One could be forgiven for thinking that Adiel Chikobvu, the Gauteng health department’s director of economics, had mistaken the gathering of doctors debating National Health Insurance (NHI) on a Sunday morning for a religious meeting.
As he paced the room like a TV faith healer, Chikobvu’s sermon to the doctors, towards the end of September, contained almost evangelical zeal.
"When I speak about NHI I forget everything, even my own interest." He continued, passionately: "We cannot put our own interests above national interests."
It was an emotion-laden speech, and Chikobvu is not alone in the strength of his feelings. Health minister Zweli Mkhize has billed NHI as the magic elixir to fix SA’s health sector, in which 15% of the population spend as much on health care as the taxes allocated for health for the other 85%.
Resources will be shared on the basis of need, they argue: the wealthy will pay taxes for the NHI based on their income, and the sickest will get treatment.
All the money will be collected by an NHI Fund, which will buy services from the private sector doctors and specialists, and dole out to those who need treatment.
Medical aids as we know them won’t exist, in the long run anyway, because you won’t need them.
If it sounds like a utopia of bulletproof unicorns and perpetually youthful elves, that’s because it is.
The numbers don’t stack up.
In 2018, R430bn was spent on health care in SA — made up of R225bn spent by 10.6-million people on medical aid contributions and out-of-pocket expenses, and R205bn spent by the government on the other 46-million people.
Yet NHI will cost far more than that — an extra expense borne entirely by the state, which will be in addition to the billions it spends on public hospitals.
Research by Fitch estimates that government spending on health care will more than double to R450bn by 2028, two years after the NHI is meant to be up and running.
Where will this money come from? Mkhize’s answer is: you.
Taxpayers will be asked to not only give up their private medical aid, but pay more in personal income tax and in VAT.
Even politicians should know how efforts to wring cash out of the public for e-tolls were scotched by an informal tax revolt. It’s unlikely to end up any different this time around.
But then the NHI, which has been under discussion in ANC circles since 1992, has always required you to suspend fiscal disbelief — as if a sprinkling of fairy dust will magic away the chasm in SA’s balance sheet.
It’s surprising that this is coming from Mkhize. The 63-year-old is not only a medical doctor, having worked at Pietermaritzburg’s Edendale Hospital and Themba Hospital in Mpumalanga — he was also the ANC’s treasurer until 2017.
He is seen as a pragmatist and was primed to contest for the post of ANC deputy president in 2017, but withdrew in the final hour
Yet at times Mkhize, too, makes the sort of grandiose promises you’d expect from a faith healer. A month before the NHI Bill was published, he said: "In the long term, the investment in NHI will create a funding mechanism that will permanently resolve underfunding." That’s wishful thinking.
In response, pharmacist and health expert Andy Gray noted that no funding mechanism could permanently resolve underfunding, and added: "There will always be demands in excess of what can be afforded, and a need for rationing … the selection of goods and services." NHI, obviously, isn’t going to change that. Especially since nobody has a feasible plan to find the R450bn needed to make Mkhize’s dream a reality.
After the NHI Bill was published in June, Mkhize appears to have been wrong-footed by the almighty furore. Everyone was "screaming and shouting", he told colleagues.
In August, he asked health economist Di McIntyre to reassure the media.
McIntyre emphasised this point: "Fundamentally, the public health sector does need additional funds."
But that’s not something even the NHI’s detractors would argue. The question — one she didn’t answer — is, where does this money come from?
The NHI Bill, written by a handful of staff seconded to an NHI "war room", proposes three extra taxes: a VAT increase, an extra payroll tax paid by employers, and a hike in personal income tax.
But a number of National Treasury insiders don’t believe this will happen.
For one thing, the public backlash that ensued after the increase in VAT last year from 14% to 15% suggests there just isn’t the fiscal room for tax hikes that Mkhize’s architects think there is.
In a research report two months ago, analysts from Citi summed it up: "We do not believe SA taxpayers can currently afford to contribute much more to health care."
Citi warned that "if private health-care choices are restricted or costs increase, we believe that the severe medical and other skills shortages in SA could be exacerbated".
In other words, fearing being forced to work for the state, SA’s highly rated doctors, nurses and specialists may head for other shores. And the middle-class tax base, fearing their health-care choices will evaporate, may follow them.
An alarming new study, obtained by the FM and reported today, shows that as much as 80% of a representative sample of 384 SA radiologists are "considering emigrating".
Professor Richard Tuft, head of the Radiology Society of SA (RSSA), tells the FM that nearly all the society’s members are writing international exams in the UK, Australia and New Zealand to qualify to work abroad.
"Radiology, like pathology, is required by every branch of medicine. You close them down, you close the whole of medicine down," says Tuft.
The society surveyed its members, who make up 90% of SA’s radiologists, and had a 68% response rate.
Then consultancy Insight Actuaries randomly called members who hadn’t responded to ask them to do so, to ensure the survey was as representative as possible.
Of the 384 responses:
• 20% of radiologists said they were definitely emigrating, while 60% were "considering it";
• 98% answered "no" when asked: Is NHI the best way to universal health care in SA?
• More than 70% said the RSSA should try to oppose the NHI, with less than 10% saying it should be accepted as inevitable; and
• 89% said the NHI would reduce the quality of medical care their families would receive.
These disturbing findings were echoed by many other doctors contacted by the FM.
Jonathan Witt, an anaesthetist, was unequivocal. "It will be like Eskom, SAA and the SABC combined, except that many people will die," he says.
Another doctor told the FM he planned to emigrate soon, but asked to remain anonymous. "Nothing the government has ever run has run well … It doesn’t matter whether the NHI happens — the point is, there’s a bad idea on the table with all the power and the might of the government behind it," he said.
Natalie Zimmelman, CEO of the SA Society of Anaesthesiologists, says that while it is essential to address the inequality in SA’s health-care landscape her group could not support the NHI Bill as it stands.
"The bill further reduces what is an already weak regulatory and governance framework and exposes the health-care sector unreasonably and unacceptably to possible nefarious interests," she says.
But it is the pre-emptive medical skills brain drain, even before the NHI is close to being implemented, that could be the most damaging.
Jonathan Broomberg, CEO of Discovery Health, told the FM last month that the country’s largest medical aid was particularly worried about emigration.
"There is tremendous anxiety among the doctors we speak to, there is chatter about leaving. And I think that filters all the way down: young kids now may, at the margin, not go to med school," he said,
Two weeks ago, RMB Global Markets Research released a report on this issue entitled "NHI: the cost of emigration". RMB head of research Nema Ramkhelawan-Bhana sought to quantify how many of SA’s 530,226 medical professionals may emigrate.
"The economic impact, particularly if we consider that many medical professionals, principally specialists, who emigrate are in a higher earnings demographic, is a significant outflow of wealth, a decline in the tax base and, critically, further erosion of SA’s skills base," she says.
By RMB’s calculations, 4,519 medical professionals could leave SA by 2019/2020, rising to 15,202 by 2025. Their departure will also hurt tax collections — money which will be sorely needed to finance the NHI.
"The annual migration rates … will reduce personal income tax receipts by between R5.2bn and R23.3bn," she says.
That’s a lot of tax money that the government can scarcely do without. But while health department officials don’t seem to have bothered to examine this, the Treasury is deeply aware of these trends.
One anecdote bears this out. Before the NHI Bill was released, Treasury officials saw the document and insisted on numerous disclaimers being added about the new taxes.
This is why, unlike earlier drafts, the final bill says that "due to the current fiscal condition, tax increases may come at a later stage of NHI implementation".
Health actuary Barry Childs says: "The memo accompanying the bill mentions that no new taxes will be considered, until economic conditions are more favourable at a later stage of NHI implementation."
It is this standoff between the Treasury and Mkhize’s department over how the NHI will be funded which has left the biggest question mark over the plan.
When the NHI Bill was launched in August, Mkhize was asked where the Treasury’s "money bill" was that would provide the fiscal skeleton to the ambitious plan. He had no answer.
That money bill, the FM has learnt, is sitting with the Treasury — but according to those close to the negotiating process, department of health officials are deeply unhappy with the Treasury’s document.
That document concluded that the government would be R80bn short, in 2010 prices, of the funding required — and that’s if the economy were growing by 3% a year, thrice as fast as reality.
(Though this was not publicly released, this R80bn shortfall was reported by Treasury health expert Mark Blecher in the Health Systems Trust, a yearly encyclopedic report on the nation’s health.)
For a country battling to pay its bloated public service, and keep cash-haemorrhaging state organisations like Eskom afloat, this is big money.
Other experts had already reached the same conclusion.
"There is no R100bn [extra] a year … I teach public financing … there is no money," said Wits professor and health economist Alex van den Heever.
He should know. Not only is he a former adviser to the Council for Medical Schemes, he was also hired to sort out the finances of Gauteng’s health department, so he knows some harsh truths about public finance.
In 2017, the Davis Tax Committee (DTC) reported that the NHI "in its current format is unlikely to be sustainable unless there is sustained economic growth". If growth hit 2%, the DTC said, there was likely to be a R108bn shortfall in the funding.
It added that "substantial increases in VAT or personal income tax and/or the introduction of a new social security tax would be required to fund the NHI".
Economic experts have told the FM they don’t believe there’s any scope for these kinds of tax hikes until 2035.
But despite this obvious tension, officials from the Treasury and the department of health are eager to play down any talk of a spat over NHI.
Mkhize’s spokesperson, Lwazi Mandi, says the health department has "no disagreement with the National Treasury regarding payment and funding of NHI … we are one government".
Mandi says the NHI would have to be enacted before details of the financing could be released. But this seems like putting the cart before the horse — how can parliament vote to approve something with a critical element of the plan missing?
"One must distinguish a law from a plan. Plans have details, [and] laws allow for regulations and plans to be developed."
A Treasury spokesperson is more coy, saying there are "ongoing discussions" between the two departments about the financing options.
However, unbeknown to many, the Treasury has drawn up a second "NHI money bill", which is something of a compromise, and puts the cost at something far more affordable than the first plan. It proposes a number of more affordable "healthcare interventions" that could be rolled out under the NHI umbrella.
The FM can reveal that this document proposes:
• Removing "state user fees" for public hospitals, since few people pay anyway;
• The state contracting doctors and nurses, who will work in teams to provide primary care to patients to a far greater degree than is now the case; and
• Implementing a model of "capitation" where private GPs are paid an annual fee per person upfront, rather than per appointment. It’s the model used by Britain’s National Health Service. This model of using your own doctor for NHI may be more palatable to the middle class, who’d sooner risk gangrene than set foot in a state clinic.
This NHI-lite model would help address the fact that many doctors have fled the crumbling public health sector, creating a severe imbalance. SA’s public health sector has 0.3 doctors for every 1,000 people, against 2.3 doctors in the private sector.
Wits public health professor Shabir Moosa estimates that if GPs worked in teams with nurses and "clinical associates", up to 10,000 patients could be treated annually — though 6,000 is perhaps a more realistic number. (These "clinical associates", who will have done a three-year university course, can perform simple surgery and prescribe basic medicines.)
This still wouldn’t be cheap. Treating a patient at a state clinic is already estimated to cost R450 an appointment, with tests and medication — but it would address some of the other systemic problems. For a start, it would probably improve competition for health services, and give patients the power to choose where to be treated.
This funding document is understood to have been seen by finance minister Tito Mboweni, but the health department won’t say when it will be released.
Doctors interviewed by the FM believe this sort of model could work.
Bhardashil Modi is a family physician and part-time Wits University lecturer, working in a grimy corner of inner-city Joburg near the high court.
"What nobody knows is that many doctors have been treating public patients in small projects, and with NGOs contracting for the state, for years," he says.
In the wealthier suburbs, doctors charge between R500 and R700 for a consultation. But Modi says: "We doctors working in Hillbrow and in the south [of Johannesburg] … are charging from R350 to R400 including basic medication. It makes no difference to us whether medical aid or the state pays us."
Modi’s sentiment underscores the fact that few can fault the NHI’s ideals, like making sure the money in the system is used more efficiently to reward quality services.
Brian Ruff, a former head of strategy at Discovery Health, says the NHI philosophy isn’t complex or even that unusual in a global sense. It’s an opportunity to finally provide SA with a national health-care system based on state-funded but commercially delivered principles.
"It sets out to separate the role of supplying health care from that of purchasing access to it. Buying care for a population should be done by a competent agency that is equipped to contract with clinical teams and hospitals," he says.
Advocates of the NHI say it will also create a stronger relationship between spending and the right outcome. "Under the NHI, public services will be subject to market competition for contracts based on value and must improve on their current service delivery, or face losing their funding," says Ruff.
Shivani Ranchod, a health actuary, says that in an NHI system, the purchaser (the NHI Fund, in other words) can demand that cash is spent properly.
"The idea behind a purchaser-provider split is that the purchaser, in this case the NHI Fund, can hold providers to account — demanding that the money in the system is used to meet patient needs," Ranchod says.
But one of the major obstacles is that trust between the government and society is at a low. Few believe, given the examples at Eskom, SAA, Transnet and other state-run entities, that entrusting the government with running a giant medical fund will lead to anything but more corruption.
Even the public hospitals are a grim example of this: inefficient, and buckling under creaking infrastructure, where money is routinely squandered. Critics fume that rather than fix the existing mess, Mkhize is looking to co-opt the private sector to paper over these cracks.
Karin Morrow, a private-practice GP who works in Durban, says: "There is an unease that the government will destroy all health care in its transparent bid to grab private health-care users’ money."
But Morrow, like many doctors, doesn’t believe it will ever happen anyway. "People are pretty numb now to the madness of the ANC ... [you] can’t take anything they say seriously any more," she says.
Van den Heever echoes these concerns, saying one glance at the NHI Bill shows "it is designed for patronage".
National government, and the health minister, will be all-powerful. The board of the NHI Fund, which will be created to collect all the money and buy services, will ultimately be picked by the health minister.
Which means that multibillion-rand health contracts would be under the control of a few people hired by politicians.
At Gauteng’s health department, Van den Heever saw exactly how state-run health care can be corrupted: jobs for pals, tenders provided to cadres for cleaning, security, hospital food and even patient transport.
And in the NHI, financial muscle will be taken away from the provinces (which today control 87% of the health budget) and put under the control of the minister.
Nicholas Crisp, who is on a six-month contract to head the NHI office, says this is actually a good thing, as it will allow the public to hold the minister accountable.
"We all want the minister to be accountable. At the moment, he cannot be accountable — it is very difficult, without control of resources, to be held accountable for everything," he says.
But recent history is filled with horror stories of what happens when you entrust government ministers with too much power.
Though many in the private health sector speak privately of their reservations about the NHI, few will publicly say as much.
This hypocrisy was on full display at the Hospital Association of SA (Hasa) conference at the end of August at the Cape Town International Convention Centre.
During the conference, Hasa executives fawned over Mkhize.
But on the same day an e-mail from Werksmans lawyer Neil Kirby circulated among the conference participants with impressive speed. It suggested that the NHI plan had been suspended.
"Public participation in respect of NHI has been suspended by the parliamentary portfolio committee on health pending advice from the state legal adviser in respect of the constitutionality of the bill," it read.
It turned out the e-mail wasn’t accurate.
Sibongiseni Dhlomo, who heads that parliamentary committee, knew nothing about it, and was at pains to point out Kirby was not a spokesperson for the department.
But it illustrates two things: first, whatever the companies are saying, they’re firm opponents of this NHI Bill, and second, they’re lawyered up to the hilt.
And there are plenty of legal grounds upon which to fight the NHI.
For one thing, it would remove the right that people currently enjoy to use their money as they want, in hiring specialists. Second, removing the "tax credit" which people get now for using private medical aid would potentially shift more people into the bursting-at-the-seams public health system and be unconstitutional.
As Kirby said at the conference: "If medical schemes are effectively disabled from providing services and that, in turn, causes members to be denied access to cover for those services, that may be a denial of access to health care."
This, he says, could be considered a breach of section 27 of the constitution, which ensures everyone has the right to an improving health-care service.
Kirby, like many, believes that level heads will prevail in the negotiations. But he warns: "If they don’t, we will get level heads in court to ensure they prevail."
Crisp says the government is ready to meet years of legal challenges to the bill. "That is the nature of how we make laws in our society, anyway," he says.
Business isn’t waiting for it to end up in court. It has created a "six-a-side" team that meets Mkhize and his officials to "find resolutions for matters of mutual interest and resolve issues amicably".
If medical schemes are effectively disabled from providing services and that, in turn, causes members to be denied access to cover for those services, that may be a denial of access to health care
— Neil Kirby
Lobbying, in other words.
The business delegation includes Aspen’s Stavros Nicolaou, Discovery Health’s Broomberg, Discovery director Ayanda Ntsaluba, Netcare director Melanie Da Costa, Association for Savings & Investment SA’s Stephen Smith and SA Private Practitioners’ Forum head Chris Archer.
The government’s team includes Crisp, McIntyre, deputy director-general Anban Pillay, GP Aquina Thulare and University of Cape Town professor John Ataguba. There is, notably, no-one from the Treasury.
Arguably, the biggest danger of the NHI is that if it’s implemented at stomach-churning cost, and causes the destruction of the well-functioning private health-care system, it might also delay the real reforms needed.
Says Van den Heever: "People want real reform, not fake reform.
"We are wasting state resources on legislative reform to transform nothing. I want to see their financial feasibility analysis that shows what they are proposing."
The health department hasn’t provided these technical documents. It’s unclear if they even exist. The only document that has come out is a 200-page analysis of 11 NHI pilot projects, which were an abject disaster.
The analysis, conducted by Genesis Analytics, was unable to conclude that the pilots, conducted at a cost of R4bn, obviously improved the health of any of the 11 districts where they were tried.
Its defenders will correctly argue this is partly because the trials were badly designed and weren’t a true pilot of how an NHI fund will work. But what it did show was hardly encouraging.
For example, the pilot included a plan to upgrade 140 clinics, but "projects were rarely implemented or completed due to lack of planning and funds not being released in time". One NHI intervention, hiring GPs to work in government clinics, ended up "much more expensive" than envisaged. It’s a laundry list of what went wrong.
Opponents of the NHI are adamant that the government cannot just ask people to have faith that funds will not be stolen
— What it means
But Mkhize’s department has sought to apply lipstick to this pig. In recent weeks, he has trotted out The Elders, a group of former world leaders set up by Nelson Mandela and Graça Machel, to praise the NHI and charm parliament.
Mkhize, rather than explain why the pilot project debacle isn’t a harbinger of what will happen with NHI, says there is a "concerted campaign from some parties to spread false information intended to scare people into believing that the NHI is a monster that will destroy everything that currently exists".
It’s a depressing response, considering that the pilot studies illustrate that the concerns about creating another unwieldy, corrupt state entity are hardly baseless.
Van den Heever speaks for many when he says: "I won’t accept the government’s word that they won’t steal money [from the fund]."
Mkhize, rather than outlining ways in which the NHI won’t become another Road Accident Fund, resorts to conspiracies.
Zimmelman, too, speaks of how medical professionals have "a lived experience of many instances of maladministration, corruption and mismanagement". This is why, she says, "a call to ‘trust us’ is simply not reasonable".
It’s a recipe that looks increasingly unworkable — especially given that there’s no plan to raise taxes to fund the NHI "until the economy improves".
Which means that at this point, the only people likely to see their lives improve markedly from Mkhize’s grand plan are the lawyers preparing to fight it.
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