THE NHI BILL: THE GOOD; THE BAD & THE UGLY

With the National Council of Provinces (NCOP) signing the National Health Insurance (NHI) Bill on Wednesday the 6th of December 2023, it is all but certain that the Bill will come into effect to some degree in 2026. In order for the Bill to take effect, it must be signed into law by the President and published in the Government Gazette. However, before this happens, there are still two potential speed bumps that may delay this process. Firstly, there are likely to be a number of legal challenges to the Bill on Constitutional grounds. Numerous key stakeholders are arguing that the Bill in its current form violates various rights and provisions enshrined in the Constitution and is therefore invalid and unlawful. If a legal challenge is brought forth to the Courts, this may push back the promulgation of the Bill for some time. The second issue is the small matter of the general elections in 2024. If President Ramaphosa is no longer in the Executive seat following general elections, then discretion on whether or not to ascent to the Bill falls to the new Commander-In-Chief. So before we even go about analysing the Bill itself, lets first examine the probability of it actually coming into existence with the two above objections in mind. 

The first concern is around the Bill’s Constitutionality. A number of key stakeholders, including Business Unity South Africa (BUSA) and South African Health Professionals Collaboration (SAHPC), have argued that the Bill is too vague regarding a number essential provisions. The Bill leaves questions as to where funding for its implementation will be sourced from exactly, particularly since it is projected to cost tax payers an additional R200 billion at least per annum. The role of private Medical Schemes moving forward is also uncertain, with Section 33 of the Bill stating that medical schemes may only offer complementary cover to services not reimbursable by the Fund. Thus, once a service is incorporated under the Bill, private Medical Schemes will be prohibited from covering it. In essence, the Bill seeks to phase out private Medical Schemes and introduce a National single-payer system instead. The argument is that this limits the Constitutional right to freedom of trade, association and occupation as patients and Healthcare Providers alike will be forcefully integrated into the NHI system over time. It is unlikely that these Constitutional challenges will succeed in their entirety since the potential limitations imposed by the NHI Bill must be weighed against the broader intention of the Bill which is to give effect to S27 of the Constitution and which mandates for universal coverage [see S36(1) of the Constitution (The Limitation Clause)]. However, we can expect a relaxing of the absolute exclusions, particularly around the role of private medical aid schemes going forward. 

The second potential hurdle is the 2024 general elections. The above Constitutional challenges will, at most, likely delay the promulgation of the Bill beyond the 2024 Presidential elections. That means that whoever is in office beyond the elections will most likely be responsible for signing the Bill into law. The recent IPSOS polls suggest that the ANC is likely to lose its absolute majority in Parliament following the 2024 National Elections for the first time since independence with a projected count of about 48%. That means that the ANC will not automatically be able to decide who holds the Executive position and we are likely to witness a coalition government for the first time in the history of the Republic. However, a 3% spread to achieve that magical 51% is not a major hurdle for the ANC to overcome.

There will likely be a number of minnow parties clamouring to get a seat at the table in a coalition government, enough to help the ANC secure another term in office. My bet is on the IFP who are currently polling at 5%, but only time will tell. The point is, we are likely to see an ANC government at least until 2029, which allows plenty of time for the Bill to come into effect. So now that we are almost certain the the Bill will be implemented to some degree, let’s analyse its merits. In so doing, I will first discuss what makes for a great healthcare system by analysing 3 very different systems in the USA, the UK and Singapore. Thereafter, I will make a declaration as to which system I deem to be the best. Then lastly, I will assess how the NHI Bill potentially matches up against this ideal system by breaking down the good, the bad, and the downright ugly parts of the Bill.

The Ideal: USA vs UK vs Singapore

All functional healthcare systems are judged mainly by how well they provide for 1) Quality of Care; 2) Accessibility; and 3) Affordability/Cost. It’s extremely difficult to optimise for all 3 and so most systems make a trade-off of one or two. In the US, the land of the free and the home of the brave, and where markets rule, quality of care is the main guiding metric, largely at the expense of affordability with the highest healthcare spend in the World. In the UK, the NHS has ensured that all Brits have free healthcare, however, long waitlists and government budget cuts have affected the quality and accessibility of care. Singapore has adopted a healthy blend of public and private care and has the health outcomes to show for it. The three systems fall well within the goldilocks paradigm, with the US system being emblematic of a pure Capitalist framework, the UK being more Socialist, and Singapore being a healthy blend of the two. So let’s see who comes out on top.

THE USA:

The US system is probably the closest of the three to South Africa’s current two-tier model. Most health insurance is provided for by private health insurance companies and is linked to your employment. Employees are required to pay monthly premiums to their insurer, with employers matching their contributions. As such, most care is covered by private health insurers barring certain specific exclusions. Government provides insurance for all citizens over the age of 65 and those with certain disabilities under a system called Medicare. Citizens on welfare and those who cannot afford private health insurance (those earning less than $17 000 per annum) are protected by a government programme called Medicaid. The US spends over 17% of its GDP on healthcare, with the highest overall healthcare spend in the World. And yet America ranks last in the OECD rankings for healthcare outcomes among all other major industrialised nations. Critics will argue that most of these costs actually go towards research and development and so this is what allows America to remain the leaders in medical innovation. Furthermore, in our globalised village, the rest of the World gets to benefit from American R&D without having to personally bare the cost, which inadvertently drives the costs down for the rest of the World. 

THE UK:

The UK’s National Health Service (NHS) is funded and controlled by the government through tax revenues. Hospitals, Clinics and HCP’s are all owned and paid for by the government and all citizens can access these services from a single point of care for free. Out-of-pocket costs are largely limited to cosmetic and/or aesthetic care such as plastic surgery. This system best resembles the intended structure of the NHI. One of the biggest critiques of this Beveridge type model is the fear of exorbitant costs due to over-utilisation. However, this has not really borne out in reality as UK spends about 9.4% of GDP on healthcare which is almost exactly in line with the OECD average of 9.3%. That being said, Physicians and Specialists are often overbooked and citizens frequently have to wait for months on end to see a Specialist. By the time of their appointment, the need for their visit could be redundant, or worse, their condition could have deteriorated significantly. 

SINGAPORE:

Lastly, let’s look at Singapore. Singapore has witnessed extraordinary economic growth over the past few decades, in no small part due to exceptional political leadership. Thus, there’s a lot that South Africa can learn from their example. Singapore is an excellent case study since it is also an emerging market economy that has recently had to grapple with providing broad-based health coverage for all of its citizens. And all the major metrics (child mortality rates, life expectancy, medical expenditure etc.) seem to suggest that they have done a great job.

Singapore has 3 buckets when it comes to healthcare funding called MediSave, MediShield and MediFund. All employees are mandated to pay about 8-10% of their income towards their MediSave account and this covers all basic medical and healthcare costs like check-ups and minor procedures. Those that want more comprehensive coverage are welcome to upgrade to private insurance which generally provides more sophisticated coverage at additional cost. MediShield is another state sponsored programme and this covers emergency treatments that are not covered under MediSave. Contributions to MediShield are also dependant on an individuals income as well as their age bracket, but emergency coverage is provided for regardless where necessary. Lastly, MediFund operates similar to America’s Medicaid in that it covers those living on government welfare and that cannot contribute to healthcare. Under MediFund, patients are assigned to independent medical volunteers who make judgments on care on a case-by-case basis.

MediSave, the main portion of Singapore’s healthcare covers medical visits and hospital stays, as well as other crucial and essential care. It operates similar to an airline. With an airline, regardless of what your ticket costs and what class you’re seated in, you will still all arrive at your destination at the same time. However, the leisure of your flight is very much dependant upon the class that you’re seated in. Similarly, Singapore has 5 tiers of insurance under MediSave (A, B1, B2+, B2 & C). The most expensive tier, class A, provides you with your own private hospital ward together with a personal Physician and other additional luxury amenities. This tier receives no government subsidies and patients are required to pay the excess out-of-pocket. The lowest tier, class C, is completely subsidised by the government but patients are required to share a public ward and receive very few additional benefits. The tiers in between exist along a continuum of comfort and out-of-pocket cost, but regardless, all patients receive relatively the same medical treatment. Price transparency across all hospitals and medical facilities also allows market forces to take effect as patients can choose hospitals and service providers based on their given prices and the reported quality of care.

This sophisticated blend of public and private funding ensures that only 4% of Singapore’s GDP ($18.4 billion) goes towards healthcare spend. This is well below the OECD average of 9.3%, and yet they rank 6th in the World in terms of health outcomes. To put that into perspective, the USA spends the most out of any country in the World with 17% of GDP ($4.3 trillion) spent on healthcare, and it ranks at 37th. The UK and the NHS came in at 15th place despite spending 9.4% of its GDP on healthcare ($356 billion). Therefore, it’s fair to say that we have a clear winner in Singapore when your compare overall spend against outcomes. This should be heartening to many developing countries in the World as it shows that outcomes are not necessarily linked to net spend, but rather to excellent health policies and good governance. Now lets see how the proposed NHI matches up against Singapore.

The NHI Bill: THE GOOD

At face value, the NHI Bill sounds like a great idea. I mean, who doesn’t want ‘free’ healthcare? The purpose of the Bill becomes extra pertinent when you consider that currently, less than 20% of South Africans are protected by some form of private health insurance. South Africa’s current healthcare model most closely resembles the American system. South Africa has a two-tier private-public healthcare system in which employees contribute monthly to their medical aid providers and employers match these contributions. Anyone who is not covered by a private health insurance provider must make use of public health facilities which by-in-large are free to access.

This doesn’t seem like much of a problem until you consider the fact that the average person on private healthcare receives x5 more care in terms of revenue spend than a person relying on the public health sector. In 2019, a total of R462 billion was spent on healthcare in South Africa, representing about 9% of GDP. Of that amount, 51.3% was spent in the private sector whilst only 49.7% went towards the public sector. This means that the public healthcare sector was required to support more than 80% of the population with relatively the same amount of revenue and resources used to cover the 20% within the private sector. This inequality is compounded by the fact that the majority of Physician’s, Dentists and Specialists operate exclusively within the private sector, meaning that public sector healthcare practitioners (HCP’s) are often over-worked, whilst public health facilities are usually understaffed, overcrowded and under-resourced.

The NHI Bill aims to dismantle this two-tier system, and create a unified healthcare system instead. The Bill aims to bring to life Section 27 of the Constitutional which decrees that “everyone has the right to have access to healthcare services…and no person may be refused emergency care.” This protection is also mandated by the World Health Organisation (WHO) which requires that all citizens, irrespective of financial status, age, and geography, must receive universal health coverage as part of the 2030 United Nations Universal Health Coverage Declaration goals. Thus, the Bill undoubtedly moves South Africa closer towards the progressive realisation of universal health coverage. Now lets get into the actual mechanics of the Bill.

Firstly, how does government plan on funding the Bill? The Bill will largely be funded through general income and payroll taxes. Government seeks to pool together 1) all current public health spending, 2) all tax subsidy revenue provided to private medical schemes, 3) all current private medical scheme contributions, and 4) contributions from all middle and higher income workers that have previously avoided joining a medical scheme. In so doing, Government is hoping to raise an additional R200 billion per annum which will go towards integrating the two systems whilst also upgrading existing public healthcare facilities. Government will contract directly with hospitals, clinics and HCP’s, and patients will be able to select from any NHI-contracted providers within their local area.

Users will not have to worry about their benefits running out at any time as is so often the case with private medical schemes. Instead, the NHI will cover all essential costs regardless of usage. Out-of-pocket costs will be restricted to the specific exclusions which include 1) non-essential cosmetic surgeries, 2) expensive dental procedures performed for aesthetic purposes, 3) cosmetic eye care accessories like spectacle frames, 4) medicines not included in the national essential drugs list, and 5) diagnostic procedures that are outside of the approved guidelines and protocols as advised by expert groups. The goal of the Bill is to increase coverage for preventive and rehabilitative healthcare services so as to decrease the overall burden on the healthcare system. This all sounds rosy in theory, but of-course we do not live in a theoretical world. We live in the real World. And in the real World, implementation of ideals is often complicated and messy. With that said, let’s look at the potential bad parts of the Bill.

The NHI Bill: THE BAD

Section 33 of the Bill is essentially a death sentence for all private medical aid schemes. It states that “Once National Health Insurance has been fully implemented as determined by the Minister through regulations in the Gazette, medical schemes may only offer complementary cover to services not reimbursable by the Fund.” That means that medical schemes will be restricted to providing coverage only for the previously listed exclusions, thereby destroying all of their current business models. This will place all of the burden of medical treatment and cover on a public health system that has proven itself to be less than adept at handling major health issues. One only needs to look back at the 2016 Life Esidimeni disaster where 144 psychiatric patients tragically lost their lives due to gross mismanagement on the part of the Gauteng Department of Health.

Critics will rebut by saying that this is emblematic of how under-resourced these departments are and that additional NHI funding will help prevent similar such happenings in the future. However, when government departments are not held to the same performance demands of the private sector, there are no guarantees that this is so. Additionally, with uncertainty as to what the role of the private health insurers will be moving forward, we are likely to see an increase in capital flight and medical migration as HCP’s seek greener pastures abroad. The pathway towards achieving medical certification is long and arduous, and HCP’s expect to be compensated fairly for the huge sacrifices that they make. Furthermore, with private medical schemes becoming all but superfluous, this is likely to increase the unemployment rate among Administrators in a country that already has the highest unemployment rate in the World. Suddenly, with the stroke of a pen, many departments within these organisations will become redundant overnight and they will inevitably be required to make cutbacks. 

Another potential danger of the Bill is the risk of over-utilisation. When everything suddenly becomes free, what prevents anyone from looking to exploit the system as a result. This will likely over-extend an already constrained health system that has to deal with a heavy disease burden relating to Tuberculosis (TB), HIV/AIDS infection, and other non-communicable diseases like diabetes. Patients who would otherwise defer treatment for non-serious issues in the past are now incentivised to seek medical treatment for every single issue, no matter how minor. There is certainly a risk of us all devolving into a society of lazy hypochondriacs. In essence, it reduces the incentive on individuals to ensure that they are living healthy in their day-to-day life.

Lastly, the Bill places an increased tax burden on all South Africans since this is the main method by which the Bill will be financed. Whatever savings current medical aid users will expect to receive from cutting off from their schemes, will likely be eroded away by an increased tax liability. Also, certain luxury treatments that were covered under private medical schemes will most likely be done away with under NHI due to cost constraints.

The NHI Bill: THE UGLY

We need to talk about the big bad elephant in the room. His name is ‘Corruption’. One of the main reasons that corruption is allowed to run rampant in the public sector is that there are no real market forces that demand performance. If a private company underperforms or runs at a loss for consecutive years on end, it is likely that at some point, it will run into bankruptcy. Before this happens, Shareholders and upper Management are obligated to implement changes that ensure a turn-around, and all employees know that their salaries are dependant on the good functioning of the Organisation. Thus, everyone’s interests are aligned to ensure that the Organisation performs well and that customers receive the best possible service.

In the public sector, there are often no such pressures. For employees, your obligation is merely to show up, punch in, and then check out. Anyone who has ever been to a Home Affairs Department knows exactly what I am talking about. For upper Management, there is less pressure to be fiscally responsible since you know that ultimately you will be bailed out by the government. As a result, State-Owned Entities like South African Airways (SAA), Eskom and Transnet (to name a few) have been operating at losses for years with little to no consequence management. And whilst not all Organisations should operate with a profit motive, for example Public Education and utilities like Fire Departments are purely public goods and should probably not be overtaken by profit-seeking, it certainly helps to achieve accountability in most other sectors. By placing the entire health budget in the hands of another public body, South Africans are forced to hold their breathe and just hope that government appoints good Management. And with the current government’s track record, it’s a bit like playing Russian roulette.

Conclusion

As I hope I have outlined above, the potential benefits of having universal healthcare far outweigh the dangers. In South Africa, the most unequal country in the World, drastic steps must be taken in order to provide redress and to ensure better equity for all. However, the Bill in it’s current format needs a lot of work. For instance, I would like to see a better blend between the public and private sector, similar to what was established in Singapore. How well the Bill goes about providing universal coverage and redressing inequality will largely depend upon how well government implements the programme. Let’s just keep our fingers crossed and hope for the best.

At Green Pill Health, we plan to do our part in improving accessibility for all South Africans by connecting Users with some of the best Health Professionals within their region, and at fair and affordable prices. We have achieved this by leveraging the power of technology, artificial intelligence (AI) and network effects. Unlike traditional medical aid schemes, nobody is ‘locked out’ from accessing our network of vetted and highly qualified providers. Neither are you ‘locked in’ to a long-term policy that you barely use. Our aim is to democratise health so that everyone has the opportunity to achieve peak physical and mental wellbeing. Green Pill Health is a platform devoid of the nefarious influence of the Big Food industry, and is free from the tentacles of Big Pharma. We are not bound by borders, boundaries or bureaucrats. Our only objective is to ensure that you are operating at your best self. We believe in the healing power of community and connection which is why we have focused on delivering a holistic approach to healthcare. Our goal at Green Pill Health is to make a healthy and happy lifestyle easy and accessible for all.

In closing, I have left a link to a conversation between Lex Fridman and Balaji Srinivasan below where Balaji does a great job of outlining the future of healthcare. I’m proud to state that we at Green Pill Health are well on our way towards achieving this future.