South Africa to roll out sweeping health reform in stages
* Universal health coverage a signature ANC policy
* Opposition and some analysts say it is unaffordable
* Officials say rollout to depend on fiscal room
* Full implementation probably many years away
(Adds detail, context)
By Alexander Winning
PRETORIA, Aug 23 (Reuters) - A proposed move to universal
health coverage in South Africa will be rolled out in stages as
the budget improves, a senior presidential aide told Reuters,
forecasting the landmark reform would cost $2.2 billion per year
The National Health Insurance (NHI) programme, to be debated
in parliament soon, is a flagship policy of the governing
African National Congress, which has wanted to overhaul the
crisis-ridden health system since it swept to power under Nelson
Mandela in 1994.
More than two decades after the end of white minority rule,
a privileged few receive world-class care in private hospitals
while many poor black people in a population of near 60 million
queue at understaffed state facilities short of equipment.
The ANC government is proposing a new system in which
medical insurance schemes will cover fewer treatments and the
government will control how much private clinics charge. The aim
is to narrow the gap between the private and public systems.
Some opposition politicians and analysts have questioned the
affordability and practicality of those changes, given a
struggling economy. They say healthcare could suffer if the
changes are rammed through hastily.
Responding to that concern, Olive Shisana, special adviser
to President Cyril Ramaphosa, said the programme would be
introduced in a fiscally responsible manner.
"This government is not going to do something that will
collapse the economy," she said.
Spending on NHI would increase from around 2 billion rand in
the 2019/20 fiscal year to 33 billion rand ($2.2 billion) in
2025/26, Shisana said. That expenditure would come on top of the
health budget, currently around 220 billion rand a year.
Government will consider adding a surcharge on personal
income tax and a payroll-based tax from 2025/26 to raise the
necessary funds. But with struggling state companies such as
Eskom also promised bailouts, there will be competing spending
To keep costs within budget, Shisana said government would
focus on a set of targeted interventions to improve public
healthcare while the new system was being set up.
Those could include hiring more doctors and improving
hospital infrastructure, while later interventions could include
changing the mechanism by which general practitioners are paid
to take into account the number of patients they serve.
"We are going to make sure that NHI does get implemented,"
Ramaphosa told lawmakers this week.
HEALTH STOCKS HIT
Many health companies have publicly said they support NHI.
In private, however, some say it is unworkable because it would
place too great a burden on limited state resources.
Medical insurance schemes would not be allowed to cover
services reimbursed by a central government fund.
Some investors have dumped health stocks since government
introduced its NHI bill to parliament this month, sending the
Johannesburg Stock Exchange's health subindex down
almost 10% this month versus a 5% fall in the broader market.
Medical insurer Discovery does not yet see a major
impact on its business because it expects the reform to be
implemented over an extended period.
Alex van den Heever, a University of the Witwatersrand
professor, said Shisana's spending projections suggested
government would not achieve universal health coverage by
2025/26, as health officials had previously said.
"NHI envisages a shift to centralised medical cover; 30
billion rand won't buy you that," van den Heever said.
He estimated a full-scale rollout would involve raising tax
revenue upwards of 3% of gross domestic product, or close to 150
A tax committee spoke in 2017 about an NHI funding shortfall
of 72 billion rand in 2010 prices, which would translate into
more than 100 billion rand in today's money.
The reform could yet be delayed by court cases.
Some experts have questioned the constitutionality of
provisions in the bill governing the role of provinces because
it proposes pooling health funds centrally.
Others expect private firms to approach the courts if the
public health system is unable to provide adequate care.
The country's main opposition party, the Democratic
Alliance, opposes NHI, but it has around 21% of lawmakers in the
lower house versus the ANC's 58%.
Shisana said NHI would not be defeated. "Our policy is
solid," she said. "It has been consulted for many years. We
don't expect major changes."
($1 = 15.1617 rand)
(Editing by John Stonestreet and Alison Williams)
First Published: 2019-08-23 12:13:28
Updated 2019-08-23 17:44:07
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