Home South African Government’s silence on cost of NHI is worrying, says IRR

Government’s silence on cost of NHI is worrying, says IRR

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The Institute for Race Relations said its analysis showed the NHI was more likely to cost around R700 billion a year when fully operational in 2026 as the government now envisages, with major tax hikes needed to generate this amount.

File image. Pictures: Supplied

Johannesburg – The fact that government is talking up its National Health Insurance proposal as the answer to ailing healthcare but remains silent on the multi-billion rand cost implications is deeply worrying, the Institute of Race Relations said on Thursday.

President Cyril Ramaphosa’s government tabled the NHI Bill in parliament last August, saying it wanted to ensure affordable quality healthcare to all South Africans, not just those with access to private medical aid. Critics however say the move will collapse the health sector, whose shortcomings have come under increased scrutiny as the country grapples with soaring cases of Covid-19.

The NHI Bill tellingly omits details on the cost of universal healthcare and a 2017 white paper putting the cost of the scheme at R256 billion year at its launch, originally intended for 2025, was a “thumbsuck” from the start and is now outdated, the IRR said.

It said its analysis showed the NHI was more likely to cost around R700 billion a year when fully operational in 2026 as the government now envisages, with major tax hikes needed to generate this amount. 

“The increased tax burden will fall particularly heavily on the 700 000-odd individual taxpayers who currently pay about two thirds of all personal income tax and a hefty chunk of VAT (value-added tax) besides,” the institute said.

The IRR accused Health Minister Zweli Mkhize, like his predecessor, of shrugging off the key question of cost, slamming this as irresponsible particularly as both the National Treasury and the Davis Tax Committee, whose objective is to assess South Africa’s tax policy framework and its role in supporting inclusive growth, employment and development, have warned the scheme is unaffordable and unsustainable.

Far from being a cure-all, the NHI is likely to be worse than the problem the government is trying to resolve of too many South Africans not having access to quality healthcare, IRR deputy head of policy research Hermann Pretorius warned.

“The NHI is a fundamentally dangerous policy. It promises improvements in healthcare for the most vulnerable, but ignores the enormous failures of healthcare already under government control,” Pretorius said.

“Beyond the unattainably high expectations created by President Ramaphosa and his government, and the many substantial built-in weaknesses in the scheme, the NHI will also destroy the private healthcare system – the very system that has shown itself during the Covid-19 pandemic to be the most reliable source of care for South Africans needing medical help.”

African News Agency/ANA