Towards inclusive healthcare

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.

Content


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

Society Institute


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


3. Recommendations


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.


Key takeouts


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

roundtable.

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.


Executive summary


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.


Key takeouts


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

clearly articulated.

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

South Africans.


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).


References


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) [2005] 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].


Recommendations


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.


Recommendation 1


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.


Recommendation 2


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.


Recommendation 3


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.


Key takeouts


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

government.

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

package.

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.


NHI highlights


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


Aims

  • 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

  • Payroll tax

  • Surcharge on personal in­come tax


Beneficiary Users of the NHI

  • SA citizens; permanent residents; refugees; inmates; designated foreign nationals


Complementary Cover

  • 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

  • NHI Fund

  • Health care benefits & Provider Payment Design

  • Health Product Procurement

  • Digital Information

  • Risk & Fraud Management

  • User & Service Provider Management


NHI Fund Organisation


The Fund structure is as follows:

  • Board

  • CEO

  • Fund

  • Corporate Services

  • Decentralised Administration Functions


What will NHI cost?

  • NHI is expected to cost between 8.2% to 8.8% of GDP


Contentious Issues


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

  • Centralised procurement


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.


Key takeouts


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

route.

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

governance.

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

vulnerable.

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.


Key takeouts


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

investment purposes.

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.


Key takeouts


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

schemes.

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

site.

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.


Key takeouts


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

themselves.

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

sustainability.

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 o