Motsoaledi endangers public health with incremental nationalisation

Dr Aaron Motsoaledi, Minister of Health, is endangering public health with his incremental nationalisation of the healthcare industry. This is the position of business interest organisation AfriBusiness, following the recent release by Motsoaledi of the National Health Insurance Bill and the Medical Schemes Amendment Bill

According to Piet le Roux, Chief Executive Officer of AfriBusiness, “The NHI will not have members, it will have victims. With his commitment to a National Health Insurance scheme, Motsoaledi is turning the healthcare industry into a state-owned enterprise, and medical insurance into tax. This is a recipe for disaster. Motsoaledi only nominally leaves some room for the private sector – in practice, he is nationalising the healthcare industry. The result will be the same as with all nationalisations everywhere: deterioration in quality, rationing of services, corruption and bureaucratisation.”

The NHI Bill reveals the structure of the NHI fund, which amounts to a single-payer system wherein government refunds approved private and public health service providers for services rendered to NHI members. Contributions to the NHI fund will be mandatory. AfriBusiness is concerned that putting all healthcare funds into one coercive, giant bureaucratic state-controlled system in a country tormented by corruption and state capture, will amount to just another tax.

Minister Motsoaledi continues blindly to emphasise the virtuous intentions of this enormous and all-encompassing health market intrusion, which is ostensibly to ensure “good quality healthcare” for all in South Africa, without taking any real stock of the harder questions surrounding the NHI. The harder questions include the enormous funding requirements of the NHI and the damaging economic impact it will most likely have on the market supply of medical services.

In the NHI White Paper, which was released in 2016 for comments, the projected funding costs were in the region of R256 billion in fiscal year 2026 (measured in 2010 prices), which placed the funding costs at around 6,2% of projected Gross Domestic Product (GDP) in FY 2026. However, the 2010 projections assumed a presently unattainable economic growth rate of at least 3,5% per annum. Therefore, the actual funding costs are likely to exceed the initial projections of 6,2% GDP in FY 2026 by a wide margin.

Le Roux stated further that, “Considering South Africa’s nearly stagnant economic growth and lower tax receipts, the NHI is now even less affordable than before.’

Moreover, Le Roux added, “If we consider estimates of NHI funding costs by groups such as the South African Private Practitioners’ Forum, these costs could be closer to around 12,5% of GDP, effectively amounting to close to half of the South African government’s national budget, something South Africa simply cannot afford.”

“The Minister continues his nursery rhyme as it were, claiming that the rich will subsidise the poor, and that the healthy will subsidise the sick, and the urban the rural, without taking any stock of possible market distortions and disincentives such a system will create. The full weight of the NHI will fall on a small and already overburdened pool of taxpayers, and it is unfathomable to think that the Minister honestly believes such a plan could work.”

“The Minister continues to shy away from true debate on NHI by, for instance, denying criticism on the dysfunctional public healthcare system. He refuses to heed calls that public healthcare should first be dramatically improved before implementing the NHI. The public healthcare system is in disarray with red tape and incompetence recently leading to medical positions remaining unfilled while newly qualified doctors are waiting for placements. Moreover, the conduct of the Gauteng Department of Health in the Life Esidimeni tragedy raises serious concerns about the wisdom of centralising healthcare in a massive and expensive government bureaucracy,” Le Roux added.

The intention seems clear: “Motsoaledi wishes to subject the entire healthcare sector to a giant state-owned enterprise, but unlike the case with Eskom, SAA and other mismanaged government entities, lives will be directly at stake,” Le Roux concluded.

 

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