National Health Insurance (NHI) is a scheme where the state covers all citizens for medical costs at most private doctors, clinics and even hospitals. It is essentially a type of medical aid sponsored by the state through taxpayers contributions.
In South Arica less than 18% of the citizens are fortunate enough to belong to a private medical scheme, while those who rely on the state for their health are at the mercy of under-resourced and understaffed hospitals and clinics.
The new National Health Insurance program is expected to cost at least ZAR 128 billion in the first year, rising to ZAR 376 billion by 2028. The South African treasury and ministerial advisory committee on the NHI, which is chaired by Dr. Olive Shisana, the CEO of the Human Science research council, has put forward a provisional model for funding the Scheme, while the main source of revenue would be from South Africans general taxation, additional financing may be sought through a surcharge on taxable income, an increased value added tax (VAT) dedicated to the NHI, payroll taxes for employers and employees, and removal of the presently existing tax credit for medical aids.
Dr. Mark Belcher, Social Services Director at the National Treasury said the NHI will be funded by way of the Finance Ministers preserve. He said that the Minister of Finance alone has the power to introduce compulsory taxation and levies. He said it was too soon to say when contributions to the NHI will start.
Director General, Precious Matsoso added that before the funding mechanism is examined the pilot projects will be implemented to determine costs.
The first phase roll out have already started this year (2012) as a pilot, and is focusing primarily on bringing services to areas with little or no access to quality healthcare. Ten districts throughout the country have been identified for the pilot roll out over the next 5 years.
Health Minister, Aaron Motsoaledi said the government had budgeted ZAR 1 billion for the pilot project. The EU has donated an additional ZAR 1.26 billion. The minister said the first phase of the pilot scheme would entail the strengthening of health systems, improvement of services delivery, and policy and legislative reform. The second phase includes pilot projects on contracting with the private sector.
Tshwane Health MEC Ntombi Mekgwe said the first phase of implementation in Tshwane, would include several clinics in sub-districts two and three. Together these sub-districts have a combined population of 848 199 which is 31% of the population of Tshwane district. Roll out to the rest of the district will be incremental over a three year period.
Planned phasing in of the NHI will be over a period of 15 years.
It may be argued that, with the implementation of NHI, Medical Schemes will disappear. Whether this NHI solution is phased in or rushed through, South Africas Medical Scheme environment will look very different 15 years from now.
William Pick, chairperson of the Council of Medical Schemes said that a full-blown NHI implementation will lead to closures and consolidations in the Private Health Care sector.
This is very unlikely, even in advanced economies where there are fully developed universal access systems; private insurance remains an important part of healthcare financing.
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