OPINION | John Endres: How to solve SA’s healthcare conundrum - News24

John Endres

The South African government's proposal for National Health Insurance (NHI) is a deeply flawed attempt to improve the universal healthcare which the country already offers.

The public healthcare system, in its current form, already provides universal access to all South Africans. But seeking to improve it by forcibly merging private healthcare into the state system as the NHI law proposes; by placing all healthcare revenue and expenditure under state control would lead to inefficiency, higher costs, and reduced quality of care.

It would trigger an exodus of healthcare professionals. And it would prompt taxpayers in higher income brackets to emigrate, precisely the people on whom the state relies for much of its revenue. The consequences would be disastrous.

The NHI seeks to centralise a highly complex system under a government that has struggled to manage other complex systems. Corruption, mismanagement, and the erosion of public services like water supply, electricity, and law enforcement are highly visible symptoms of the government's inability to run complex systems competently.

Granting the government total control over all healthcare finances is a surefire way to extend these failures. The cost will not just be financial: it will be measured in human lives, with the Life Esidimeni disaster a stark reminder. 

Reforms to consider 

Currently, a sizeable minority of the population, including government ministers, senior officials and members of Parliament, enjoy world-class private healthcare, while the majority of the population are locked into a public system that is badly managed, plagued by corruption, overburdened and underperforming. Instead of bringing private healthcare under state control and thereby eviscerating it, the smart choice is to expand access to it as rapidly as possible.

Millions more South Africans should be empowered to access the world-leading services offered by the private sector. At the same time, the services offered in the public sector must be vastly improved for those still unable to afford private healthcare. Here is how this could be done.

To empower more people to use private healthcare, the government should introduce the following reforms.

First, it should make it compulsory for all those formally employed to be enrolled in a medical aid, as proposed by the Hospital Association of South Africa (HASA) a month ago. The cost of doing so for low-income earners should be funded by employers by obliging them to issue a monthly healthcare voucher to each employee earning below a certain threshold, enabling them to buy obligatory medical cover of their choice.

A minimum voucher value should be prescribed. This should be set at a level that allows employees to buy basic private health coverage while allowing them to top up the value of the voucher from their earned income should they prefer more expensive options. This would spread the benefits of private healthcare without overburdening the state. In return for picking up part of the tab, employers should be given tax breaks or other incentives.

Second, the regulator must support medical insurance companies in creating and rolling out low-cost plans instead of opposing them as it is currently doing. There is no good reason why people on lower incomes should be deprived of the opportunity to buy private medical insurance if insurers can offer it – which they can.

Allowing more low-cost options to be provided in the market would dramatically increase the number of people benefiting from private healthcare, further alleviating the strain on the public healthcare system.

The importance of a rapidly growing economy

Third, the government should remove restrictions on the expansion of the private healthcare sector. It should allow private educational facilities to train doctors, nurses and other healthcare professionals. It makes no sense to restrict such training to state facilities, which, in any event, cannot produce sufficient numbers of doctors and nurses to meet the country's needs. The state should also allow private investors to build hospitals or clinics wherever they see a market opportunity rather than withholding permission to build such facilities.

Finally, in the broader context, the government must adopt policies that facilitate rapid economic growth. Such policies are described in detail in the IRR’s "Blueprint for Growth" proposals. A rapidly growing economy means that companies will hire more people – who, once they are formally employed, will be enrolled in private medical aid.

Similarly, a growing economy produces higher incomes, placing more people in a position to buy private medical services. All of this would help to reduce the burden on the public healthcare system.

For those who cannot afford private healthcare, reforms must focus on improving the quality of public healthcare. This can be achieved through better management, reducing corruption, and ensuring that public funds are used efficiently. Public-private partnerships can also help bring private sector expertise and efficiency into the public system, without displacing government from its role in enabling healthcare access for all. 

The NHI is not the answer to South Africa's healthcare crisis. A better approach involves empowering individuals to access private healthcare while improving the public system for those who depend on it.

In a recent IRR poll, 74.6% of respondents said they used a government clinic or hospital when they were sick. But 67.7% of this group said that if they could choose and could afford it, they would prefer going to a private doctor or hospital. Instead of centralising healthcare under a state that has proved itself incapable of managing even basic functions, we should listen to what South Africans want by embracing reforms that promote competition, efficiency, and choice.

South Africa's healthcare future depends on solutions that work for everyone. Better quality universal health coverage is achievable, but not through the NHI. Thoughtful, market-driven reforms are what the country truly needs.

John Endres is CEO of the Institute of Race Relations.

https://www.news24.com/news24/opinions/columnists/guestcolumn/opinion-john-endres-how-to-solve-sas-healthcare-conundrum-20241028