One Of The Potentially Most Destabilising Endeavours Of Recent History - Weekend Argus

15 February 2020 - Perhaps the greatest irony is that – again, in theory – South Africa is committed to evidence-based policy. What passes into law must be proofed and tested for its efficacy, not merely its appeal. On one of the largest, potentially most destabilising, endeavours of recent history, the government is to all intents and purposes refusing to do so. There is no fearmongering in this. And it is a great injustice.

Terence Corrigan

The introduction of the National Health Insurance (NHI) is a certainty that the government will not compromise on – it’s on the way, ‘whether you like it or not’. This has been the consistent message for some years now. To oppose it is to signal one’s fealty to certain ‘vested interests’, and to be guilty of ‘fearmongering’.

The latter is in the view of health minister Zweli Mkize, in response to survey evidence that the introduction of NHI would prompt widespread emigration of medical personnel. This was, he said, a case of fearmongering, ‘without substance’, and making such claims constituted a ‘great injustice’ to the NHI.

The grounds for concern about what the NHI will mean for the country are numerous. For medical professionals, it promises a significant intrusion of the state into their careers and career prospects. This is not only about how it might hit their earnings, but of finding themselves caught up in administrative chaos. The latter concern is shared by many ordinary people and by interest groups.

To them, the minister had a simple message: ‘The powers, privileges and consequence management set out in typical section 3A entities are no different to what is being proposed in the NHI Bill. There is a high index of confidence in section 3A entities as they have set a precedent of good governance and accountability.’

In other words, the record of the country’s public entities are sufficient to dismiss the concerns about the NHI. We can, as a country, confidently place our faith in the state to manage our healthcare – and the gargantuan aggregation of resources that will be needed to run it.

Except, the minister’s exhortation, if anything, makes the opposite point. As a number of commentators have pointed out, section 3A entities include such doubtful examples of efficiency as the Road Accident Fund. Last year, the accumulated deficit of the RAF stood at a staggering R262 billion. Its total net liabilities stood at around the same amount. In view of the dire straits it was in, the Auditor General questioned whether it could be seen as a going concern.

Frustrated claimants have turned to the courts for help, and have been granted attachment orders for RAF bank accounts. The matter remains unresolved.

This should concern us deeply. Let us not forget that NHI is primarily about funding. For that reason, it will mean higher taxes, with an especially heavy burden falling on the country’s diminishing middle class, and squeezing businesses further. (The South African Revenue Service reported that in 2017, around half of South African companies reported no taxable profit, and a quarter an actual loss.)

If the conduct of an entity like the RAF is a guide, it is a matter of mere prudence that those whom the NHI is meant to pay for their services – doctors, specialists and so on – and their supplies – medicines, machinery and the rest – be mindful of the possibility that securing payment may be a difficult matter. There is certainly plenty of precedent for this problem. Many of these are small firms engaging in technology supply and manufacturing, in other words, just the type of businesses that the economy needs to encourage.

In November last year, according to Gauteng health MEC Bandile Masuku – the province is regarded as a particularly problematic one for this – some 987 businesses were owed a combined R1.9 billion over a period dating back to 2014.

Being trapped in this system – the NHI intends to be, if not the only game in the medical field, then the one game that no one can realistically afford not to participate it – is a reasonable concern for medical professionals. It is not just that they might be concerned about what the NHI would mean for the scale of their incomes, it’s the concern that they might not be paid at all.

The NHI will represent one of the largest aggregations of resources in the country, and almost certainly the largest in the state. The RAF may ultimately seem quite trivial by comparison. The NHI would oversee procurement of medical goods and services on an unprecedented scale. This, its supporters contend, will allow it to bargain for favourable prices in a way that the industry cannot currently do.

As one commentator put it: ‘If you represent the whole of South Africa’s demand for, say, chemotherapy, you can negotiate down the price. Think of the difference in buying power between a corner grocer and Pick n Pay in their dealings with suppliers. Pick n Pay can call the shots on price whereas the corner store can’t. In theory, the NHI can get a much better deal by being the “big kahuna” in the negotiations with suppliers.’

With caveats: unlike Pick n Pay, the NHI seems set to become a near monopsony – the lone buyer in a market – backed by the power of the state. It would have little need to make competitive deals with its suppliers. Indeed, procurement is certain to be done in line with Broad-based Black Economic Empowerment (B-BEEE) requirements. The reality is that this will probably work against getting the most cost-effective deals.

 The NHI Bill makes procurement subject to B-BEEE provisions, which allow BEE suppliers to charge an extra 10% on contracts worth R50m or more, 20% on contracts below this amount.

This is a complex system that would require an efficient, skilled and scrupulously honest bureaucracy to implement with any success. The evidence of recent years is that this does not exist, and is aggravated by aggressively assertive patronage networks that have found in the state a deep trough in which to feed. And so in practice, whatever the intentions of BEE legislation may be, it has become a justification for some dreadful mistakes (at best) and horrendous abuses (at worst), whether in respect of bottled water or coal for power stations. The opportunities for malfeasance in a resource pot of the NHI’s magnitude will be too tempting to ignore.

So when the NHI is touted as a health system that will dispense with the unnecessary and immoral profit motive (as the African National Congress, and still more, its allies in the South African Communist Party and the Congress of South African Trade Unions argue), this is by no means a given. Profit – for a connected few – will likely feature very strongly indeed.

It is startling that for the most part, there is hardly any sense (at least in public) of the financial implications of the NHI. To raise that question is to risk denouncement as a shill for profiteers or as being shockingly callous towards South Africa’s less fortunate citizens. No cost will be too high to do what must be done (indeed, spending may well be indifferent to consequences). This is reckless in the extreme. On a previous occasion, political leaders demanded that cost be excluded from consideration in a major procurement, in favour of a ‘visionary’ approach. That was the arms deal.

Perhaps the greatest irony is that – again, in theory – South Africa is committed to evidence-based policy. What passes into law must be proofed and tested for its efficacy, not merely its appeal. On one of the largest, potentially most destabilising, endeavours of recent history, the government is to all intents and purposes refusing to do so. There is no fearmongering in this. And it is a great injustice.

Terence Corrigan is a project manager at the Institute of Race Relations.

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