Hybrid model proposed for affordable NHI

The Health Funders Association (HFA) has proposed an alternative model to National Health Insurance (NHI), saying it offers a faster, more affordable and less risky route to achieving universal health coverage.

The HFA, an industry association for medical schemes and administrators, earlier this week launched legal action against the NHI Act, which it argues is unconstitutional, irrational and fiscally impossible.

NHI is the ANC’s plan for achieving universal health coverage but has run into stiff opposition from doctors, private hospitals and medical schemes. There are six legal challenges to the act, which was signed into law by President Cyril Ramaphosa but has yet to be brought into effect.

In its court papers, the HFA argues that NHI will not achieve its stated aims and that international experience shows almost all countries that have successfully implemented universal health coverage have systems that permit multiple funds to operate — as opposed to the single, government-controlled fund envisaged under NHI.

One of the act’s most controversial aspects is the prohibition on medical schemes offering cover for benefits provided by NHI set out in section 33.

Multi-fund model

The HFA has proposed a hybrid multi-fund model, which it calls NHI+, in which individuals will be allowed to purchase medical scheme cover to supplement the benefits offered by NHI.

Under this model NHI and medical schemes will cover a common benefit package delivered by public and private providers, and all taxpayers will contribute to the NHI Fund — either directly or via mandatory contributions to medical schemes. The NHI Fund will also receive funding from general tax revenue. A key feature of NHI+ is a set of riske-qualisation and redistributive mechanisms that would level the playing field between medical schemes and see medical schemes subsidising the NHI Fund for the common benefit package.

“It is a practical solution for SA. It offers a faster, more affordable and lower-risk route to achieving universal health coverage through progressive reforms,” HFA CEO Thoneshan Naidoo said on Thursday.

The HFA commissioned an economic analysis of the impact and feasibility of the act from Genesis Analytics, which it submitted to the court in support of its application to have the legislation scrapped.

Its report concluded SA had neither the financial resources nor enough healthcare professionals to provide the comprehensive benefits promised by NHI.

Doing so would cost an estimated R940bn a year — R400bn more than SA’s combined public and private healthcare expenditure of R530bn in 2022 — and would require increasing the average rate of personal income tax from 21.3% to 47.5%, it said.

Free up resources

Genesis found the NHI+ model would outperform the current approach, not only due to its redistributive mechanisms but also because it would free up more resources for uninsured South Africans by removing older and more intense users of health services from the NHI’s responsibility. Medical scheme members are on average older than the population as a whole.

The HFA calculated that its model would cause an 8% increase in the resources available to the NHI Fund for the 46.7-million people who live in households with a monthly income below R30,000.

“NHI+ demonstrates that section 33 is not required to effect redistribution in favour of [the] uninsured,” Genesis said.

It is a practical solution for SA. It offers a more affordable and lower-risk route to achieving universal health coverage through progressive reforms Thoneshan Naidoo HFA CEO