Taxes and more taxes: what to expect from NHI

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Taxes and more taxes: what to expect from NHI

Times Select got a glance at the government's highly awaited NHI Bill before its public release

Katharine Child
Health minister Zweli Mkhize has been empowered by the bill to make regulations that payments are conditional to meeting quality standards of care, 'or the achievement of specified levels of performance'.
In control Health minister Zweli Mkhize has been empowered by the bill to make regulations that payments are conditional to meeting quality standards of care, 'or the achievement of specified levels of performance'.
Image: TimesLIVE

A sneak peek at the National Health Insurance Bill shows the government is planning a single national pricing regimen and a surcharge on personal income tax, as well as an employer tax, and a minor role for medical aids. 

The target date for full implementation is 2026.

The 88-page bill, which Times Select has seen before its public release on Thursday morning, is  now destined for heated debate in the National Assembly. Past draft bills sparked vigorous debate, with the government claiming private medical schemes were its staunchest opposition. This bill provides more details than the proposed bill released in 2018.

In its preamble, the bill says it is targeted at addressing social-economic inequality and wants to “improve the quality of life of all citizens and to free the potential of each person”.

To make this a reality the government is proposing to establish and maintain a National Health Insurance Fund financed through “mandatory prepayment” that aims to achieve sustainable and universal access to quality healthcare services. 

According to the bill, this fund will serve as the single purchaser of all healthcare services – pooling finances and strategically buying healthcare services, medicine and products from accredited service providers. 

Where will the money come from?

The fund’s chief source of income will be appropriated from money collected from general tax revenue, including centralising money, now allocated to provincial health departments. 

Healthcare service providers, establishments and suppliers will have to be properly accredited and meet high standards before they are reimbursed.

Income will also be derived from a payroll tax and a surcharge on personal income tax. 

Medical scheme tax credits currently paid to medical aid members in the form of a tax deduction will also be reallocated into the NHI.

What you can expect

The first notable change for many South Africans pertains to the current referral system. Patients will now be made to first access healthcare services at primary healthcare level (a general practitioner or nurse) and will only see a specialist if referred.

Second, academic hospitals such as Cape Town’s Groote Schuur, Durban’s Albert Luthuli and Johannesburg’s Chris Hani Baragwanath will be run by the national government instead of provincial health departments. Their administration, management, budgeting and governance will be “made a competence” of national government.

Healthcare service providers, establishments and suppliers will have to be properly accredited and meet high standards before they are reimbursed for their work, and in the case of specialist services payments will be based on performance. 

Emergency medical services will be reimbursed on a “capped case-based fee” basis with adjustments made for case severity where necessary.

All patient information, including fingerprints and residential addresses, will be recorded on a single database, the National Health Information System.

What doctors can expect

Doctors and hospitals will have to adhere to certain treatment protocols and guidelines determined by the minister and fund, and will prescribe medicine and health products from a “formulary” or a list provided by the government.

All medical professionals will have to adhere to a single national pricing regimen.

Asylum seekers and ‘illegal migrants’ will only be entitled to emergency medical services and ‘services for notifiable conditions of public health concern’.

The minister has been empowered by the bill to make regulations that payments are conditional to meeting quality standards of care, “or the achievement of specified levels of performance”.

The minister can also determine how an individual health worker will be paid.

Private medical aids

The NHI Bill makes a one-sentence mention of the role of private medical schemes. It says that once it is fully implemented medical schemes may only offer complementary cover for services not reimbursable by the NHI Fund.

Asylum seekers and ‘illegal migrants’

Asylum seekers and what the bill describes as “illegal migrants” will only be entitled to emergency medical services and “services for notifiable conditions of public health concern” (contagious diseases).

Three phases until completion

NHI will be implemented over three phases, according to the bill. 

The first, which sought to pilot “health system strengthening activities”, supposedly took place  between 2012 and 2017.

The second phase, scheduled from 2017 to 2022, seeks to continue these undefined health system strengthening activities; develop NHI legislation and amendments to other legislative documents; establish institutions that will act as the foundation for a fully functional NHI Fund; and purchase personal healthcare services for vulnerable groups. 

The third phase is scheduled for between 2022 and 2026, during which the establishment and operationalisation of the fund as a purchaser of healthcare services must be completed.