Resisting the NHI and health-shedding
- The National Health Insurance Act (NHI) is a disastrous proposal and must be opposed until it is undone or rendered practically impotent.
- Organised interest groups can avoid making unnecessary and costly compromises on the NHI by refusing to let it set the negotiation baseline and redefining the negotiation terrain with sustained and resolute opposition.
- Opposition should include comprehensive litigation; maximum appropriate non-compliance and non-cooperation by healthcare professionals, businesses, and users; and negotiating more freedom for healthcare providers to unlock their full potential to meet healthcare needs.
When President Cyril Ramaphosa signed the National Health Insurance Act on 15 May 2024, he essentially presented a proposal to nationalise healthcare.
In signing such an absurd bill, the president attempted an outrageous framing for negotiations over the future of healthcare. It is a crude technique, but, if the framing is unthoughtfully accepted, one that can be effective at anchoring negotiations for eventual settlement outside a reasonable and constructive window.
Consider a trade union brazenly demanding a 100% wage increase, trying to draw counterparts into unsustainable concessions. Just like businesses are doomed if they fall for this in wage negotiations, so are we if we fall for it in political negotiations. This is especially so in South African politics, where a failing state keeps escalating rhetoric to make up for its loss of authority and executive capability.
Demands for a nationalised healthcare system should not be met with timid compromise but staunch resistance and constructive solutions to redefine the terrain for negotiations in the interests of a flourishing healthcare environment.
State pays, state controls
The NHI is not really a “health insurance” system but rather a state-pays-state-controls system. Intent on eliminating healthcare independence, choice and competition, the NHI threatens to create another Eskom-like monopoly where “health-shedding” becomes a permanent feature.
The Act’s gaping vagueness means much of the NHI will be made up on the go. What is clear, though, is that it intends such extreme state control that private medical aid schemes and medical insurance policies would largely disappear. Medical decisions would no longer be made freely between healthcare suppliers, hospitals, practitioners and patients; they would be determined by system prescriptions, bureaucratic protocols, and state budget limits. Under the NHI, healthcare professionals would be pressed into being functionaries and patients would be applicants in a state system, stripped of their autonomy.
These conditions would push healthcare professionals away. Many would opt not to be NHI-accredited. and make a go of it outside the system. This (lawful) route would come with considerable operational and business challenges. It wouldn’t always be viable, but it would allow practitioners, especially GPs, to retain patient choice and working autonomy.
Others practitioners would leave the healthcare sector, retire early, or ship off to other countries. Fewer talented young people would choose to pursue careers in medicine. The critical shortage of healthcare practitioners running functional facilities would further reduce the availability of healthcare services, creating long waiting lists, substandard care, rising costs, and falling medical investment.
The deteriorating healthcare situation would inflict tremendous spillover harms across the economy. Further emigration of productive families and the added difficulty of attracting talented people from abroad would compound the damage.
Damage already here
These harms are not just future tense. They have already begun. By signing the NHI Act, and therefore making explicit threats even before implementation, the government has acted irresponsibly. It has immediately increased the perceived risk of healthcare disruption and fiscal crisis, lowering the future attractiveness of working and building businesses in the country generally.
Medical professionals, practitioners, and businesses will already find it less attractive to invest and hire. Would-be medical and nursing students will already have started giving more attention to other career options and investing less time and money in training. Businesses outside the healthcare sector will already be more cautious about long-term investment planning.
These effects may not be plainly apparent yet, but they are already real.
Fiscal make-believe
At a conservatively estimated R1 trillion or so, the expected annual price tag of the NHI is economically and fiscally paralysing.
Conservative, because costs are likely to spiral upward from an avalanche of frivolous demand for “free” healthcare, rampant fraudulent claims, and the state’s endemic procurement corruption.
The Act makes clear that NHI procurement would be subject to the same BEE and state procurement rules that have infected countless state entities with debilitating cost premiums. We should also expect the state to make a concerted attempt to subject the entire industry to ‘3rd Wave’ BEE provisions – that is, banning companies from participating in the healthcare industry at all unless they restructure according to specified BEE levels.
Given its current annual budget of around R2 trillion, the NHI pricetag would pressure the government to extract another 50% or so in annual revenue from already exhausted taxpaying households and businesses. It is the sort of fiscal and economic shock that cripples economies and bankrupts states, propelling them toward default or the dangerous allure of money printing and inflationary chaos. Hyperinflationary collapse always, after all, germinates from absurd fiscal promises while crushing private sector productivity.
The NHI is therefore not just ‘very expensive’ or ‘fiscally demanding’. It is economically unthinkable, unless one wants to tempt the same calamitous hyperinflationary fate as the crippling of Zimbabwean agriculture along with that state’s unfulfillable fiscal promises in the late 90s.
Stopping the NHI and shifting the negotiation terrain
It would be a significant miscalculation to accept the NHI Act as a baseline for negotiation.
Redefining the negotiation terrain is imperative and possible for several reasons.
The NHI is a hopelessly unrealistic proposal. National Treasury itself doubts its viability. It is deeply unpopular among and faces a groundswell of opposition from medical companies, doctors, millions of private medical scheme members and policyholders, and private healthcare patients. Widespread non-cooperation with the NHI system by medical practitioners alone would render it largely defunct from the outset.
Further, the NHI Act is legally challengeable on numerous grounds and several parties are mounting concerted and complementary litigation from different angles. Sakeliga’s litigation on the NHI is in advanced preparation and will make essential contributions from a business perspective.
Besides our NHI litigation, we are already resisting the attempt to tie medical and pharmaceutical licensing to BEE. This is part of our wider commitment to stopping the 3rd Wave of BEE, in which all economic activity becomes subject to state permission based on racial criteria.
Organisations should use well-crafted, resolute public-interest litigation to the fullest extent available to shift the negotiation terrain back toward realistic and constructive possibilities.
Furthermore, there is time. Although signed by the president and already harming healthcare industry sentiment, the NHI Act is not yet in effect. Medical schemes, hospitals, and healthcare practitioners continue to operate normally. The implementation timeline will likely be slow, inefficient, and beset by bureaucratic and political friction. This provides a substantial window, probably several years, to mount and escalate comprehensive opposition.
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Considering alternative models carefully
Amid the good prospects for resisting the NHI, one danger looms above others. This danger is the risk of premature concessions and harmful settlements while the state’s hand is much weaker than it pretends.
For example, one prominent idea proposed in NHI stakeholder discussions is to force all formal sector employees to join private medical schemes. This model derives its apparent merit from the purported increase in private healthcare coverage among the formally employed, thereby relieving the strain on public healthcare services.
But this result is highly doubtful.
The key question one needs to ask is why uncovered formal sector employees currently choose not to be private medical aid members.
The answer is they value other needs more than precautionary healthcare contributions priced out of their reach by minimum prescribed benefit regulations.
Forcing employees to fund medical contributions with their limited income must necessarily come at the expense of the food and other necessities they currently buy.
And it is no use to argue that employers should bear the cost, as if this would be of no consequence for employment. Raising the cost of employment would further reduce hiring.
Furthermore, if the state could coerce employees or employers into spending more on healthcare, it would only lead to less spending and contractions elsewhere in the economy. It would also undermine existing alternative healthcare and insurance arrangements like stokvels and other cooperative schemes.
This enforced insurance proposal is just one example of the difficulty of restructuring the healthcare system with centralised directives to appease unrealistic political preferences. And it shows the problem with trying to extend healthcare by regulatory fiat.
From NHI to a flourishing healthcare environment
Avoiding the NHI and poor compromises is an important first goal, but more is needed. Shifting the negotiation terrain also means healthcare reform efforts should go beyond merely blocking the NHI and defending the status quo to crafting a favourable environment that unleashes the full potential of healthcare services to meet healthcare needs.
Even without the NHI, there is far too much regulation in the healthcare sector, not too little.
Medical insurance markets face considerable and unnecessary constraints on what type of cover they can offer clients. Minimum Prescribed Benefits rules and other restrictions prohibit medical schemes from responding flexibly to members’ varied needs, circumstances, and risk profiles. Pharmaceutical regulations and price controls restrict the supply of valuable treatments. Stringent licensing requirements are barriers to establishing and expanding hospitals, clinics, and medical facilities. Restrictive, onerous, state-monopolised medical training policies choke off the supply of capable doctors, nurses, and technicians.
Only a thriving and productive economy absorbing millions more people into productive employment together with greater freedom for healthcare businesses to trade, invest, and innovate can furnish the means required to scale up quality healthcare supply.
The NHI turns this logic upside down, adding tax and regulatory burdens that will ultimately crush productivity and destroy one of the country’s most important industries.
Fortunately, the NHI is not inevitable. Opponents must challenge it staunchly, and the prospects for success from these challenges – if sustained and resolute – are promising.
We must protect the independence of healthcare providers to ensure they can continue delivering and expanding quality care. Healthcare businesses should also steer as far as possible away from overcompliance and pre-compliance with the NHI and instead prioritise a business-as-usual, value-adding customer focus for as long as feasible.
Independent businesses and business organisations should remain patient and undaunted, avoid unnecessary compromises, and support well-structured opposition to buy time and repeal the NHI Act or render it functionally impotent.
In doing so, they will play an essential role in crafting a flourishing environment for healthcare.