services purchased meet the needs of the population.
The second reason is to monitor the money that the fund is spending on a particular community, to keep an eye on whether there is indeed redistribution of resources, which will ensure that underserviced communities receive proper healthcare.
And lastly, there is the question of the transferring of funds. It cannot be arbitrary; it has to be very deliberate. It is the responsibility of the health system to manage these transfers efficiently and effectively.
The bill provides for two main routes through which purchasing will happen. The one is through capitation funds, which will be the means for purchasing in the primary healthcare sector. The trouble here is that there are a variety of models. The costing and designing of those models is a concern, but it is the reporting of what outcomes are achieved that is actually the more tricky aspect to monitor.
There needs to be more work done clarifying how to effect capitation. Contracting units for primary healthcare could be used, but exactly how that will function in South Africa, within our statutory environment, who would be responsible and who would be the providers within a contracting unit – remains to be seen.
The second route is through some form of global budgeting mechanism – 0.1% of private purchasing is presently done through a form of diagnosis-related group (DRG). This should be the primary method of purchasing services in hospitals, to avoid a fee for service environment.
Fee-for-services is expensive and the development of agreed upon DRGs requires extensive engagement and substantial available data on which to base pricing decisions.
DRGs are very necessary in an NHI environment where services need to be actively purchased across sectors.
The way in which the provincial equitable share gets reallocated is also a matter for careful consideration.
If the NHI intends to purchase personal health services collectively for the country, it makes perfect sense to shift those funds into the NHI fund, to follow the moving function. This is not going to happen immediately.
Touching on accreditation once more – this is about making sure that the facility and the providers in a facility have, in fact, not just the quality needed but also the capacity to provide a certain kind of benefit. This needs to be set up as an ongoing accreditation system, where providers can update the packages they offer with new benefits over time.
The fund must determine the way the provider payment mechanisms operate. The bill says that with specialists and hospital services, payments must be all-inclusive based on performance. It then becomes about an outcome. The problem with our present system in both the public and private sectors is that no-one measures the outcomes; the focus is all on the inputs. The result is: no accountability for the services they offer.
With regards to emergency medical services, they are designated in schedule 5 of the Constitution as provincial services. Therefore, they will have to be funded directly through the provincial equitable share. The private emergency and medical services could be funded through alternative means. Presently, the bill describes functions that the fund will execute, some of which are common sense. The NHI committee has looked into a number of other NHI funds globally. They also have consultants on hand, and treasury, who have worked in Europe in connection with recently formed insurance funds.
The fund has seven key functions, with sub-functions within each. The first function, governance and administration, cannot be implemented until the fund is a schedule 3A entity outside of the public sector, in terms of the Public Service Act, as it is illegal to duplicate the administrative functions – human resources, procurement functions and the supply chain management – under the same accounting officer. The other six will take substantial effort to describe and will involve learning from people who are versed in these undertakings – including the considerable expertise already on South Africa’s doorstep.
Function two: set up the NHI fund. This is fundamentally a sizeable bank account which will have roughly R5-billion funnelling through it per week once it is a fully functional fund. It will involve a vast collection of bank accounts and commercial banks, careful cash flow and cash flow balances on a daily basis.
How the money comes in from the treasury and how it is dispersed is going to need to be closely watched. The fund will not be run by health professionals; it will be managed by medical scheme administrators with actuarial, financial and clinical skills.
The third function is the benefits and the provider payment designs. The key starting point will be getting the benefits designed early. Then working out the payment designs: calculating the costs, negotiating a level of pricing and what the profit margins will be, and who will be providing the services. There are no laws prohibiting any one of the multitude of payment design options.
The next function (the fourth) is health products procurement. There is some debate about whether this function specifically needs to be carried out by the fund, whether it should be the department’s responsibility or whether it should be an autonomous function. But this is not a warehousing function; it is described as a function of negotiating prices. It follows then that if there is economies of scale, there is the leverage to attain better prices.
Function five belongs to the realm of digital information. The whole NHI system has to run on a digital platform. It would be impossible to run such a large-scale operation in the same fashion the government has been running health services up until now, which is manually. As such, this realm will require substantial infrastructure investment, software investment and data analytics capacity building.
The sixth one is risk and fraud management, the majority of which needs to be designed into the NHI system. This would be a similar system to those utilised in the medical scheme and hospital environments. There also needs to be a way in which to respond to whistle-blowers and people’s complaints outlined in the system.
User and service provider management is the last function (seventh). This concerns the rules around what data the fund is at liberty to keep on people using the system. The NHI will not keep the kind of data that a hospital does on personal records, but it needs to have a certain amount of information – whether a patient accessed care and the outcomes of that care – in order to monitor the epidemiological trends, to keep tabs on where the money in the fund is being spent. Exactly what data the fund will be allowed to retain still needs to be determined. And then of course there is the information about the service providers, those who get accredited, which needs to be taken into account.
These are the building blocks of the NHI fund. There will ultimately be a board that is accountable. There will be an accounting officer, with an office to deal with the core administrative functions. Although, corporate services will only come into being once the NHI fund is a schedule 3A entity. There may need to be some form of decentralised administration, the details of which are being discussed with the provinces.
In terms of the fund itself, until there is money to be paid out, there is no real purpose of having a fund – in the interim, perhaps only a few officers to determine the rules.
The National Department of Health will still be responsible for policy standards and coordination of the entire system. The provincial departments of health will still be responsible for stewardship over the public and private providers. The bill is not explicit about whether that will be a primary assigned function but says a great deal of the current provincial functions will be removed and then delegated back to the provinces.
The municipalities will primarily be responsible for non-personal services and intersectoral collaboration. The president is setting up coordinated district meetings to improve the relationship between the traffic department and trade and industry around liquor licensing and water, etc., to relieve pressure on the health department from the throngs of patients arriving at hospitals and clinics with complaints that are due to the social determinants of health.
Within the provinces, how the districts are managed in terms of the setup of the primary healthcare units will largely depend on how the economy is performing. As the Minister of Finance explained, if the economy is performing poorly, we would implement less, and then when cash flow increases do more. The NHI needs to trim the fat from the system: sort out the inefficiencies of the public service, the way people are employed and then allowed to offer their services in the private sector, the unnecessary, costly duplication of tests and examinations.
The four contentious issues that the NHI is keenly aware of, and is engaging on, are the role of the medical schemes, the role of the provinces, the capability of the state to manage the fund, and centralised procurement. Each issue needs a unique perspective to accommodate the role players as individuals.
In the meantime, while the fund is being designed and people are being employed to engage with those who have been through the process, the private sector needs to organise itself. The Health Market Inquiry (HMI) report is not declared null and void because healthcare in the country is moving in the direction of the NHI, far from it, it is as important if not more important than ever.
There are numerous social compact issues between private sector players, civil society, the public sector, and so on. And these issues are not negated by the NHI at all. They all need attention; and they will all be seen to in good time.
1. The NHI is a financing system, not a healthcare system, to address the number of people
who have access to coverage, the amount of healthcare they receive, and the burden on
the individual at the point of care.
2. The problems with healthcare in South Africa lie in both the public and private health
systems. The NHI proposes to address the healthcare system as a whole entity.
3. The NHI is designed to be one fund; a single pool of resources which will purchase
services on behalf of every person living legally in South Africa.
4. The NHI fund will contract directly with accredited service providers from the public and
private sectors with regards personal health services.
5. Non-personal health services not funded through the NHI will be funded through the
provincial equitable shares in government and the municipal allocations in local
6. The purchaser will be a new public entity, defined according to schedule 3A in chapter 6
of the Public Finance Management Act (PFMA) and will act as an administrator of
government business outside of the public service.
7. NHI benefits will be defined, codified, costed and priced. Prices will be negotiated much
as they currently are in the private sector.
8. The chief source of the fund’s income will be appropriated annually by parliament. But
essentially, it will come from tax revenue.
9. Once benefits are included in the NHI package, they will no longer be insurable outside
of the fund. The private insurance will only fund benefits that are not included in the
10. All patients will start off by visiting a primary healthcare facility of their choice to register
on the NHI system.
11. The NHI system offers portability in order to track the epidemiological pattern of users in
a geographical area, monitor the fund’s spending and track referrals.
12. Purchasing will happen through capitation funds or through a global budgeting
mechanism such as DRG, ideally one that avoids a fee for service environment.
13. Provider payment mechanisms must be all-inclusive based on performance to create an
outcomes-based measurement standard for services, building accountability.
14. The National Department of Health will still be responsible for policy standards and
coordination of the entire system.
15. The fund’s seven key functions:
First: governance and administration;
Second: set up the NHI fund;
Third: benefits and provider payment designs;
Fourth: health products procurement;
Fifth: digital information;
Sixth: risk and fraud management;
Seventh: user and service provider management.
Why do we need NHI?
It is a human right that everyone should be entitled to
It should not be related to income levels
Currently there are poor outcomes in both public and private sector
Public and Private sector are mutually dependent
The whole system needs a facelift
How will NHI work?
One NHI Fund
NHI Fund will purchase services (benefits) from both public and private sectors
NHI Fund will contract directly with service providers
When will NHI be implemented?
Implemented in phases
2025/2026 expected delivery
Objectives of the NHI Bill
Achieve universal access to quality health care services
Achieve progressive realisation towards Universal Health Coverage
Pool financial resources and ensure risk protection
Provide quality health care services
Single purchaser of health ser-vices to end fragmentation
Create a single national health system
Portability of health care services to enhance access
The NHI Fund
Purchase health care services determined by the Benefits Advisory Committee
Chief sources of income are money appropriated annually by parliament: General tax revenue
Reallocation of funding from medical scheme tax credits
Surcharge on personal income tax
Beneficiary Users of the NHI
SA citizens; permanent residents; refugees; inmates; designated foreign nationals
Only applicable to benefits not included in the NHI Fund
Health Care Services Coverage
The Fund will contract accredited providers and health establishments at primary health care and at hospital level, based on the health needs of users and in accordance with referral pathways
Services will be portable
Transfer to appropriate provider if required
NHI Fund as Purchaser
Fund will purchase health services for all based on need
Various models for reimbursement are outlined
Accreditation of Service Providers
All Health care service providers and establishments will need to be accredited to deliver health care service (benefits) at the appropriate levels of care
NHI Fund Functions
Seven Main functions:
Governance & Administration
Health care benefits & Provider Payment Design
Health Product Procurement
Risk & Fraud Management
User & Service Provider Management
NHI Fund Organisation
The Fund structure is as follows:
Decentralised Administration Functions
What will NHI cost?
NHI is expected to cost between 8.2% to 8.8% of GDP
A number of contentious issues have been identified, not limited to:
The role of medical schemes
Role of provinces
The capabilities of the State to manage the NHI Fund
NHI is a healthcare revolution, not a political motivation
Dr Gwen Ramokgopa | ANC NEC Education & Health Sub-committee member and former Deputy Minister of Health
South Africans will have the NHI bill that suits its environment, its stage of development and what is best for all its citizens. And the binding principle will be social solidarity. When a person is sick, they will not have to check how deep their pocket is before receiving healthcare.
No-one can disagree with that. The World Bank has been training ministers of finance to understand why every country – for its productivity and sustainable economic growth – needs to go the universal healthcare route. In fact, this is in the NDP, which is one of the few consensus documents across political parties.
There needs to be engagement in a manner that co-creates what is ideal for the majority of South Africans and addresses legitimate concerns. There needs to be controls put in place in order to avoid corruption and systems breaking down further.
Over the years, there has been a disinvestment in the public health system – the funding of central hospitals has halved over the past ten years. The health providers, both in the public and private sectors have been left with the responsibility of deciding how to care for patients while still earning enough to survive themselves.
The health system needs to deal with the challenges in both sectors. One of the main concerns is corruption; there need to be adequate controls in terms of governance. The minister should appoint the board, and the board must appoint the CEO, in consultation with the minister. If the minister appoints both the board and the CEO, it will undermine the board.
The second concern is the issue of the medical aids. The question here is whether it is too soon to pull the resources from the medical aids. And if not now, when? What led to the near collapse of the public health system in Gauteng is partly the economy. The global economic recession has also resulted in the number of medical aids in the private sector decreasing. And the affordability of catastrophic health situations like cancer has become unmanageable for the ordinary person. Financial protection of all South Africans is critical, as both the public and private sectors are crumbling.
There needs to be a wall-to-wall health system that is reliable and includes both sectors in its implementation. Entrepreneurs and investors can diversify or look at other areas where government is looking only to the private sector to service. For example, government will not manufacture equipment. Government will still depend on the private sector to avail their skills to help strengthen the NHI and to consider putting health and productivity of people before profits.
There needs to be a realistic approach which acknowledges that if there are further delays, neither system will be able to provide for the country’s patients. There is no room for arrogance. The NHI and universal healthcare is a revolution, not from a political point of view, but how it will impact the way healthcare is done in the country.
There is no other solution. There are recommendations, for instance, that government continues with the 86% of the public receiving funds from treasury and the private sector going to the market to raise funds from investors. But investor money moves. The result will be a much more stressed public sector that will collapse even further. Privatisation is not an option.
Health is not a commodity for the free market. People do not want to hunt for and negotiate the best price when they are sick, they want to negotiate good health. The World Bank has done many studies on this and it is no longer a matter of debate globally; it is a consensus.
The need for a benefit design is understandable. The Council for Medical Schemes, through the Medical Schemes Act, came up with prescribed medical benefits (PMBs) to protect those with chronic ailments. But when the courts ruled against having a price reference list, instead of improving, the situation actually worsened because medical administrators and medical aids simply found a way around it. There are also lessons to be learnt from Vitality and other programmes that reduce the burden of disease, which is a real risk to the fund.
In terms of the current financial framework, including both percentage of health and the economy, and rands and cents, a particular element to emphasise is the issue of affordability. WHO recommends 5% of GDP, but South Africa is already at 8.5%. Looking at it from the perspective of rands and cents, in the public health system there is R230-billion. In the private sector the contributions are also over R200-billion.
The NHI is not a reckless politically motivated decision. There has been so much wastage in the public health system. And in the private sector there has been much extraction of the health rand meant for people on medical aids, but used for intermediary support services, for example.
There is much work to be done with treasury to figure out what the amount is that is available, including looking at the inefficiency of tax rebates for healthcare. These rebates come out of a common central revenue and go back to individuals who are working and can afford healthcare. Essentially, this means the poor are subsidising the rich.
Government through the Council for Medical Schemes and a number of government medical aids participates in private sector health – there is no paucity of information. At the same time, the information is also not that integrated. When referring to comprehensive benefit packages, this means that nobody will be turned away if they have a health need. And the protocols will be determined by experts, not by government. The same experts that have been developing them for both sectors.
There is a small community in the private sector which is making excessive profits. And those profits are not shared throughout; it is purely extractionism. There is no problem with the entrepreneurs and private solutions making reasonable profit margins. But the huge returns on investment in private/personal healthcare come at the expense of the vulnerable. The IRRs are about 26%, which is an indefensible figure. Serious investors will know that they need a healthy population to improve productivity.
As a society, there needs to be agreement on the principle that if a person is sick, it is a human right to have access to quality care, nearest to where they are, anywhere in the country. And health professionals should not have to deal with the issue of whether a person can or cannot afford it every time they treat a patient – that is a massive moral burden to bear.
There needs to be research into affordable solutions. There has been waste on the part of government and also the private sector in the past, so there needs to be zero tolerance for inefficiency, maladministration, extractionism and exploitation in the health sector of the future – whether public or private.
1. South Africans will have an NHI bill that suits its environment, its development and what
is best for its citizens. And the binding principle will be social solidarity.
2. The World Bank has been training ministers of finance on why every country – for
productivity and sustainable economic growth – needs to go the universal healthcare
3. There needs to be engagement in a manner that co-creates what is ideal for the majority,
dealing with challenges in both the public and private sectors.
4. One of the main concerns is corruption; there needs to be adequate controls in terms of
5. Another concern is the issue of the medical aids. The question here is whether it is too
soon to pull the resources from the medical aids. And if not now, when?
6. Government will depend on the private sector to avail their skills to help strengthen the
NHI and to consider putting health and productivity of people before profits.
7. Health is not a commodity for the free market. People do not want to hunt for and
negotiate the best price when they are sick, they want to negotiate good health.
8. There is no problem with entrepreneurs and private solutions making reasonable
margins, but huge returns on private/personal healthcare are at the expense of the
9. Health professionals should not have to bear the moral burden of whether a person can
or cannot afford it every time they treat a patient.
10. There needs to be zero tolerance for inefficiency, maladministration, extractionism and
exploitation in the health sector as a whole.
Business proposes joint ranks with government over NHI to balance capacity
Business point of view
Businesses’ position in terms of the NHI’s values is that it supports universal and equitable healthcare – in fact, it forms part of the team’s mandate.
One of its other key points is that it believes wholeheartedly that South Africa needs to take on board the NHI bill. Further to this, it believes the process of implementing the bill needs to unfold in such a way that it crowds in the private sector, rather than pushing it out. And not just with regards to healthcare. The underlying sentiment in business’s ongoing discussions with government, from the president down, is that the private sector is able, ready and willing to help in a whole range of ways.
The reality of South Africa’s present situation is that the resources of the country lie in the private sector. It makes sense then to use those resources to match government capacity with private sector capacity. This is the principle that the business sector brings to the table.
It firmly agrees that this depends on mutuality and mutual dependence between the public and private sectors, and that government needs to increase efficiencies within these two sectors and leverage the strengths of both.
This is also critical from a funding point of view, given the dire state of the economy, with indications this last quarter that South Africa may be heading into a recession. At the very most, the country is looking at a GDP figure of roughly 0.1%. This fiscal situation is reason for great concern, with increasing shortfalls in tax collection. These are issues that will have an impact on any proposed strategies, from either the public or private sectors. Funding of the NHI and how much it will cost, therefore, depends on what is expected from it, as a percentage of GDP.
Clearly then, there needs to be growth of GDP. As it stands, a percentage of GDP would mean next to nothing. Bearing that context in mind, to fund any major project at this point, or for the foreseeable future, from the fiscus is going to be an extremely challenging endeavour.
That is of critical importance in the funding discussion. Government needs to clarify the role of the private sector for business continuity and investment purposes. Although it has been said that the role will be a mutual one, the hard discussions are still needed between business and the National Department of Health working on this issue.
In parallel to this, there needs to be a focus on fixing up the current public sector capacity – and government will need private sector capacity to do that. The business sector’s proposition is to merge the two and find a way to bring the capacity to bear, though this will take years to implement. Ordinary people on the street who currently use public services do not have years to wait – government needs to remedy this in the short term. And business suggests working together to do that.
If the rollout of the NHI is handled properly and the discussions are constructive – not just talk of it depending on mutuality between the public and private sectors, but agreement on how the two are going to work with each other – then the NHI will have the opportunity to enhance and even regain skills. If the discussion is not constructive and the mutuality concept is not bedded down in real, hard terms, then this could very well bleed skills instead.
Another point is that the pooling of funds and the creation of the fund under the Public Finance Management Act (PFMA) needs more clarity: on who is going to manage it, how it is going to be managed, what the board is going to look like. Because there is no escaping the reality that public sector pools of funds have not had a good track record over the past years.
The private sector is not free from blame in that regard either, but billions of rands have been misappropriated in the public sector and now the conversation is about additional billions of rands in the form of the NHI fund. It is not just the private sector that needs absolute clarity and transparency on how the fund is going to be managed, it is the whole country that needs peace of mind.
There are also constitutional issues to take into consideration related to freedom of choice and what sort of health services a person will have access to. These issues need to be discussed further and government needs to put a plan of action in place to deal with them going forward.
There is some impatience around the often talked about potential legislation, but a lack of conversation around the issues. Legislation gets passed and signed into an act, and then when issues arise, government simply blames them on unanticipated, unintended consequences. But as in the case of the Credit Amendment Bill recently, during the process of engagement, the government was warned of the consequences, compounded by their own socio-economic impact assessment – and still signed the bill. It is now time for government to take responsibility for actions; to take heed of the early warnings.
Business understands full well that the process of implementation will be a lengthy one; to rush this would be irresponsible and that is not the intention of the NHI. But substantive engagement and maximum agreement early in the process will help implementation, rather than allowing those interactions to drag on and cause disruption further down the line.
Early on in discussions between the department and organised business, in the first meeting with the Minister of Health, Dr Zweli Mkhize, it was decided to have a deadlock breaking mechanism for managing disagreements and reaching a consensus. Achieving this promptly means that business and the department will have a better chance of working together productively and implementing the NHI successfully, albeit over time.
Despite the fact that rolling out this massive project will not be an easy process and there are bound to be differences that come into play, The business sector remains supportive and confident that in the interaction with the department, and in the parliamentary process, concerns will be addressed and a clear strategy for equitable healthcare will come to light.
1. Business fully supports the NHI values of universal and equitable healthcare.
2. Business believes South Africa needs to take on board the NHI Bill and implement it in a
way that crowds in the private sector, rather than pushing it out.
3. Using the resources of the private sector to match government capacity with private
sector capacity depends on mutuality and mutual dependence between the two sectors.
4. Government needs to clarify the role of the private sector for business continuity and
5. The country’s fiscal situation is reason for great concern, with increasing shortfalls in tax
collection. This will have an impact on any proposed strategies for funding the NHI.
6. There needs to be a focus on fixing up the current public sector capacity. The business
sector proposes to merge the state and private sector, bringing the capacity to bear for
the long term and for the short term to address immediate needs.
7. The pooling of funds and the creation of the fund under the PFMA needs more clarity.
8. There are constitutional issues to take into consideration related to freedom of choice
and what health services a person will have access to.
9. Business understands that to rush the process of implementation would be irresponsible,
but substantive engagement and maximum agreement early in the process will lead to
less disruption further down the line.
10. In the first meeting between the Minister of Health, Dr Zweli Mkhize and organised
business, it was decided to have a deadlock breaking mechanism for managing
disagreements and reaching a consensus.
Workers call for urgent quality healthcare from government in response to NHI
Labour point of view
Organised labour representatives recently concluded a process whereby they visited all nine provinces to discuss the NHI Bill with workers – to discuss what the bill is trying to achieve and to get their views on what they believe national health insurance is.
The most salient point to come out of the discussions is the urgency for workers on the ground to have access to quality healthcare, and soon. Workers simply cannot afford to be members of medical aid schemes for much longer; it is not practical for them anymore.
South Africa’s health system is in dire need of an overhaul in terms of its financial arrangements, management, and its ability to deliver quality healthcare services. Access to quality health services is currently dependent on a person’s geographical location, race, employment status, income level, gender, and on where the healthcare services are being delivered at the time.
From labour’s perspective, the unequal distribution of health spend in South Africa and the deteriorating state of public healthcare necessitates the implementation of the National Health Insurance. The findings of the Health Market Inquiry reports reaffirm labour’s opposition to the commercialisation of health and its consequences on both quality and access to healthcare.
Labour supports the NHI as well as the bill. The reaffirmation of primary healthcare is a critical component of the NHI, as it constitutes the foundation of the healthcare system. Primary healthcare reengineering and the intended effort to grow a strong district health system is crucial to the endeavour of re-orientating the South African healthcare system.
Furthermore, labour supports the establishment of a single fund, the appointment of a board as well as a number of functions related to the NHI fund. Though there is obviously concern about the board pertaining to how secure the funds will be.
Corruption has burnt particularly the workers. Wherever there has been an onslaught of corruption, it seems the workers take the fall. SAA and Eskom are cases in point. The only solution to corruption there so far has been the imminent retrenchment of workers. Ignoring the impact of corruption, especially in state-owned enterprises, means workers will continuously be at a disadvantage.
There is an opportunity, being at the beginning of the rollout and implementation of the NHI for government to establish clear-cut methods and mechanisms within the board and its functions, to ensure that it is carefully monitored and managed.
Labour also supports the inclusion in the NHI bill of the complimentary role of medical aid schemes. It is becoming less and less affordable to be on medical aid. During provincial consultation processes conducted by labour representatives, many have indicated that they chose to first try signing up for a government employee medical scheme, only for it to turn out to be like any other medical scheme, where it quickly becomes unaffordable. The benefits do not justify the amount of money that is being spent on medical aids.
With regards to the issues relating to the contracting unit for primary healthcare services, there have been numerous collective bargaining agreements put forward that allow for Collective Bargaining Council clinics on site at various workplaces. Workers too are willing to play an active role in the implementation of the NHI, even if it means opening their collective bargaining clinics for use by people living in close proximity to the clinics.
When it comes to the sources of funding, it seems the NHI will be heavily reliant on taxation. It was said that this is a contradiction of the principles that are set out in the NHI bill, whereby it is based on social solidarity and cross subsidisation. Social solidarity from labour’s point of view means that the rich subsidise the poor; the healthy subsidise the sick.
Although there are grievances among the representatives of labour as to how heavy the NHI will lean on taxation, the workers are still willing to come to the table and agree to the sources of funding that have been proposed by the bill. But there needs to be a bit of homework and a bit of groundwork done by the government on looking at additional sources of finance. This is going to be a fund that will benefit all South Africans and, therefore, all South Africans should have a part to play in the financial arrangements.
Over and above the various tax streams that have been made use of, there is a need to venture into a discussion about the wealth tax. Regardless of the fact that the Davis Committee has already gone through the process of looking at these various streams of financing, labour feels strongly that this discussion needs to be reopened.
If the NHI is to live up to and reflect the standards and processes set out in the bill, which largely focuses on the attainment of section 27 of the constitution, there needs to be constructive dialogue around how al South Africans will play their part equally with regards to funding the NHI – whether that means looking at a wealth tax, a tax on currency transaction or a tax on financial transactions.
Broadly, it would appear that labour agrees with the aims and intentions of the NHI. There have been resolutions at several congresses of labour that a national health insurance is needed, because it is the only vehicle that could achieve universal health coverage.
Labour has made several concessions. Ideally, and when the process started, it purely wanted the public sector to be involved. The concession has been made to allow for private sector involvement in the process, on condition that there is a boost in access to healthcare. And that is labour’s main end goal on the matter.
There are likely to be additional concessions to be made as the rollout of the NHI progresses, but multistakeholder forums of this nature will make it easier to find consensus on the matters that arise. Labour will not be alone in this; other stakeholders will also have to dig deep and take a good look at ideologies they have previously held onto and make their concessions. But at the centre of these considerations must always be the workers and people on the street who are not afforded the access to quality healthcare.
1. Labour’s discussions with workers revealed the urgency for workers on the ground to
have access to quality healthcare, as they cannot afford medical aid.
2. South Africa’s health system is in dire need of an overhaul.
3. From labour’s perspective, the unequal distribution of health spend and the deteriorating
state of public healthcare necessitates the NHI.
4. The findings of the Health Market Inquiry reports reaffirm labour’s opposition to the
commercialisation of health and its consequences.
5. Labour supports the NHI bill and the establishment of a single fund, the appointment of a
board as well as a number of functions related to the NHI fund.
6. There is obviously concern about the board pertaining to how secure the funds will be.
Wherever there has been an onslaught of corruption, it seems the workers take the fall.
7. Labour also supports the inclusion in the NHI bill of the complimentary role of medical aid
8. With regards to the contracting unit for primary healthcare services, there have been
numerous agreements put forward that allow for Collective Bargaining Council clinics on
9. Labour is willing to agree to the sources of funding proposed by the bill, but the
government also needs to look at additional sources of finance.
10. Labour has made the concession of allowing for private sector involvement in the
process, on condition there is a boost in access to healthcare.
NHI gives rise to constitutional challenges
Health industry point of view
Nobody in the NHI debate is arguing against universal health coverage, but unfortunately many in this debate are having a fundamental debate – literally for and against the NHI. This is unfortunate. Many believe that the debate needs to move past this this approach. The leadership within both the public and private sectors – and the NGOs and others who are part of this conversation – need to move past this high level debate, and to rather focus on those elements of the proposals which can be supported and the elements that are problematic and need further discussion.
For many in the private sector, there has been consistent support for the broad policy of the NHI, as well as much of what is found in the NHI Bill. But there are some critical concerns with the current draft of the NHI Bill – the most important of which is Section 33 and the consequences of this.
There are some other concerns. For example, the lack of clarity and information on the benefit package and, linked to that, the absence of any detailed information on the likely costs and financing of the NHI. It is understandably difficult for government at this point to be explicit about these issues – it requires a mountain of work – but it not appropriate in a democratic society to ask the parliamentarians to approve a massively important and impactful Bill such as this one in the absence of such critical information, including the benefit package, and also the associated costs.
In addition, there is concern around issues of governance. The model that has been put forward is precisely the model that has led to serious corruption with very damaging impacts on our economy. The main concern is that as currently drafted, too much power is vested in the Minister of Health in terms of appointments and governance. This creates the risk of politicising the NHI.
Many stakeholders would suggest that different governance models are explored. For example, in the HMI report, the governance model recommended for the Supply Side regulator could work very well. In fact, it is the same model used by the Judicial Services Commission. In essence, the idea is to have a broad grouping of civil society and all
political parties come up with names for the Board and other governing bodies, and then Minister selects the nominations from that short list. The Board then picks its own chair, and also appoints the CEO, who in turn appoints the organisation. This model would preserve more accountability and avoid some of the risks of the current model.
Section 33 of the NHI bill is highly problematic. It has the potential to spark significant resistance and objections to the NHI, which are completely avoidable. This is why it is important for some compromises to be made in relation to this Section. This Section was incorporated into the Bill at a very late stage, and it was not included in the prior version of the Bill from June 2018. This means that the public had no chance to comment on these drastic provisions in the prior round of comments on the June 2018 Bill. There has also not been any kind of open process or consultation with the private sector, which is most impacted by this Section. For this reason, it is believed that there is no basis to justify such a drastic change from the June 2018 version of the Bill to the current version.
There are at least six fundamental problems with section 33. Firstly, no rational policy basis has ever been set out to justify Section 33. No paper or explanation from any of the policy makers has been provided to properly explain the reason for such a drastic invasion of both the rights of people and intervention in the healthcare system.
The industry has attempted to understand the implicit policy arguments, in the absence of clear and explicit explanations from the policy makers. One argument appears to be that Section 33 will deal with the maldistribution of resources in the private and public sectors.
However, this argument fails to recognise that central to the issue of resources is lack of funding in the public system, as well as very poor conditions of service for health practitioners within the public healthcare system. Currently, approximately 25% of specialist posts are unfunded. Funding those posts would make a massive impact on the shortages in the public sector. It is wrong to blame medical schemes for the fact that doctors choose to work in the private sector. The lack of funded posts, and poor working conditions in the public sector are a major part of the problem.
There is no need to shut down large parts of the medical scheme environment to force health professionals into the NHI/public system.
This approach will not address inequity; it will actually make inequity worse. It will do so by driving up out-of-pocket expenditure, which would be unfortunate considering South Africa is currently one of the best performers in the world with regards to out-of-pocket expenditure. These unintended consequences of Section 33 have not been properly researched or understood.
Another argument appears to be that Section 33 will allow funds to be moved from medical schemes into the NHI Fund. But this is simply wrong. Implementing section 33 will not increase funding for the NHI. The only way that can happen is through increased funding from the Treasury, which will require tax increases. Medical scheme funds are owned by their members, and Section 33 will not move any funds from schemes to the NHI.
A second point is that there has been no evidence or policy rationale put forward by the policy makers to support this approach. This Section was not included in the prior version of the NHI Bill, and therefore there has been no opportunity to comment on it, nor is there any reason why it has been included.
Thirdly, perhaps most crucially, is that the implementation of Section 33 will have severe consequences for the healthcare system and for the economy as a whole. It will also greatly increase the burden on the NHI. It does not make sense to create a policy that takes nine million people who can fund themselves and transfers them into the NHI. There is an older average age profile for the medical scheme members, and in some respects a worse disease burden. Adding these 9 million people to the care burden of the NHI will only detract from the limited resources available to improve the healthcare of those who cannot fund themselves. This is therefore actually a retrogressive step. It will impair the ability of the NHI to allocate scarce resources to the most needy in our country. Why not allow those who can contribute to the NHI, and then make an additional contribution to medical schemes to continue to do so. This is precisely the model that is implemented in the UK, for example, which has an outstanding National Health Service, but allows citizens to purchase additional private medical insurance if they wish to.
We have already seen that the publication of the NHI Bill with Section 33 included has had a significant negative impact on investor sentiment, with many local and international investors looking for reasons to exit South Africa. And this Section of the Bill is confirming the concerns of sceptical investors who see a government that appears willing to implement an irrational policy without a solid policy foundation to support it.
It is very clear that the implementation of Section 33 as drafted will cause material damage to private healthcare. Estimates are, depending on how much money the system can mobilise, that if all healthcare is moved into the NHI, this will have a dramatic negative impact on the income of hospitals, private doctors, pharmaceuticals, etc. This will result in the loss of potentially thousands of jobs, losses of tax revenues as well as reducing the attractiveness of our country as an investment destination. The argument that the NHI will support private providers is not convincing as the NHI will simply not be able to fund private sector providers at their current tariff levels. Nor is the argument that increased volumes will compensate for lower tariffs. Most private sector providers cannot accept much of an increase in volumes and no evidence has been provided to back up this view.
In addition, the impact of cross-subsidies is vital. Medical schemes pay higher prices than the public sector, and therefore effectively provide a subsidy to the public sector. If medical schemes are forced out of the market, as envisaged in Section 33, pharmaceutical and device prices will have to increase substantially from current state tender prices in order to sustain a pharmaceutical environment and a medical devices environment, with a single payer. And the same is true of doctors and hospitals.
The fourth problem with Section 33 is that it will almost certainly lead to legal challenges on various grounds including constitutional challenges.
Many stakeholders have received senior counsel advice with clear arguments that under the Constitution, rights can be limited under section 27, but that section 36 of the Constitution obligates the State to justify those limitations, firstly by showing that they will have the desired effect, and secondly by showing that there are no alternative that can avoid the limitation of rights.
Thus far, there hasn’t been any justification for this limitation of rights, and there are certainly alternative models to achieve the same objectives. If the inevitable delays were to be avoided due to legal challenges, surely the way to do this is to find some compromise in relation to Section 33 and some of the other areas of major concern in the NHI Bill.
A fifth concern is the fact that there is no country in the world that has, in attempting to implement or run an NHI or similar system, made such a drastic intervention in reducing voluntary health insurance. There are countries that have certain limitations, but there are none that have vetoed cover for anything that the NHI is covering. The reason for this is that other countries have not seen such a drastic intervention as a necessary step to achieve their own NHI, and nor is it necessary in our country.
The NHS in the UK, which achieves precisely the aspiration of universal health coverage which South Africa aspires to, allows private health insurers to cover whatever they wish to. The NHI Bill should be implemented without Section 33 and the way to go is to build a highly functioning NHI that is supported by all stakeholders and that compete the medical schemes out of business. If the NHI provides a cost effective high quality alternative to schemes, citizens will vote with their feet. There should be no reason for the draconian measure of shutting medical schemes down. Nor does there necessarily have to be only one single public payer. There are brilliant models around the world which have both the public fund and medical schemes or their equivalent carrying the NHI package.
Finally, one of the biggest concerns with the bill is that the phases of the bill are tied to dates and not to actual outputs and delivery. Again, this could provide a basis for legal challenge and this can surely be avoided. Some policy makers have said that it will take a lot longer than five or six years to roll out the system. However, the public in South Africa and investors, foreign and local, have the impression from the Bill itself that the date for full implementation and therefore the implementation of Section 33 is 2026. And that implies a drastic curtailment of the role of medical schemes. That is what the millions of medical aid members, which include hundreds of thousands of trade union members as well as public sector employees, as well as the broader business community and civil society are very concerned about.
1. Leadership in the public and private sectors – and NGOs and other stakeholders – need
to focus on the details which can be supported and the elements that are problematic.
2. Generally, the private health sector is in strong support of the NHI, but a critical concern
is section 33 of the NHI bill.
3. Other concerns include lack of clarity and information on the benefit package, costs and
financing, the governance model and the timeline.
4. Many stakeholders propose a different governance model: a broad grouping of civil
society comes up with names for a board, then the minister picks the board. The board
picks a CEO, who in turn appoints the organisation.
5. Section 33 was incorporated into the bill late and with no open process for inputs to
provide a rational justification for the move from the June 2018 draft to now.
6. Shutting down large parts of the medical scheme environment will not address inequity; it
will drive up out of- pocket expenditure.
7. Adding in the nine million people who can fund themselves will increase the burden on
the NHI, detracting from the limited resources available to those who cannot fund
8. The country has already seen a negative impact on investor sentiment, and there will be
damage to provider cross-subsidies that currently exist and are needed to ensure
9. No country in the world has made such a drastic intervention in reducing voluntary health
insurance and none that has vetoed cover for anything the NHI is covering.
NHI presents a golden opportunity to equalise the health system
Health industry point of view
When looking at the bigger picture with respect to the NHI, the state of South Africa’s present economy and its likely trajectory over the next decade or two are critical considerations. Whatever the decisions, they need to be made with the certainty that they will not further damage the economy, drive up public debt or stifle an already stagnant economy. Decisions that are made based purely on being patient-friendly and patient-centric often disappoint patients down the line, as they are economically unaffordable to implement. There does need to be a patient-centric system in place, however, solutions that will further worsen public debt and not offer the appropriable public/private partnerships need to be avoided. This requires a collaborative effort from both the public and private sectors. As organised business there is much that can be supported and needs to be supported in the NHI bill. It is clear that the status quo is undesirable, untenable and unsustainable. The solution needs to, for the next 50 years, provide a healthcare system which will address the gross inequalities at a financing and service level in the public sector. But there are a few concerns with the bill. The first, the ‘treasury concern’, is to ensure that there is no burden left for future generations to deal with. The country is already paying R1.3-billion daily to service its debt. And the debt to GDP ratio is not looking good. The solution needs to be one that works across both sectors, that will not worsen the public debt position and will deliver equality in healthcare. The second concern is that, speaking to investors, there are a number of issues that are putting them off sinking their money into the country. One of those is policy uncertainty and lack of implementation of policy. Unfortunately, this is the way the bill is presently expressed. Parliamentary processes are urgently needed to constructively contribute towards fixing those issues. As it stands, both foreign and domestic investors are deeply uncertain. Capital is agnostic; it will only follow where there is certainty. South Africa desperately needs to attract foreign direct investment. In fact, if the country does not get FDI and domestic investment, it will be forced to rely on the IMF and the World Bank to run it.
There needs to be a focus on the practical actions that can be taken to make investors feel comfortable. Some are questioning that when the bill first came out, there was between R40-billion and R80-billion wiped off market capitalisation. The protagonists say that was entirely a consequence of the bill, and those that are defending it say there were a number of other reasons, including poor management, etc, within those companies.
The real question though, is whether the policies are investor friendly. If it is cabinet’s number one imperative at present to grow the economy and solve unemployment, there needs to be a focus not only on what will achieve the desired outcome, but also on keeping investors on side.
With regards to the governance issue, there are many models to follow that could resolve that conundrum. Reiterating the points that have already been made is not helpful, it simply gets investors reacting. The flurry and frenzy of articles and opinion pieces is not the way to achieve a meeting of minds.
The last concern is section 33. From a pharma perspective, pharma and devices are the only sectors that supply products to both the public and private sectors. The rest of the subsectors in health are largely private-centric.
There are no access issues around medicines in the public sector. In the private sector, 87% of chronic conditions can be treated for R100 or less a month. The most consumed product in the public sector, antiretrovirals are taken by close to five million patients every month, costing the state roughly R70 for a month’s supply for one person. The access problems begin at around 30 or 40 molecules, mainly oncology molecules.
Implementing section 33 in its extreme form, with no medical schemes and, therefore, a completely different model will disrupt the public/private subsidy which enables the selling of an ARV for R70 a month, or less than R3 a day, in the public sector. If that is disrupted, how will the NHI continue to supply those five million patients their treatments every month?
There are concerns, but there are also opportunities in the bill. The real opportunity that exists for South Africa and its citizenry is to use this platform as an instrument to once and for all bring the two sectors closer together to find common ground. To use this bill as a vehicle to explore other options available that would lead to achieving universal coverage and equalising of the system, without having a negative impact on the economy and patients by disrupting the subsidy that exists and chasing away investors.
The outcomes of the discussions and comments are now subject to the parliamentary process. But at the end of the day, the real action will be in the hands of the expertise that resides within the health department.
There is a golden opportunity to work with the health department on many different levels: getting the infrastructure right, the capex, reducing problems such as debtors books, and introducing 4IR technology into the system to make it more efficient.
Using technology and digitalisation would solve some of the human capital issues. In the private sector, pharmacists spend most of their time on the phone trying to get a benefit through the medical aid, instead of counselling a patient. And in the US, 25-50% of all hospital admissions are iatrogenic in nature, mostly from drug interactions that are not picked up or suboptimal use of drones, etc.
Many of the aims that the bill aspires to achieve can partly be serviced through the public sector – there is nothing in it that excludes contracting services from the public sector. The aim to keep an eye on, is how best to equalise the system.
1. Decisions about the NHI need to be made with the certainty they will not further damage
the economy, drive up public debt or stifle an already stagnant economy.
2. Decisions based purely on being patient-friendly and patient-centric often disappoint
patients down the line, as they are economically unaffordable to implement.
3. The solution needs to, for the next 50 years, provide a healthcare system which will
address the gross inequalities at a financing and service level in the public sector.
4. The ‘treasury concern’, is to ensure that there is no burden left for future generations to
5. Investors are being put off of sinking their money into the country due to policy
uncertainty and lack of implementation of policy. If South Africa does not get FDI and
domestic investment, it will be forced to rely on the IMF and the World Bank to run it.
6. There needs to be a focus on the practical actions that can be taken to make investors
feel comfortable, for example, by ensuring that policies are investor friendly.
7. With regards to governance, reiterating the points that have already been made is not
helpful, it simply gets investors reacting.
8. There are no access issues around medicines in the public sector. Implementing section
33 in its extreme form, with no medical schemes and, therefore, a completely different
model will disrupt the public/private subsidy.
9. Bring the two sectors closer together to find common ground and use the bill to achieve
universal coverage and equalise the system, without a negative impact on the economy
and patients by disrupting the subsidy that exists and chasing away investors.
10. There is an opportunity to work with the health department on the infrastructure, the
capex, reducing the debtors books and introducing 4IR technology to make the system
Quality and standards: the cornerstones of achieving universal health coverage
Health industry point of view
There is much talk about providing quality health services through implementation of the National Health Insurance (NHI) fund. The term ‘quality’ has been used frequently by stakeholders during the discussions on achieving Universal Health Coverage (UHC); however, this is actually a highly complex area. The accreditation of health services focuses on a key aspect in this field: developing and implementing accreditation standards.
Those representing the accreditation concern wholeheartedly support UHC and believe that quality improvement and compliance with robust standards are cornerstones of achieving this target; in this regard, the Office of Health Standards Compliance (OHSC) has a mammoth task ahead. The extent of this task is indicated in its recent report from 2016/2017 which exposed the enormous gaps in the quality of healthcare services indicated by the lack of compliance with the regulatory national core standards across public sector facilities.
The accreditation bodies are ready and willing to offer support and expertise in supporting facilities to improve service delivery and patient safety across both the public and private sectors and thus achieve compliance with the regulations.
One such accreditation body is COHSASA, which is just over two decades old, has worked in over 600 healthcare facilities in 13 African countries. Notably, COHSASA worked with the Ministry of Health and Wellness in Botswana to develop national health quality standards and has accredited 16 facilities in the programme. Furthermore, COHSASA is currently assisting the Ministry of Health in Uganda and the Uganda Healthcare Federation (UHF)—a collaboration between the public and private sectors— to develop baseline standards in order to allow the nation to implement its own NHI in order to achieve UHC.
It is vital to invite on board bodies such as this, that already have first-hand experience to offer in the process of improving service quality to support the rollout of the NHI in South Africa. It also appears to be the only organisation in Africa accredited by the International Society for Quality in Health Care (ISQua).
Within the context of the NHI, capacity is a massive issue. The appropriate accreditation bodies would be able to assist in training healthcare workers to evaluate their services and to address the compliance gaps and deficiencies in the sector. As a result of the multitude of the facilities starting at a low base, it is recommended that, once they are certified by the OHSC as compliant with the regulatory standards, a system of “Graded Recognition” be implemented to allow weaker facilities to demonstrate that they are moving towards compliance with accreditation standards. By this method, instead of losing a facility and the personnel due to lack of motivation because they have not achieved full accreditation immediately, the relevant authorities are able to guide and offer a support base to reach key milestones, and eventually reach full accreditation.
There have been some interesting innovations when it comes to motivating personnel and healthcare facilities to adhere to quality improvement programmes. For example, a recent TED Talks presentation demonstrated how a consulting firm, employed by the Indian Ministry of Health, helped develop mechanisms to motivate primary healthcare facilities to improve the quality of services provided to the population. An example of one method used to enhance motivation involved ranking clinics (and publishing the results publicly) based on key quality performance indicators including patient and family feedback on the level of service received. This intervention was necessary as studies revealed that patients were boycotting primary healthcare facilities and opted to remain sick as opposed to receiving sub-standard care. Similar interventions could be leveraged in South Africa where hospitals and clinics are ranked—based on their progress in complying with the regulatory and accreditation standards— within national and provincial leagues, thereby motivating personnel and management to uphold quality improvement efforts.
Quality improvement is a lengthy process; patience is needed to achieve the desired outcomes and constant monitoring is required to maintain high standards of care. Overall, a commitment to working together over an extended period of time is of paramount importance.
It was recommended to exempt facilities that have already achieved international recognition, whether through COHSASA, ISO, or an equivalent accreditation body. The key decisionmakers should focus the country’s limited resources on facilities that are in dire need of assistance and use the facilities that are accredited as Quality Learning Centres (QLCs) to share their learning expertise with the rest of the healthcare sector, both public and private.
Finally, it is important to note that quality improvement is founded on the values of excellent governance, leadership and management—these values cannot be neglected.
1. The Office of Health Standards Compliance’s (OHSC) recent report shows the enormous
gaps in the quality of healthcare services and lack of compliance with national core
2. The first step in the trajectory towards good quality services is for all facilities to achieve
compliance with the National Regulatory standards assessed by the OHSC.
3. There are capable accreditation bodies to assist the health establishments in improving
service delivery and has extensive experience in developing and implementing health
4. COHSASA has worked in over 600 healthcare facilities across 13 countries in Africa.
5. COHSASA worked with the Ministry of Health and Wellness in Botswana to develop
national health quality standards and has accredited 16 facilities in the programme and is
currently assisting the Ministry of Health in Uganda.
6. COHSASA is the only International Society for Quality in Health Care (ISQua) accredited
organisation in Africa.
7. The appropriate accreditation bodies would be able to assist in training healthcare
workers to evaluate their services and to address the compliance gaps and deficiencies
in the sector.
8. The accreditation process assists providers to achieve the required standard rather than
closing them down. There is an awareness that organisations which have worked
primarily in the private sector in South Africa will need to adjust according to the local
9. Quality improvement is a lengthy process; patience is required to achieve and sustain the
desired outcomes and a system of “Graded Recognition” should be implemented to
allow weaker facilities to demonstrate that they are moving towards compliance with
10. It was recommended to exempt facilities that have achieved international accreditation
and instead to focus the country’s limited resources on the facilities at the lower end of
the quality spectrum.
11. It was suggested to use the facilities that achieve international accreditation to participate
as Quality Learning Centres (QLCs that share their expertise with the rest of the
12. Quality improvement is founded on the values of excellent governance, leadership and
Managing the lifeblood of the NHI
Health industry point of view
At the recent NHI Roundtable discussion, representatives of the South African National Blood Service pointed out that the organisation captures the values of the NHI in that it aims to offer a reliable, cost-effective, high quality service which gives every patient in South Africa the coverage – in this case, the unit of blood – that they need, and also aims to ensure that no patient gets a unit of blood they do not need, as blood transfusions are not without their complications.
It would appear that through the blood service, government is in the unique position of having access to data from more than seven million donors across the country from diverse backgrounds. Moreover, they have the capability of geomapping this data, which has the benefit of being able to show, for instance, what the incidence of iron deficiency or anaemia is in a particular geographical area.
In effect, government has a bird’s-eye view of what the country’s healthcare system looks like – and what can be seen is that there are two different healthcare systems in play. Of course, this has already been proven in the majority of the submissions that have been made and in the research that has been done.
But it is worth opening up this discussion again, as the difference really is profound. There is a vast discrepancy between what healthcare looks like in the public sector, how sick these patients are, compared to what is happening in the private sector. In the public sector, it appears that patients present later with disease and when presented, the diseases are more severe, whereas in the private sector the incidence of disease more closely mirrors the patterns found in the European countries.
Furthermore, government not only has access to data of the donor community, but also data of the hospital patients – and a marker that shows severity of disease, which is anaemia.
There was recently a blood demand versus supply study conducted. The resulting estimate showed that if government proceeds with implementing the NHI and increases access to healthcare, the need for blood in the hospitals is likely to increase by an astounding million units. Currently, there are 760 000 units being supplied, but there are concerns that this figure may be out by as much as a million units.
With such a massive gap between the public and private sectors, in terms of disease, it is reassuring that the NHI has stated that it will take time to implement the new healthcare system and that it will be rolled out with the utmost care.
Looking again at the data, from a real world point of view, in the private sector there are at present 28 units per thousand people being supplied, which is lower than the number in Europe at 33 per thousand. But in the South African public sector (excluding the Western Cape), the audited figure for 2018 is only nine units per thousand – showing a huge deficiency in healthcare in this sector.
Another important factor to consider in the NHI discussion is the likelihood that the cost of blood products will rise if the system is implemented as is, and if there are no adjustments made to actually prevent patients from receiving unnecessary blood products.
There may be a solution to this which could have an immensely positive affect on healthcare in South Africa. Patient Blood Management involves a system, which has been adopted by the WHO, that would ensure no patient gets a unit of blood unnecessarily, and is based on an IT system that integrates hospitals, laboratories and the blood service.
Such a system, which has already been implemented in Australia, would take roughly seven years to apply, but would improve patient outcome enormously. Where it was implemented in Australia, it improved in-hospital mortality by 28%, length of stay in hospital by 15% and complications from blood transfusion. It cost AU$5-million to put the
system in place, but the saving was AU $180-million.
There are also possible new solutions being worked on for cancer therapy and degenerative diseases, in the form of immunotherapy and cellular therapies, which will contribute to the efficiency of the NHI. With regards to the NHI bill itself, it makes no mention of blood services. To clarify, the blood service is neither a pharmaceutical service, nor a healthcare service. It provides a unique service: taking blood from donors, processing it and delivering it to every patient in need of it. The organisation is the custodian of the blood products and is also tasked with the responsibility of monitoring the adverse events of these products.
According to the WHO, the cost recovery model is the most efficient. It should never be a for gain model. It was suggested that government continue with the cost recovery model and with a non-remuneration system for donors, in the interests of blood safety.
1. The Blood Service captures the values of the NHI: to offer reliable, cost-effective, high
quality products and services which gives every patient in South Africa the coverage they
2. It would appear that through the blood service, government is in the unique position of
having access to data from more than seven million donors in South Africa from diverse
3. It has the capability of geomapping this data, with the benefit of showing, for instance,
what the incidence of iron deficiency or anaemia is in a particular area.
4. In the public sector, it appears that patients present later with disease and diseases are
more severe; in the private sector the incidence of disease mirrors the patterns found in
5. If government proceeds with the NHI and increases access to healthcare, the need for
blood in hospitals will increase by a million units. Currently, there are 760 000 units being
supplied, but there are concerns that there is an undersupply of a million units.
6. In the private sector there are at present 28 units per thousand people being supplied. In
the public sector (excluding WCBS data) this figure is only nine units per thousand –
showing a huge deficiency in healthcare in this sector.
7. Patient Blood Management is a multidisciplinary approach that ensures that the patients’
own blood supply is preserved and does this through a monitoring system that includes
8. In Australia, the system improved in-hospital mortality by 28%, length of stay in hospital
by 15% and complications from blood transfusion. It cost AU$5-million to put in place, but
the saving was AU$180-million.
9. There are also possible new solutions being worked on for cancer therapy and
degenerative diseases, in the form of immunotherapy and cellular therapies.
10. It is concerning that the NHI bill makes no mention of blood services.
Integrating family practitioners as gatekeepers to the NHI
Health industry point of view
This contribution approaches the NHI from a family practitioner’s – a family doctor or GP –perspective, and not from the perspective of a specialist, who works in a different environment from family practitioners.
IPAs are independent practitioner associations, which loosely refers to a group of family practitioners from a common area who come together to form a society, in effect sharing a network of knowledge and resources and working together to improve healthcare. The various smaller IPAs would then fall under a larger IPA within the province. And then nationally most of these IPAs fall under the umbrella of IPAF (Independent Practitioners Association Foundation).
There are roughly 5 000 GPs across South Africa. There is a common vision among these health providers: one of patient-centric care, including peer reviewing and mentoring to ensure high quality cost-effective care to their patients. There are also opportunities within these groups for family practitioners to take part in regular upskilling training.
In addition to medical aid patients, GPs have been providing healthcare to uninsured patients for years. They have discounted their services in these communities, thus making healthcare accessible to numerous disadvantaged individuals.
The community of family practitioners is in full support of the ethos of the NHI, since it will essentially be an extension of the kind of services that GPs have already been providing in
many of those communities that struggle to access private healthcare. According to the NHI bill the services that will be dispensed first and foremost will be primary healthcare based.
Family practitioners have been specifically trained in this area of providing primary healthcare services to all individuals, regardless of age, gender or illness. They provide primary and continuous care to entire families, within communities, addressing not only the physical aspects of health, but psychological and social problems too.
It is for this reason that the input from the independent practitioner associations into the NHI is vital. It is imperative that they are included in the discussion around primary healthcare, since they have developed the necessary skills and experience over the great number of years that they have been servicing these communities, to assist in successfully implementing the NHI.
An area that needs more attention from government is the connection between IPAs working on the ground and the Department of Health in terms of the NHI. A pathway for interaction needs to be created, a consultative process, in order to create a platform on which to discuss the issues that are fundamental to the NHI, which are
primary healthcare based.
Considering that family practitioners are the gatekeepers of healthcare, or the first point of contact, for most patients within the communities, their representatives need to be at the table when issues such as service delivery requirements, scope of primary healthcare services provided, licensing, accreditation, contracting and dispensing medication are discussed. These issues have a direct effect on how the IPAs will function in the NHI environment; in the universal healthcare environment.
For example, the district health management office is set to be a contracting unit for primary healthcare. But at this point little is known as to how this will play out in real terms and there is no avenue through which to consult or interact with the district committees. The family practitioner group is more than willing to get involved, to assist with the process of rolling out the NHI, but there is a lack of opportunities for connection and conversation around these matters.
Although there are a few unanswered questions that currently concern the group, they believe in the ethos of universal healthcare and are committed to engaging in this consultative dialogue. The independent practitioners called for the group to be represented on the committees that are discussing issues which will affect family practitioners and, in this way, to be integrated into the process, allowing the associations to be more meaningful partners to the NHI.
1. IPAs loosely refers to a group of family practitioners from a common area who come
together to form a society.
2. Smaller IPAs fall under a larger IPA within the province. Nationally most of these IPAs
belong to IPAF.
3. Family practitioners share a common vision: one of patient-centric care, including peer
reviewing and mentoring to ensure high-quality cost-effective care to its patients.
4. There are roughly 5 000 GPs across South Africa, who have been providing healthcare
to uninsured patients for years at discounted rates to enable disadvantaged individuals
to have access to healthcare.
5. The community of family practitioners is in full support of the ethos of the NHI, since it will
essentially be an extension of the kind of services that the GPs have already been
6. Family practitioners have been specifically trained in this area of providing primary
healthcare services to all individuals, regardless of age, gender or illness.
7. An area that needs more attention from government is the connection between IPAs
working on the ground and the Department of Health.
8. Family practitioners are the first point of contact for most patients.
9. Representatives of the family practitioners need to be part of discussions about service
delivery requirements, scope of primary healthcare services provided, licensing,
accreditation, contracting and dispensing medication.
10. The independent practitioners called for the group to be represented on the committees
that are discussing issues which will affect family practitioners.
Medtech as a solution to the NHI’s pricing challenges
Health industry point of view
The medical technology industry fully supports the concept of a National Health Insurance – a well-formulated NHI is crucial to assisting South Africa in advancing universality and social solidarity as the pillars of patient-centred health systems that do not discriminate along economic lines.
The South African medical device market – consisting of consumables, imaging, ortho and prosthetics, patient aids, dental and digital services – totals US$1.3-billion. There are a limited number of South African manufacturers, with an output of approximately US$2.5-million, of which half is exported. This makes South African small- to mid-sized distributors with less than 50 employees on average, highly dependent on imports.
Medical technology is not a commodity and unlike, for example, pharmaceuticals, the industry undergoes a rapid cycle of improvement – it only takes 1-2 years before newer and better products are introduced.
MedTech can be seen rather as a solution consisting of various elements such as hardware, software and consumables. It doesn’t necessarily have a dedicated purchase price as such, as it combines and includes services, technical support and training. MedTech can be tailored for certain needs and requirements and hence, could offer useful solutions to some of the issues plaguing the NHI process.
There are risks an NHI could bring, especially in putting pressure on the price, as this has an immediate effect on services and training, which is where the high investment on the distributor side sits. Furthermore, an over-regulated market bears its risks.
The regulatory framework in South Africa needs some attention, if it is going to be any kind of support to the NHI. The Medicines Control Council, which is now SAHPRA, sits at the top of established frameworks such as CE and FDA, and seems yet to become fully functional, with massive backlogs on licence applications and approvals. There are a number of grey areas that need clarification. The role of these new, yet to be established local regulatory bodies may be confusing to overseas suppliers and this, together with pressure on price, could result in deprioritising the South African market and, worst case, pulling out completely.
This would not only have a negative effect on the vast amount of small to medium local distributors, it would also result in a decrease in the quality of healthcare, which is the opposite of what the NHI and government are trying to achieve.
Rather, a solution could be transformation. South Africa needs to be marketed as innovative and open to new, more cost-effective technology, building on an already existing excellent digital infrastructure. Paired with the speed at which South Africa is accepting and making way to new technology, compared to other economies, the healthcare system could vastly benefit from this head start and attract overseas suppliers.
There is an obvious opportunity, as well as a need, to create digital services around expensive medical devices. For example, taking screening and diagnostic monitoring out of expensive specialist and overwhelmed hospital environments, has an immediate cost savings effect, making quality healthcare more accessible.
Especially in remote and rural areas, digital health and cloud technology solutions could support an NHI on its mission to offer equal standards of healthcare for all South Africans, considering the ever-decreasing number of specialists in the country.
Often, all that is needed is a 4/5G network, which is widely available in South Africa, and a smart phone or tablet pc to connect a nurse or health worker with a specialist. One of the devices currently applied is used for remote cardiovascular screening. The diagnostic devices are cost effective and can be easily employed by a nurse or health worker, after which the patient’s ECG is uploaded to an assessment centre, where experts conducting the analysis are able to give immediate feedback and advice on further action.
In summary, part of the strategy for a successful rollout of the NHI could be to upgrade the current system step by step, enable technology and, of utmost importance, create an exciting environment for all stakeholders, as this will benefit all patients.
1. The medical technology industry supports the concept of a national health insurance that
doesn’t discriminate along economic lines.
2. There are only a limited number of medical device manufacturers in South Africa,
therefore the industry is largely dependent on imports.
3. The output of domestic manufacturers is only two to three million USD, and half of it is
4. Medical technology is not a commodity. It combines hardware, software and
consumables, as well as service and training.
5. Pressure on pricing may result in outdated technology, lack of service and training, and
would negatively affect the standard of healthcare in South Africa.
6. The regulatory framework in South Africa needs attention, if it is to be a support to the
7. South Africa needs to be marketed as innovative and open to a new, more cost-effective
8. Digital solutions should be implemented, building on an already existing excellent data
infrastructure, reducing costs and making healthcare more accessible to all South
3 Fundamental principles for NHI success: efficiency, quality and responsiveness
Health industry point of view
There are many naysayers in the South African communities – doubtful about whether the NHI and the promises made will come to fruition, worried that it will be too expensive (for government, and for the people who will be using the service), that the benefits will be too few, that the financing will be corrupt.
The NHI is one of the biggest reform programmes in the country. Involving the values of visionary leadership, participation and coordination, the NHI is well on its way to achieving universal health coverage for South Africa. But the financing/benefit design conundrum is a particularly challenging part of the process that still needs to be tackled.
The global need for universal healthcare is inevitable. It is an inescapable undertaking brought on by the pressures of changing demographics, an increase in the elderly, an increase in the number of people getting sick, changing disease patterns, higher rates of chronic disease, and so on. The costs of these pressures are incremental; increasing on a yearly basis.
The time for the NHI in South Africa has come. But in what form? This needs to be approached with caution: medical care needs are so extensible, unlimited – the needs of patients differ, in some cases dramatically; the financial investment into the NHI Fund will be enormous; the professionals and the clients need to be retrained with regards to provision and consumption of services.
In many countries, there have been certain ideologies that have disabled their national health insurance. Some people believe there is nothing wrong with the system and all that is needed is to protect against unpredictable expenses by imposing financial disincentives for utilisation. A philosophy that is geared towards leaving the system as it is; just improving it. Whereas others believe the whole system needs reform, that it needs to have a distributive intent. In other words, looking into efficiency, allocation and equity. Clearly, the NHI in South Africa is taking the latter view.
A framework has been outlined for how to proceed. While certain areas are well-explained, others are still lacking in detail, understandably, considering the nature and the magnitude of the work that lies ahead.
The NHI bill is a framework that out lines the governance structure, what governance processes and institutions need to be put in place. There is less focus on other vital structures such as strategic purchasing and the benefit design, which are more relevant to the managed healthcare environment. These issues are key to the affordability of the NHI. The bill also mentions eligibility of members, the financing, budgeting and reporting – which talks to accountability.
Looking at what the critical elements and implications are, and what the tools and remedies will be to mitigate those implications, needs to be the first action in every step of the process. The implication of raising the finance centrally is that it is distributive in intent. The aim is to move money from the haves to the have nots, including a vast number of unemployed people. Then there is the issue of equity. A person who is paying taxes, paying towards national health insurance, may have a certain sense of entitlement about equity, about how the system is going to work.
In addition, there needs to be a definite commitment by government towards economic growth, to undertake such a huge project. Not having a clear direction of where the economy is headed will be problematic in implementing the NHI. From the perspective of particularly the taxpayer, there needs to be great sensitivity towards the potential for fraud and abuse of the funds.
The purchasing of services is obviously an important issue in terms of cost containment. It will be a purchasing function that has probably never been seen before in this magnitude. Huge money, huge purchasing pressure that is likely to bring down the cost of healthcare, not only for the public sector but also for the private sector – there will be benchmarks set.
With regards to location and levels of service, again there is the issue of equity. There need to be safeguards put in place against simply entrenching the status quo. The issue of no payment at the point of sale: this needs to be stratified, because it also comes with the issue of entitlement. The benefit needs to be explained properly to avoid having to deal with human rights issues further down the line. There needs to be clarification about what those rights are, for the patient and for the service provider. Currently, the remedies are primarily legislative.
According to the World Health Organisation the benefit packages are crucial to cost effectiveness, impact on financial protection, equity and access across populations. Of utmost importance in the design of benefit packages is efficiency, quality and responsiveness.
The NHI needs to be effective. In addition, it needs to be affordable, which comes with a level of complexity. But the more complex the NHI is, the more effective it will be, and probably more affordable too. Involving the private sector will increase the complexity but also effectiveness and affordability.
The financing is a range. The services will be public/private, and the financing will be mainly public. Within the financing model, these need to occur concurrently. Financing from the government, from treasury and from the actuaries, needs to feed into the NHI model. And it needs to be an iteration; an ongoing process.
1. The NHI is one of the biggest reform programmes in the country.
2. There are concerns that the NHI will be too expensive, that the benefits will be too few,
that the financing will be corrupt.
3. The need for the NHI has been brought on by changing demographics and disease
patterns; an increase in the elderly, the sick and rates of chronic disease.
4. The NHI needs to be approached with caution: medical care needs are unlimited,
financial investment will be enormous, professionals and clients need to be retrained with
regards to provision and consumption of services.
5. In some countries, the belief is there is nothing wrong with the system and all that is
needed is to protect against unpredictable expenses by imposing financial disincentives
for utilisation. In other countries, the belief is that the whole system needs reform, that it
needs to have a distributive intent – looking into efficiency, allocation and equity.
6. The NHI bill framework outlines the governance structure, what governance processes
and institutions need to be put in place. There is less focus on other vital structures such
as strategic purchasing and the benefit design, which are key to the affordability of the
7. The bill also mentions eligibility of members, the financing, budgeting and reporting –
which talks to accountability.
8. The purchasing pressure is obviously an important issue in terms of cost containment.
This is likely to bring down the cost of healthcare, for both sectors.
9. With regards to location and levels of service, there need to be safeguards put in place
against simply entrenching the status quo.
10. The benefit packages are crucial to cost effectiveness, impact on financial protection,
equity and access across populations.
Bringing the frontline of healthcare to the NHI debate
Health industry point of view
At the health summit last year, representatives of the private hospitals in South Africa offered insight into what its spare capacity in the private sector was, showing that at public sector admission rates, it may be possible to absorb a population of seven million. The real question is whether there is capacity for a different discussion, as the 2019 version of the NHI bill seems infinitely more aggressive on the role of medical schemes than the draft that was put forward in 2018.
As long as a service provider could continue running their practice sustainably, they would be indifferent as to who the patient was or whether the patient could afford to only pay half of the cost or only in a year’s time, it would probably be acceptable.
But when does it become unacceptable? Would it be when it is at 30% of the patient base, or 50%? There would come a time when it becomes impossible to pay staff, rent, etc. And that is what it boils down to from a provider perspective – whether it is possible to continue offering quality service in a sustainable way.
Having Deloitte and the medical schemes at the table leads into the sorely needed discussions around cost and sustainability. There was a class action in 2008/2009, wherein 22 healthcare service providers approached the court demanding that it look at cost studies before deciding on pricing that had been recommended by DoH. The problem with costing is that the price guideline, known as the Reference Price List (RPL) – used as a departure point when medical aid schemes determine their tariff or rates structures – would be loss-making for hospitals from the get-go. The fact is that the Uniform Patient Fee Schedule (UPFS) was lower than the RPL, and the ten wards assessed did not work from the start.
That is the reason why these discussions are a bit charged. It is not because people do not support universal healthcare, it is simply that there needs to be space for a more balanced discussion with more compromise in order to figure out how to shift the discussion and the debate forward.
There are so many different elements that need to be discussed, but most important is section 33. And yet, in every session of dialogue about the future of healthcare, there is the same proviso: section 33 may not be discussed.
It is hard to see how a middle-income country could do that without cross subsidies from private patients. No one wants to pay three times what they should for healthcare.
In addition, no one wants to pay a general tax, another tax that might come up for healthcare, on top of paying for private healthcare. If a person can afford to, the money will be added to the broader healthcare envelope. Currently, the country has a fairly broad healthcare envelope, in excess of R300-billion, but half of that is private money. It will be challenging to substitute that over time.
There needs to be further discussion on the role of the medical schemes and how that might change over time. The idea of 2026 being the timeline is most probably unrealistic. Why not rather have measurable milestones?
Representatives from the private hospital sector called for a review of the wording of section 33, or the purpose of section 33. Hand-in-hand with that is introducing changes with immediate effect to the Medical Scheme Act, which will merely cause unnecessary uncertainty with regards to an aspect that only really becomes relevant at a later stage. Rather introduce it when the time is right and for the right reasons.
Obviously, the private hospital sector embraces the objectives of the NHI and understands the need for it – as it is currently structured, the health system will not be able to deliver.
Therefore, there is a need for change. What also needs to be acknowledged now though, being close to the point where the rubber hits the road, is that until now the private sector people who truly are on the frontline – the funders, providers, consumers – have not entirely been part of the debate. For some reason, it has side-tracked them.
The other reality is that they are the ones in the know about what is happening on the ground: how to deliver the healthcare, how to fund the healthcare, about consumer healthcare. In fact, moving forward it is critical that, as the gaps begin to emerge in the process, those on the frontline of healthcare – not those sitting in the government boardrooms, but the people who are practically running the institutions – need to be part of the debate in earnest.
1. At public sector admission rates, it may be possible to absorb a population of seven
2. The 2019 NHI policy draft is more aggressive on the role of private medical schemes.
3. As long as a service provider could continue running their practice sustainably, they
would be indifferent as to who the patient was or whether they could afford to pay.
4. The problem with costing is that the RPL would be loss-making for hospitals from the get-
go, but the UPFS rates are even lower.
5. In every session of dialogue about the future of healthcare, there is the same proviso:
section 33 may not be discussed.
6. Immediate changes with the Medical Scheme Act will merely cause unnecessary
7. The association embraces the objectives of the NHI and understands the need for it – as
it is currently structured, the health system will not be able to deliver.
8. Currently, the country has a fairly broad healthcare envelope, in excess of R300-billion,
but half of that is private money.
9. The funders and private providers need to be part of the NHI debate in earnest.
Fair play in the pharmaceutical trade in Africa
Health industry point of view
The private health sector has been working closely with providers and communities on the NHI bill, since it was published in August 2019.
The vision of the private health sector is in line with that of the NHI, to create partnerships with various stakeholders to achieve universally accessible and affordable healthcare for all. The aim is to establish private/public partnerships that are sustainable, and which can be rolled out within the African continent.
The intention is to unify the private sector in order to engage and take inputs to the Department of Health. In addition, it is to reach a collective perspective and a common purpose around finding solutions to the healthcare challenges faced by the private sector.
It is fundamental in choosing representatives of the private health sector, and indeed those of the NHI, to look for individuals who are knowledgeable and of high integrity.
Corporate governance has to be in place; there needs to be accountability, joint decision-making and the ability to identify solutions that have worked and that are sustainable.
The idea is to move away from finding private sector solutions for public sector problems but rather to focus on joint participation between the two sectors.
The private health sector in South Africa, with all its affiliations, is fully functional across the African continent. There are evidence-based projects currently being rolled out in Africa. For example, the Africa Healthcare Federation of South Africa (AHFSA) is a platform that has pledged to constructively engage government on the implementation of national health insurance, and comments have been submitted through various relevant stakeholders.
There needs to be fair regulations in place to allow for a level playing field for all stakeholders in the health sector. The Health Market Inquiry (HMI) has offered great insight into the challenges faced and has made recommendations on how they can be addressed.
Healthcare services need to be pro-poor and should promote the needs of the ordinary South African. There are platforms available that could be used for constructive dialogue, joint decision-making, and arriving at solutions that will help with healthcare re-engineering, redesigning and restructuring in the implementation of universal healthcare.
Proposed interventions that will ensure success include utilising the network available in Africa to understand the needs / gaps in the African market, consolidating the lessons that have been learnt in Africa, and to be less reliant on solutions found in first world countries which will not be practical in the South African or African market. Identifying innovative solutions will also help to solve the problems of the African continent.
The East African Healthcare Federation member, Kenya, has established successful Public Private Partnerships with organisations such as Amref Health Africa PharmAccess to strengthen the health system towards universal health coverage. The Africa Union (AU) has endorsed the vision of the Africa Healthcare Federation. The AU has also highlighted that the pharmaceutical sector will be an area of focus. Challenges facing the sector include counterfeit medicines being dumped in Africa, regulatory challenges and reviewing trade agreements that are inhibiting free flow trade. Ethiopia has been exemplary in that it has drafted a strategy for the pharmaceutical sector and it has also established industrial park in Addis Ababa to attract investments and growth opportunities.
Pharmacy is ready for business. There are three factors as evidence of this: the first is that the licensing in pharmacy is already in place. The second is that the Pharmacy Council is able to identify each and every practicing pharmacy or pharmacist in South Africa. And third, it has attempted to tackle and reduce the cost of medicine through the introduction of a Single Exit Price (SEP). There are also well structured platforms where can engage as pharmacists, community, industry, academia and hospitals.
1. The vision of the private health sector is in line with that of the NHI, to create partnerships
with various stakeholders to achieve universally accessible and affordable healthcare for
2. The aim is to establish private/ public partnerships that are sustainable, and which can be
rolled out within the African continent.
3. The intention is to unify the private sector in order to engage and take inputs to the
Department of Health.
4. The idea is to move away from finding private sector solutions for public sector problems.
But rather to focus on joint participation between the two sectors.
5. There needs to be fair regulations in place to allow for a level playing field for all
participants in the health sector.
6. The services need to be pro-poor and promote the needs of the ordinary South African,
and African, on the ground. There are platforms available that could be used for
constructive dialogue and joint decision-making, and arriving at solutions that help with
healthcare reengineering, redesigning and restructuring.
7. From the pharmaceutical sector perspective, the issues with regards to healthcare
include access to quality, essential and affordable medication.
8. One of the major challenges Africa is facing is that it has become a dumping zone for
medicines. Counterfeit medicine is a critical problem that needs to be addressed.
Finding pathways to consensus on the NHI
The NHI roundtable dialogue was wrapped up with an open discussion, where all participants were given the opportunity to respond to the speeches and air any further concerns. The aim was to consolidate the areas of agreement, areas of disagreement and potential pathways to achieving consensus.
At the start of the discussion, an important clarification was made with regards to the lack of forward momentum and representatives to approach. The NHI is still in the process of splitting from the Department of Health and setting up office. There will be functions that will remain in the department to do with policy formulation and health services, and the NHI fund office will be dealing with fund matters: how to pay for and fund the system.
The minister and the director general cannot just create a component. They have to have the money, the authority of the Department of Public Service, etc. It is a complex, time consuming and difficult process, not to mention dealing with the media.
In terms of the role of the private sector for business continuity, government’s view is that it is not a homogenous group. And while there might be a constituency called BUSA, or any of the other groupings, these hold complex, different players within them that find it just as challenging to come to agreement on how the NHI may or may not affect their business.
Then there are the political imperatives, political alliances which the minister and the deputy minister have to handle with other political players. Therefore, it is important to segment and try to understand what the problems are within the various environments to be able to make valid comment around their concerns.
However, in terms of the formal contribution, the minister’s team, which includes the Department of Health, is not at liberty to comment on the bill in the public environment at present. It is in a parliamentary process – the officials in the department cannot be seen to be agreeing or disagreeing with something which they may find differently.
From many of the presentations and discussions on the day, there is clearly consensus on the need for universal healthcare coverage in South Africa. Further consensus was around the need to grow GDP in order to ensure a sustainable economy and to be able to cover various benefits from healthcare to education.
Elements that need further clarity include how the NHI will be implemented, timelines, the board and security of money, the role of the private sector, how accreditation will happen and how purchasing will be done. Another concern is the role of medical schemes and private care and whether it is appropriate to withhold the right to opt out of the healthcare system.
It has been made clear in discussions and submissions outside of parliament that section 33 is a massive issue for all stakeholders. It begs the question of whether this will result in further investor uncertainty and how that may impact the market. Although section 33 will undoubtedly remain in the bill, government has taken note and understands the arguments against it. There needs to be more definition with regards to the idea of making profit out of healthcare.
What is also agreed upon is that an even greater worry than economic performance is staving off rising social unrest. People everywhere are restless, unhappy with the lack of jobs, service delivery, housing, sanitation, etc. There needs to be action to make the lives of the people better, and timeously.
In addition, there needs to be a concerted effort to create channels for communication for all stakeholders: the general public, hospitals, doctors. People have the right to know what is happening at every stage.
The public sector failure to meet the needs of the people from a healthcare point of view, extreme inefficiency in the private healthcare system and inequity are common concerns. Fixing the public sector will not happen without cooperation between the two sectors. However, the budgets for next year are being cut. The implications of this will not be to expand and increase and fill vacant posts, it will mean forgoing certain elements and closure of more hospitals. The reality is government has extended its spending to every last cent.
In addition, the public service delivery system is not in the hands of the National Minister of Health. They have almost no authority over it. It is in the hands of the MECs and the heads of departments in the provinces, and their executives. And building that trust and that relationship with a considerable number of new MECs takes time.
From the medical technology side, the key will be in health technology assessment. There is consensus that technology is crucial to decreasing the reliance on people and decentralising healthcare, getting it closer to communities for easier access. The problem though is that the new gadgets and innovations do not necessarily add value and the temptation once bought is to use and charge for the expensive gadget, regardless of its usefulness. How the NHI fund chooses which technologies to include in the costing of a benefit will be an important factor.
Medical schemes are no longer affordable for the majority. This trajectory, over the last 20 years now, has reached a tipping point. But the Healthcare Market Inquiry (HMI) was very specific. It did not indicate getting rid of medical schemes, but rather made recommendations on how to make them more affordable. The principle issues it found was lack of government stewardship and an incomplete regulatory environment.
The current trajectory that section 33 envisages is building one large public financing system and marginalising private financing. But some stakeholders are of the view that it would be better to build the NHI to a point where it competes private funding out of the picture.
The system needs to be affordable – for the people and for government. The critical issues for the NHI to look at are understanding utilisation of services, benefit design, digital healthcare and the central purchasing function of government.
Another area of consensus is the need for growth in the economy and a decrease in debt. To find the right balance between what needs to be achieved economically, while bridging the in-equality in the healthcare system, both at a service and a financial level.
There is concern around the narrative in the media. There needs to be caution about creating an unrealistic political narrative – this is not a healthcare system; this is a national health insurance bill. The public is being led to believe that by 2026 the NHI will be up and running, when in fact it will be a much longer process.
Government’s aim is to see visible change within the next five years. The system needs to build carefully, to avoid a precipitous event where suddenly a million people leave their medical aids and switch to the public sector before the NHI is prepared. The minister, through the national health council, is presently working through what needs to be done with the MECs.
There are many examples of people putting processes in place, including the pharma industry, which has made concrete proposals on how to strengthen the NHI. The devices industry has begun a process with the Department of Trade and Industry to boost the manufacturing of devices in South Africa. Government has done a full costing of all the public sector infrastructure needs and is in discussions with the DPSA on how to fund that, which will dramatically improve the construction industry.
It makes sense to focus energy on making sure that, whatever comes out of the process, every resource is used more efficiently. The first step is to get enough people with the right knowledge into an office and make them accountable for the benefits. Then to move past the theory, to a point where medical codes are developed, where everybody understands what the benefits offer, that there is a clinical pathway and a health technology assessment (HTA) of the cost of the medicines and diagnostics has been done. The number of accredited and unaccredited providers needs to be measured, and there needs to be an investigation into what the present case mix is and how to better collect the data.
Over the next three months, until 1 April 2020, the IT systems of the new organisation will be formally created. Patients on the current system then need to be loaded and those seconded to be the nucleus of the team designing the operational procedures need to be appointed. There is a small budget which government will have access to from 1 April 2020, and between now and then it will advertise a few posts and bring in more permanent people. And then there are some global donors who have offered to support various activities and posts.
There is concern about whether the financing aspect can be dealt with appropriately, given the lack of certainty around what will be included, in terms of benefits, and how that will be phased in – as well as the overall fiscus sustainability of the fund itself.
It would be unwise to assume that money spent voluntarily in the private sector will suddenly become available to the public sector, but there are mechanisms to move it, slowly. Government, together with the CMS, will monitor the number of people who are shifting out of the medical aid sector, thereby watching people’s affordability to anticipate what the impact will be of removing that subsidy.
There is unease around the potential heavy reliance on taxes. Treasury will ultimately make the decision on the use of tax to fund the NHI. But a relationship needs to be built and discussions had in order for treasury to properly understand what the demands and pressures are within the health service.
The bill creates the possibility of a payroll tax to prepare for the eventuality where people trust the services of the NHI and decide they do not need medical aid anymore. The planning for that is being done with close cooperation between the new office of the NHI fund, private sector medical schemes and the Council for Medical Schemes, which coordinates and watches the figures.
There may need to be a regulation on what data elements are needed to responsibly monitor these decisions. Obviously patient confidentiality is to be respected, and their information will not be distributed. But the NHI needs to know where a patient has logged into a primary healthcare facility in order to monitor the healthcare it is providing and at what cost.
From the public sector side there is a massive programme on the go. One part of this is that the Law Reform Commission has done an investigation into medical legal claims, not just for the public sector but for the professions too. That report is in the public domain and can be found on the Internet. Government has now started pooling all the cases to examine them collectively, and has found disturbing patterns among the claims, where the same patient has claimed for the same condition in more than one province.
All the provinces are now engaged in processes of improving their mortality and morbidity management, risk management, clinical governance processes, etc. To the extent that their current environment allows them, there are concerted efforts and deliberate plans afoot.
There has not been sufficient coordination across the healthcare delivery system. But this roundtable dialogue, set up by the Inclusive Society Institute, saw representatives from government, hospitals, independent practitioners and medical aid schemes, to the pharmaceuticals and equipment industry participating. If the rationality of this discussion was captured in the public media, it would be a source of much comfort for society.
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This report has been published by the Inclusive Society Institute
The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals.
Phone: +27 (0) 21 201 1589