NHI will place high burden on taxpayers — doctors

Financing the ANC’s controversial plan for universal health coverage will require raising an additional R240bn-R270bn and place an improbably high burden on SA’s small tax base, according to research commissioned by the country’s biggest doctor organisation in its legal challenge to the National Health Insurance (NHI) Act.

Raising this amount of tax revenue would require increasing VAT from 15% to 23%, instituting a 40% surcharge on personal income tax, introducing a payroll tax of 13.4% or increasing corporate income tax from 27% to 45%, the SA Medical Association (Sama) said in a report filed with its high court application this week.

These estimates are slightly higher than those released by life and health insurer Discovery last year, but convey a similar message.

Sama’s legal challenge comes as the government of national unity wrestles over a contentious one percentage point VAT hike set out in finance minister Enoch Godongwana’s budget last month.

His plans to raise VAT from 15% to 16% over the next two years have not only exposed divisions within the ANC but also cast the future of the coalition into doubt after the DA voted against the fiscal framework in parliament last week.

Sama represents 12,000 doctors working in the public and private sector, and is the fifth organisation to fire a legal salvo at the NHI Act since it was signed into law by President Cyril Ramaphosa in May 2024.

It has asked the high court in Pretoria to declare the act unconstitutional and invalid, and set it aside, citing the minister of health, the president, speaker of the national assembly and the chair of the National Council of Provinces as respondents.

“Needless to say, without the support of the doctors, the NHI cannot be implemented,” Sama CEO Mzulungile Theo Nodikida said in his founding affidavit.

The expert report it submitted on the costing of NHI estimates that fewer than 490,000 taxpayers account for just under half (46%) of all income tax paid to the fiscus. If income tax was the sole means of financing the NHI shortfall, they would each

have to pay an extra R229,000 a year, says the report from consultancy firm Value in Research.

NHI is the ANC’s plan for universal health coverage, which aims to provide all eligible patients with care that is free at the point of delivery, regardless of their socioeconomic status. One of its most contentious proposals, is the creation of a government-controlled fund that will be the sole purchaser of healthcare services from accredited service providers, with medical schemes barred from covering benefits provided by NHI.

Sama’s case follows hard on the heels of court challenges launched by trade union Solidarity, the Board of Healthcare Funders (representing medical schemes), the Hospital Association of SA (representing private hospitals) and the SA Private Practitioners Forum (representing healthcare professionals).

It echoes many of the previous arguments that have been made, contending that the act is unconstitutional because it is vague, erodes the access to healthcare services now enjoyed by medical scheme members and tramples on the rights of doctors to practice their profession.

However, it places greater emphasis on the act’s impact on patients and healthcare professionals, arguing that its provisions will harm the people it aims to help.

The benefits that patients

WITHOUT THE SUPPORT OF DOCTORS THE NATIONAL HEALTH INSURANCE CANNOT BE IMPLEMENTED

were entitled to were not clearly defined, they faced unreasonable bureaucratic hurdles to register with the scheme, and the complaints procedure set out in the act was unworkable, Nodikida argued in papers. In addition, the act’s requirement that a patient always start with the healthcare establishment with which they had registered was impractical, he said.

He drew attention to the act’s silence on health insurance products, which unlike medical schemes are not barred from covering benefits offered by NHI, and argued that low-income households that pay out of pocket for primary healthcare will be prejudiced by the act. “They may no longer be able to pay cash for healthcare services due to increased taxation or may be prejudiced by the non-survival or non-availability of their previous preferred provider,” he said.