Is NHI still a priority for National Treasury?

The February 2018 Budget speech is again likely to be underpinned by the priority areas outlined in the National Development Plan. In light of recent decisions by the governing party regarding free higher education, it is unclear if Finance Minister Malusi Gigaba will prioritise funding and implementation of the National Health Insurance (NHI).

Healthcare and education are two key government focus areas. The decision to offer free higher education is expected to cost the government at least
R35-billion in currently unbudgeted expenditure. This move will necessitate tough trade-offs in order to fund the new policy. One of these trade-offs may be the funding for NHI.

In October, Gigaba hinted that R20-billion in cuts to medical aid tax benefits , that were ring fenced to fund the NHI, were unlikely to materialise. This decision followed National Treasury findings that it would hurt low-income earners. The ANC’s Education and Health sub-committee, however, announced that cuts to medical aid tax credits remained a possibility. It is likely that Gigaba will provide an update on the status of tax credits in his budget speech.

The sugar tax is still on the agenda and SARS will begin collecting it from 1 April 2018. It is unclear to what extent these funds will be utilised to fund NHI.

The private sector proponents of the hybrid NHI model maintain that it is more feasible and far less risky to implement. They say it will create less political resistance and will take advantage of the existing infrastructure, skills and systems within the current healthcare system. This approach suggests that the employed and wealthy continue to fund themselves, with minimal support from thetaxpayer. The model therefore directs more funding to the poor and unemployed.

The consideration of the hybrid model will serve to reduce anticipated costs of implementing NHI as it leverages off existing infrastructure. This may support government in balancing the need to focus on NHI while also meeting additional budgetary requirements such as funding free higher education.

Key elements of the hybrid model include establishing a new NHI Fund alongside existing public and private sector funds, and co-opting the well-functioning private sector as a partner rather than an adversary. It would also feature mandatory membership of medical schemes by all employed people, enabling cross-subsidisation of the poor and sick. Government funding would be focused on poor and unemployed citizens through the new NHI Fund. Overall, the initiative would be affordable for the state within its budgetary constraints while also giving employed citizens the right to choose healthcare they can afford. Existing national healthcare assets would be leveraged to improve the supply of services to all, with a significantly lower risk of transition.