NHI proposals and the law

Publication | September 26, 2013


This article first appeared on www.cover.co.za/healthcare/

Hot on the heels of the e-tolling saga, government should be gearing up to fight a similar battle with the publication of National Health Insurance proposals (“NHI proposals”).

What is contemplated in the NHI proposals is healthcare coverage for all South Africans (including legal residents) through a central financing system funded by mandatory contributions through taxes and levies. The aim is to provide members of the public with essential healthcare regardless of their employment status or ability to make monetary contributions to the fund. So, whilst everyone would be entitled to the benefits of NHI, only the higher earners will be required to contribute to the fund. The threshold has yet to be determined.

The NHI proposals have been met with a lot of criticism, particularly regarding the system’s sustainability in an industry currently plagued with challenges, including poor healthcare services and management in public hospitals, rapid inflation of prices, the high cost of private hospitalisation and a lack of expert human resources both in the public and private health sector. Other concerns raised relate to the autonomy of the individual, their freedom of choice and the extent to which government can implement policies that increase taxes. This has raised pertinent questions such as:

  • How far can authorities go in forcing us to contribute to a fund that they set up and run?
  • What about our right to choose which medical scheme we want to belong to and which doctors/hospitals we want to visit?
  • How far can the government go in terms of prescribing our contributions other than increasing our personal taxes?

Authorities forcing us to contribute to a fund

The state is obliged under the Constitution to make policy decisions that respect, protect, promote, and fulfil the rights in the Bill of Rights. The objectives of the NHI are to:

  • provide access to quality health services for all South Africans regardless of their employment status
  • achieve equity and social solidarity through the creation of a universal fund
  • control key financial resources through the procurement of healthcare services on behalf of the nation
  • improve the public health infrastructure and resources

The proposed NHI system will give effect to the right of access to healthcare in section 27 of the Constitution. In fulfilling this obligation, the state will go to whatever lengths necessary to ensure that that happens as seen in the recent challenge by the Opposition to Urban Tolling Alliance (OUTA) to the introduction of the e-tolling system. This case went all the way to the Constitutional Court.

The court’s attitude was that courts do not determine the kind of funding to be used for infrastructural funding or who should bear the brunt of that cost – this is a political policy-making process that falls within the preserve of executive government, through public participation, consultation and appropriate channels. The court rejected the argument that there was no public participation.

Post this judgement, the public and the media have been severely criticised for not playing an active role and participation in preventing unpopular policy decisions that affect them.

The state is certain to allow extensive public comment on the NHI system.

Right to choose medical scheme and doctors/hospitals

The aim of the NHI scheme (“NHIS”) is not to abolish medical schemes. The schemes will continue to exist in conjunction with the NHIS.

A member of a medical scheme can continue membership with the chosen medical scheme, but is still required to contribute to the NHSI and can use the benefits of the NHSI. The envisaged effect is people either cancelling their medical aid membership or opting for cheaper medical aid with fewer benefits, to provide top up cover.

An NHIS patient should still be able to choose a medical scheme of their preference and which healthcare facility or healthcare provider they wish to visit, provided that the healthcare service provider is accredited and contracted by the state to provide NHIS health services.

However, because of the costs in the private health sector, it has been said that the state is unlikely to afford purchasing these health services, and there is a plan to regulate the pricing in private hospitals whilst at the same time tackling the poor management and lack of human resources in public hospitals.

Prescribing contributions other than increasing personal taxes

Currently, it is envisaged that the funding of the NHIS will predominantly come from an increase in personal taxes of higher earning individuals regardless of whether they choose to participate in the NHIS. The threshold for higher earners has not been determined.

In addition to taxes, the proposed Green Paper identifies two potential methods of funding: employer and employee contributions and fiscal funding. The breakdown, costing and feasibility of this route has not been dealt with in any detail in the NHI proposals.


The recent Obamacare judgement in the US Supreme Court is a classic example of an access to healthcare and government intervention in providing a central fund for healthcare. Obamacare requires the states to implement healthcare schemes, failing which a penalty will be levied on the state.

In implementing the NHIS, government may prescribe taxes and other forms of contributions. But they must do this in a transparent environment and with public engagement and participation.

It is understood that consultations have been held with various stakeholders, but the stage of these consultations is unknown. Once the consultation phase has been completed, a white paper will be drafted and thereafter draft legislation will be submitted to Parliament for approval.

Whilst the state may dictate policies requiring monetary contributions from members of the public in one form or another, it is up to all of us as members of the public to engage actively with government at the early stages and throughout the entire process regarding the feasibility of policies affecting us.



Sandra Sithole

Sandra Sithole