After the Bell: SA’s NHI healthcare disaster starts right here

South Africa’s new national health service legislation, which will eventually outlaw Discovery, ParMed, GEMS, PolMed and all the other private medical aids, will almost definitely cross its last legislative hurdle on Wednesday when it is voted on by the National Council of Provinces.

The legislation, the NHI Bill,  is the culmination of a decade-long process, but it has already been passed by the national assembly, so essentially, this is it. From there it goes on to be signed by the President, and then it’s law.

One doesn’t like to be negative, but may I just say this is going to be an absolutely monumental stuff-up of gargantuan proportions.

It’s hard to describe exactly how big a stuff-up it’s going to be, but we are talking easily about an Eskom-level stuff-up. Bigger perhaps. The idea of better healthcare for the poor is clearly desirable, but the idea of doing it in this particular way – trashing an irreplaceable amount of private sector expertise and innovation – is backwards and the whole thing is at best 20 years premature.

So many people are tip-toeing around these issues that I feel it’s my responsibility simply to be honest. People don’t like to be seen as being against free-at-the-point-of-service healthcare because it sounds as though you don’t want poor people to get better healthcare.

Worse care for poor people

But trust me, this legislation will result in poor people getting worse healthcare.

How do I know that? Because the legislation envisages the destruction of private healthcare while neither SA’s public finances nor organisational systems can support a comparable public healthcare system for 60 million people.

So something has to give – and the only thing that can give is the overall quality of healthcare.

Almost no country in the world has a healthcare system envisaging a total ban on private healthcare in the way SA’s system now does.

Just for some perspective: if SA were Sweden, for example, it would be pretty easy to have a high-quality public healthcare system because the country is rich. GDP per capita in Sweden is $64,000 per year, and the average healthcare spend is around $6,400 – neatly 10% of GDP. Totally doable.

But SA’s per capita GDP is around $1,600 per year. To have Swedish levels of healthcare, (or any European country for that matter) South Africans would have to spend two-thirds of their personal income just on healthcare.

So that’s not going to happen because what it would require are taxes at astronomical levels.

SA will get, on average, a far less comprehensive system than those in Europe, obviously. But the NHI will still require somewhere between R200-billion and R600-billion extra government income per year.

That’s a big difference between the high and the low, but nobody knows for sure because the bill’s proponents haven’t really bothered with detailed, accurate, up-to-date costing. But VAT will almost certainly have to double, at the minimum.

The ANC meets this argument with the counterargument that NHI will be introduced gradually as the funds become available (when do they imagine this will happen, I wonder).

Because it’s going to be introduced gradually, there is no need to bother with the whole question of how much taxes are going to be increased. Convenient hey? Politically, they are counting on the frog-in-boiling-water syndrome.

The idea is that the government will ban healthcare insurers from providing, say, hip replacements. Technically, there will still be private healthcare providers; they just won’t get fully paid. Government will then tax the public more to pay public healthcare providers to provide hip replacements. And because they no longer provide that service, private healthcare providers will reduce their fees accordingly as we go.

Basically a tax grab

Eventually, all of the money people pay private healthcare providers now will instead be paid to the government, resulting in healthcare nirvana in which all citizens get equal healthcare provision. It’s basically a tax grab posing as a healthcare system.

Wait. Just say that last bit again? Public providers will reduce their fees because they are now providing less, you say?

Forgive me for being overly cynical, but trust me when I say that is not going to happen. What will happen is that until the last service is banned, people who can afford it will prefer to stick to their private healthcare to the extent they can.

This is South Africa; we don’t rely on government services unless we absolutely have to, and even then it’s a maybe.

But at the same time, taxes will have to increase to pay for public healthcare. The result will be much more expensive healthcare for everyone and much higher taxes, which, in case you haven’t noticed, are pretty high already. That means fewer businesses, more unemployment, and ultimately a lower tax base. The usual stuff.

Constitutional challenges

In the meantime, a whole range of institutions in the industry are already briefing lawyers, because before he signs the legislation, President Cyril Ramaphosa has to consider its constitutionality. And there is not going to be just one case – there are going to be many – because at least three groups are going to lose out.

First, healthcare providers presumably will have a constitutional claim against the government for the destruction of their businesses under Section 22 of the Bill of Rights; the freedom of trade, occupation and profession clause. Probably not the strongest case because the clause envisages government “regulation”, but we will see.

Second, provinces have a constitutional case because healthcare is currently a joint provincial/national mandate, and the legislation makes it exclusively a national mandate. Of course, only the Western Cape has objected, but constitutionally that might be enough.

And third, a whole range of organisations, including doctors’ and nurses’ associations, have a procedural claim because even the sponsoring department, the Department of Health, acknowledges weaknesses in the legislation which were pointed out, ad infinitum, but not rectified during the consultation process. And there will be more.

This could all have happened in a totally different way.

Government could simply provide better healthcare. And then people would think, “Why am I paying so much for private healthcare when I can rely on the public system?”

Instead of forcing people out of the private system, they could welcome the public in by competing in the marketplace and providing a better service.

The most instructive thing about this legislation is that government knows, in its heart, that it can’t compete, so the only thing to do is rely on force and create a monopoly, with all the joys a monopoly brings. Where is the Competition Commission when we need it?

The 2024 election

So, in the face of this barrage of criticism and scepticism, why is the ANC pushing ahead? The answer is obvious: the 2024 election. The ANC is selling the legislation to people not covered by private healthcare, effectively promising an improvement in their healthcare service in the foreseeable future.

But even the ANC acknowledges that this is going to take years, perhaps even decades. What happens when five years pass and nothing has happened? Or something has happened and it’s bad? Will voters still be convinced about its utility?

With the Eskom crisis now rampant, the Post Office in bankruptcy, Transnet in disarray, and so on, could there be a worse time for the government to introduce legislation that nationalises such a critical function?

But this is the way it has unfolded: the ANC is facing an election and it needs to make promises – and, as always, politics trumps function and common sense.

What I want to know is this: do SA’s parliamentarians know they will have to toss away their Discovery cards? That they too will join the queue at Bara, bringing their own sheets and their own food?

Do Cosatu members know they will have to trash their GEMS cards?

Do politicians know they are voting for VAT to double?

Like so many other pieces of election-inspired legislation, do politicians even know what they are voting for? DM

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