Will SA’s medical aid reserves be expropriated to fund the country’s bankrupt plan for a National Health Insurance (NHI)? Until a week ago, you’d imagine this to be a nuts conspiracy theory, cooked up by a sect in the basement of the Institute of Race Relations.
Then Prof Simon Nemutandani, president of the state-run Health Professions Council of SA (HPCSA), stood up in parliament last week to discuss the proposed NHI Bill, and threw a grenade into the notion of private property rights.
"The NHI should be taking over from medical aid schemes, and all assets that sit under medical schemes must be transferred to NHI — that is the position of the HPCSA," he said.
It was a remarkable statement from a statutory body set up to regulate medical professionals and protect the public by setting and monitoring standards. Yet, even more remarkably, few of SA’s parliamentarians bothered to interrogate Nemutandani about the startling implications of what he had said.
What he was arguing, in other words, is that the R90bn which has been paid by medical aid members into reserves to cover unforeseen emergencies should simply be nationalised to fund the gaping chasm in funding for NHI.
As for the existing laws which would prevent this kind of thing like, you know, the constitution, Nemutandani was pretty clear on this point too: "Any section of the constitution that is against this view must be amended … [and] the NHI Act must repeal the Medical Schemes Act."
SA’s largest medical aid administrator, Discovery Health, is having none of it. Ryan Noach, CEO of Discovery Health, told the FM it’s a "preposterous proposal", akin to the idea of suddenly nationalising all private pension funds.
"We wouldn’t accept that, and society wouldn’t accept that. To simply nationalise medical aid members’ money, which they contributed on discretion, out of their after-tax income, would not only be unconstitutional, it would be tantamount to taking money out of their bank account," he says.
Discovery, like everyone, was blindsided. Noach says you won’t find any document from the National Treasury or the health department which talks about nationalising reserves.
Contacted by the FM afterwards, Nemutandani was frustratingly vague about how such a fundamental change could be made constitutionally. "We’re saying that if we want universal health care to happen, there will have to be changes to benefit the many, not the few," he said.
Coming up with a real pragmatic solution will take nuance, a deft policy touch and private-sector support
Asked if this amounted to nationalisation, the unintended consequences, and whether such a change would pass legal muster, Nemutandani would say only: "That is for the parliamentary committee to consider."
Though it appears to be an impractical and unconstitutional suggestion, it will doubtlessly resonate with those in pockets of government who haven’t got any clue how to finance NHI. The most conservative estimates, put together years ago by researchers Genesis Analytics, say NHI will cost more than R200bn a year. Research by Fitch put the cost of running NHI at more than R450bn a year.
The government clearly doesn’t have this, so the populist instinct is to filch this money from the private sector.
Craig Comrie, CEO of the Profmed Medical Scheme, says this is entirely unrealistic. "Policymakers speak about rerouting the R200bn paid to the private sector each year into NHI, but this is paid by people as part of their after-tax income to secure their health because of the state of government health care. People wouldn’t simply pay this out of their disposable income to the government," he says.
The only option left to fund NHI would be to raise taxes — but with the narrow tax base, the Treasury can’t afford to do this right now, says Comrie.
It doesn’t help that the government’s handling of Covid — pock-marked by theft of money set aside to fight the pandemic — has eroded the public’s confidence further. As Comrie asks, rhetorically: "Would you now give the government another R200bn to manage?"
Comrie, like Noach, sees Nemutandani’s proposal as "nationalisation in a way that should never happen". Besides, he says, even suggesting such a thing is reckless, since it could worsen the steady trickle of medical professionals out the country.
"Profmed’s 36,000 members are mostly doctors and health-care specialists, and of those professionals who resign from the scheme each year, about 20% are going overseas, partly because they’re getting poached by other countries," he says. "Anything that speaks about nationalising health care, and endangering these valuable assets, will only make that worse."
While the health department has provided about as much clarity over NHI as mud soup, health minister Zweli Mkhize isn’t backing down. Last week, Mkhize said NHI remained one of the government’s "main objectives", and R7.5bn had been allocated to the plan.
But this, as he knows, won’t even touch sides.
Nemutandani’s proposal is the bluntest and most populist solution to the conundrum of how to fund NHI. But coming up with a real pragmatic solution will take nuance, a deft policy touch and private-sector support.
Noach says it’s clear the country needs "structural reform" — the trick is to do this in such a way that it doesn’t destroy existing assets.
"The gap between the standard of private health care and the public sector is widening, and this isn’t acceptable. So something has to happen, and we as medical aids are willing to support a larger proportion of the country, and we need to find a way to do this efficiently."
But Nemutandani’s approach — seizing medical aid reserves — isn’t even close to being the answer.
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