Financial Mail and Business Day

NHI is an unrealistic and incoherent scheme in service of dated ideology

Michael Settas ● Settas chairs the health policy unit at the Free Market Foundation.

Business Day asserted in a recent editorial opinion that the government is either naive or dishonest to argue that more health funding via its proposed National Health Insurance (NHI) will magically fix the parlous condition of state hospitals (“Stop wasting energy on NHI and fix the rot”, March 17).

Given the magnitude and sweeping reforms demanded by the NHI proposal, it is necessary to emphasise just how naive or dishonest the government is. The editorial quotes the standard messaging from the government — that Gauteng has undergone a large increase in population from inward migration and therefore its provincial health budget is being stretched across more citizens. But this is simply untrue.

Health care is both a national and a provincial competence. But the mandate to deliver is purely a provincial one, where each province undertakes management of its personnel and health facilities. The vast majority of the provincial health budgets are derived through the “provincial equitable share”, the National Treasury’s mechanism by which the national health budget is appropriated equitably to the provinces using the latest provincial population numbers.

This means that as the population of Gauteng has ballooned, so too has the province’s proportion of the national health budget. The latest, March 2022, financials of the provinces show Gauteng’s share of the total health budget at 25%, almost equal to Gauteng’s population share (25.9%) in the 2020 midyear population estimates, from which the 2022 health budget appropriation would have been calculated.

Measured in real, per capita terms, from 2000 to 2020 SA’s national public health budget doubled in value, a result of annual budget allocations over that period that exceeded both population growth and general inflation. So even when factoring in the rising national population and inflation, the government now has twice the health funding it had two decades ago. This stands in stark contrast to the perpetual narrative that public health problems are caused by underfunding.

Also diametrically contrasted against popular belief is that the rate of increase in public sector medical personnel has far exceeded the rate of increase in the overall population. A concerted effort was undertaken to increase the number of medical personnel in the mid-2000s, which saw a 43% increase from 2006 to 2016, substantially improving the ratio of patients to medical personnel within virtually every clinical discipline.

This raises two pertinent questions. Why have conditions and outcomes within the department of health not improved commensurately with these vastly increased resources? This is essentially the issue the Business Day editorial was probing. Second, the government’s own erroneous argument in favour of NHI was that its available resources were declining. But as outlined above, the government was in fact the recipient of substantially increased resources, so why is the NHI proposal required?

These two questions lay bare the incoherence of the NHI proposal. The answer to both questions can be found within the governance failings of the department of health.

Business Day correctly highlights the stark differences in management capacity between the DA-led Western Cape and the ANC-led Gauteng. The Western Cape has undergone a similarly big increase in population, but most importantly has kept its governance frameworks and management capacity intact, thus avoiding the disasters so evident in all eight other provinces.

Maternal and infant mortality rates are two main institutional performance metrics in health systems, and the Western Cape unsurprisingly achieves far lower mortality rates when compared with all the other provinces. Similarly, its medical legal liabilities are negligible, compared with a colossal R22bn for Gauteng, roughly a quarter of its 2022 health budget.

The state’s overall medical liability of R119bn in 2021 was restated downwards to R91bn due to a change in the provisioning method at the start of the 2022 financial year, but it nonetheless still incurred an additional R10bn in new liabilities in 2022 and paid out R8bn in awarded claims.

The NHI proposal has been centre stage of national health policy for 15 years now, with the overarching aim to nationalise the country’s private health system by amalgamating it with the public sector into a centralised staterun monopoly called the NHI Fund. The fund’s governance model, based purely on political appointees so much like those of existing state-owned entities and public sector departments, dooms this proposal to catastrophe even before it commences.

Along with the dearth of technical, feasibility or costing analyses on NHI, this informs us that it has little to do with health care and far more to do with the ANC’s desire to control all of the levers of the economy in support of its Marxist dogma on the “national democratic revolution”.

If the government had truly concerned itself with better health care as a primary goal, two critical outcomes would have transpired — the existing public health system would have performed substantially better than it has, and the critically necessary analyses of the NHI policy would have been undertaken free of political influence. Such analyses would almost certainly have highlighted the folly of such a ludicrous proposal, based on failed statist economic policies. The deficiencies are as obvious as they are plentiful.

Parliament’s legal services unit recently raised alarm bells with the institution’s health portfolio committee over several aspects of the constitutionality of the NHI bill, including clause 33, which seeks to outlaw medical schemes from continuing in their present form. This was despite the private sector, NGOs and numerous academics having repeatedly raised the same concerns throughout the lengthy NHI policy development process.

This is a ray of light that hopefully spells the end of the NHI calamity. A high court ruling in 2022 striking down the constitutionality of the National Health Act’s certificate-of-need provisions, which sought to apply draconian impositions on doctors and medical facilities, is on the roll of the Constitutional Court for ratification. The certificate-of-need is pivotal to the NHI proposal since it provides for authoritarian state diktat on where, how and on whom doctors may practice. If it fails to pass constitutional muster, as it surely must, the NHI will be dealt a devastating blow.

Along with the valid concern raised in parliament on the NHI bill we may shortly get to a point where the NHI proposal finally gets relegated to where it belongs — the dustbin of history.






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