NHI white paper ignores the economic downturn

NHI white paper ignores the economic downturn

By Tamar Kahn, 30 June 2017, businesslive.co.za.

Health Minister Aaron Motsoaledi is resolutely sticking to the government’s ambitious goal of implementing National Health Insurance (NHI) by 2025, despite the drastic downturn in the economy since the policy was first flighted six years ago.

The government’s latest white paper on NHI still refers to the cost projections in the 2011 green paper, which say the annual cost of NHI in 2025 will be R256bn in 2010 terms, assuming the economy grows 3.5% a year. Yet the latest Reserve Bank prediction is for GDP growth of a mere 1% in 2017 and 1.5% for 2018.

“I think it is really worrying that we have an official government document with 2010 figures, when supposedly there has been a lot of work done to develop the policy,” said Econex economist Mariné Erasmus.

“The lack of acknowledgement of the economic downturn that we are in is really concerning. Even if they just extended the time lines and allowed for a slower implementation period that would have at least given an indication that there was some consideration of the economic climate,” she said.

Motsoaledi released the white paper at a media briefing on Thursday, emphasising the need to reform health-financing to end the deep inequities in the system. By and large, wealthier patients have access to private healthcare services, which they pay for via their medical scheme contributions and poorer patients depend on the patchy public health service.

He steered away from discussion on the affordability of NHI, drawing attention instead to the projected R69bn cost of the “priority programmes” for women, children and the elderly that are to be implemented over the next four years.

This could be funded by scrapping the R20bn tax credits provided to SA’s 8.8-million medical scheme members.

“The central philosophy is that we are going to start pooling funds for people who are not on medical aid, starting from the bottom,” he said.

Former finance minister Pravin Gordhan announced in his February budget that an NHI Fund was to be established, which would progressively expand the services it provided.

The white paper goes a step further, with far-reaching proposals that herald sweeping changes to the medical scheme benefits enjoyed by state employees and personal tax increases. It also proposes doing away with the medical scheme subsidies the government gives to its employees and those of state-owned entities.

It describes tax scenarios to fund the R71.9bn shortfall (at 2010 prices) required for NHI and says the preferred option would be to supplement general revenue allocations with a 2% payroll tax and a 2% surcharge on taxable income. It does not support increasing VAT.

The white paper also heralds a major shake-up for the medical schemes industry, saying these schemes are to “evolve and consolidate” so that they each provide only one benefit option and ultimately only provide complementary cover to NHI. Schemes covering state employees are to be consolidated into the Government Employees Medical Scheme.

Health director-general Precious Matsoso said NHI would be phased in, but the deadline remained set at 2025. “It is not a big bang approach, it is a journey, a transition,” she said.

Advisory committees would be established to determine NHI patient benefits and how they would be paid for. NHI would require extensive legislative reform, starting with the National Health Act, she said.

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