Hello and welcome to the So What podcast, in
which political economic analyst J .P. Landman
discusses the issues uppermost in the minds of
South Africans. You can find a written version
of this content on J .P.'s website, jplandman
.co .za. I am Ruda Landman, and I am your host.
Hello, and as always, a very warm welcome to
our So What podcast. This one is dated the 19th
of November, 2025, and the title, NHI, where
are we now? Well, after the Department of Health's
presentation to Parliament three weeks ago and
the medium -term budget statement, NHI is back
on the front pages. Where do we start? Yes, indeed,
it is back on the front pages. You're quite right.
Look, the first point to make about South Africa's
health system is that it has to change. Why must
it change? Because affluent people or wealthier
people can belong to medical age, but the cost
of private health care has been escalating way
above the rate of inflation. So they're subject
to price pressures which are quite real. Poorer
people, on the other hand, uses the state health
system, state hospitals, and we know the state
of affairs there. Long queues, waiting times,
supplies not being available, that sort of story.
So something has to change in our health system.
I think we can take that as a point of departure.
But this is not new. Have there been... attempts
to change it over the years? Yes, absolutely.
You're quite right. The first attempt to change
started in 1994 at the dawn of democracy, when
the first change that was made was free health
care for mothers and children under the age of
six, as well as a big emphasis on primary health
care. Since 1994, government has also embarked
on a huge clinic building program precisely to
support and expand primary health care. In 1995,
there was an NHI inquiry, and it proposed a universal
basic primary health care package provided in
the public sector, but with the retention of
individual choice in the private sector, for
private sector medical aids. So it was the beginning
of a process of expanding health care. In 1999,
the Medical Schemes Act was changed as a result
of this inquiry, and a couple of important things
were introduced. Community rating, open enrollment,
and prescribed minimum benefits that all medical
aides had were adhered to. So that was quite
a step forward. In 2002, we got the Taylor Committee.
And it proposed a four -phase process to achieve
universal health care based, and this is very
important, based on multiple funds and a public
sector contributory environment. So the idea
of having a monopoly fund or just one fund was
never on the table. However, this approach of
having incremental changes and working with multiple
funds in the private sector, retaining choice
and supplement that with services in the public
sector, that came to an abrupt halt in 2007.
at the conference of the ANC in Polikwane. That
was the conference, you will recall, where Jacob
Zuma was elected president. And there the ANC
took the decision that they want to go for a
single state -funded national health insurance
scheme and minimize or limit the role that private
medical schemes will play. So the 2007 Polikwane
decision was quite an interruption. or a deviation
from the approach up till that time. Well, it
sounds as if it was an interruption of a process
that had actually been moving towards... Yes,
absolutely. No question about that. They were
steady, but certain improvements that were being
made. The law was changed. Medical aides had
to change their benefits and their behavior.
And yes, things were moving in an incremental
way towards better health care for everybody.
Why is the idea of the NHI, this single fund
for everybody, why is it so attractive to its
supporters? I think two reasons. The one is there's
the idea that there's a lot of money out there
that you can mobilize and put into the fund,
and then you can give everybody the same health
care. We will come to that. That's the one idea.
And linked to that, I think the second reason
is simply the idea of equality, the idea that
everybody should have the same health care. Some
people shouldn't have better or worse health
care than others. I think those are the two ideas
that drove the NHRA decision. Has anyone put
some numbers on the table? What will it cost?
No, not at all. But before we get there, can
I just make this one point? We have actually
covered it. And that is that the whole point
of NHI, the way it is being marketed and sold
politically to the nation, is that everybody
will get the same care. The NHI Fund, a state
-run NHI monopoly fund, will open the door to
the same care for everybody. And both the Deputy
Minister of Health as well as the Minister of
Health and officials have been very clear about
that. That's the vision. Now that brings us then
to your very important question, is it affordable?
Can it be paid for? And that's where it becomes
very interesting. If you look at the numbers,
South Africa at the moment has got 9 million
people who are beneficiaries of various medical
aids. But the country has got 64 million citizens.
So if you now take all the private health care
money plus all the public health care money,
which the state spends, and you put it together
in one fund, and you say this fund must now look
after the treatment of 64 million people. What
will then have to happen is that the current
level of medical aid covered by medical aids,
the current level of service, would have to fall
by about two -thirds or 66%. So members of medical
aids could only get about a third of what they
get at the moment? Yes, that's what it will be.
In fact, Adrian Gore from Discovery has calculated
that decline in the service level at about 70%.
So yes, it's a big drop in the service level.
So one of two things must happen. Either you
must raise taxes considerably to pay for 100
% for everybody, or everybody will have to fall
down to a much lower level of service. That's
the stark choice that we are faced with. That's
what the numbers tell us. Now, the figures that
I've just been quoting is sort of easy numbers
to calculate. Much more scientific research was
done by Genesis Analytics, and they were commissioned
by the Health Funders Association to look into
the cost of NHI. And what they have found is
that NHI will cost almost a trillion rand a year,
940 billion rand. And here is the really relevant
number. That is 400 billion rand more than South
Africa's combined public and private health care
expenditure of about 530 million. So that's what
we spend currently, 530. You've got to go to
940. It's a huge, huge increase. And it would
imply in their calculations, it would imply that
personal income tax will have to go on average
from just over 20 % to about 47 .5%. So it's
a massive tax increase. There's no question about
that. And what is quite interesting, Ruda, since
the act was signed last year, just before the
elections, what has happened is that a very wide
coalition of groups have come out against NHI
on the basis that it is not... fiscally or money
-wise feasible. It cannot be done. And I'll quote
you some names. There's the Progressive Health
Forum, and the word progressive is important.
There is the Universal Healthcare Association.
There is the Health Funders Association. You've
got business group. You've got professional bodies.
And it looks as if there are even groups in ANC
which are opposed to introducing NHI. In fact,
Aslam Dasu, who is convener of the Rikese Health
Forum, said it best. He said the NHI is fiscally
unimplementable. There is no feasible scenario
in which a single tax -financed fund can provide
all the cover for the entire population. So the
numbers are quite unforgiving. Either you drop
service levels or you increase taxes substantially,
and it's quite clear that more and more people
in society who are attracted to the idea of NHI,
are less attracted when they start looking at
the numbers and what it will mean. Have alternatives
been developed? Are there alternatives on the
table? Yes, there are. And it's quite interesting
if you go back, while the health department,
after the 2007 decision at Polikwane, were quite
single -minded in pursuing NHI, a couple of things
happened. The first one is that in 2014, the
Competition Commission launched an investigation
into the private healthcare market. They published
their report five years later in 2019, and it
was a very substantial and deep analysis of how
private healthcare in South Africa operates.
And they came out with a number of recommendations,
basically to promote competition and in that
way drive down the cost of private healthcare.
Now business for South Africa is calculated based
on these recommendations by the Competition Commission
that private health care costs can save as much
as 20%, can come down by as much as 20 % if one
implements the recommendations of the Competition
Commission. But they have not been accepted by
the Department of Health. Sorry, but the implication
is that... It could then be cheaper to be a member
of a medical aid so more people could become
members. Absolutely. If it was cheaper. Correct.
And of course, the more people join medical aid,
at the moment about 14 % of South Africans belong
to medical aid. If you can push that number to
say 20 or 25, you take pressure off the state
system. That's the other side of it. Now, that
was not the only alternative that developed.
In 2017, former President Galima Motlante led
the high -level panel review on South African
legislation, and his panel recommended a three
-tier model, which must combine private sector
medical schemes, government employee medical
schemes, and the NSI scheme for people who are
not employed. So again, the idea of a hybrid
system. In 2024, after the NHI Act was signed
into law by the president, the Universal Healthcare
Access Coalition was formed. They came together,
a variety of people from the industry, and they
developed an alternative system as well. And
what they are suggesting is mandatory medical
scheme membership for high -income individuals,
so you've got to belong to a medical aid, accompanied
by mechanisms to pool risk between schemes. and
converting the current tax benefits, which medical
aid members enjoy, into an income -related contribution
subsidy and a new public scheme to compete with
the private schemes. So again, a hybrid model,
public plus private, with subsidies where necessary
and regulation. To strengthen the public sector,
the Healthcare Coalition also proposed that the
governance model at hospitals must change. Hospitals
must be run by independent hospital boards. After
Tembisa. And I think after Tembisa, you know,
it's a no -brainer. It's really a no -brainer.
They also had a rather prescient recommendation
in their proposals. Not a recommendation, but
a proposal that the South African government
must start negotiating with the governments of
neighboring states. for those states to pay for
health care of those citizens at South African
hospitals and clinics. And given the problems
that we have around that, protests and so on,
as I say, that was quite prescient. Earlier this
year, there was yet another alternative put forward.
Absolutely. The Health Funders Association put
forward a set of proposals. They call it NHI
Plus. And what is this NHI Plus? It basically
says that NHI and medical schemes must all cover
a common benefit package delivered by the public
and private providers, so same treatment or similar
treatment, and all taxpayers will contribute
to the NHI fund, in other words, a kind of a
broad tax, either directly or via mandatory contributions
to medical schemes. So you can either pay the
NHI fund or you can pay your medical aid, one
of the two, but you must belong somewhere. which,
of course, is the same as the Universal Health
Care Coalition. Now, like the Health Care Coalition's
proposals, there will be a risk equalization
between funds and redistributive arrangements.
We'll see medical aid subsidizing the NHI fund
for the common benefit package. So, you know,
it's different proposals. It's different ideas.
But they all have useful elements one can work
with. They're all hybrids. And nowhere is there
a suggestion that there must only be one state
monopoly fund. Nobody is doing that, which is
the key difference between the NHI fund and what
we have currently and what is proposed. What
is the situation internationally? Britain has
famously the NHS, for example. Yes, and that
NHS has been around for almost 80 years in the
UK. Since 1943? Something like that. And yet
10 % to 12 % of the British population use private
medical health care. And the system allows that?
The system allows that. The most famous one for
South Africa would come from Thailand, where
there is the so -called 30 baht scheme. Baht
is their currency. And you pay... You pay 30
baht when you go into a clinic or hospital and
that's all you pay, nothing more. But even there,
there are free schemes and the 30 baht scheme
is only one of three schemes. And these three
schemes compete in terms of efficiency and also
delivering services to different sections of
the population. So nowhere else is there this
idea of a universal monopoly fund. To the exclusion
of everything else. Absolutely. And this is work
which was done by Andrew Donaldson and Tamar
Kahn in their very, very good report, which we
rely on a lot here in this note, throughout the
developed world. and developing world, what you
find are hybrid schemes, not just a monopoly
fund. And I think that's an important point.
Do you think the private sector needs regulation?
Oh, yes, absolutely. Remember, that was recommended
by the Health Market Inquiry by the Competition
Commission back in 2019 already, that's six years
ago. And if you look at the price rises that
we see in private medical care, which really
is becoming more and more onerous for private
medical... members and patients, yes, we do need
a form of regulation. Again, that is not a unique
thing. It is fairly standard worldwide. As you
said earlier, there seems to be a faction in
the ANC, in the health department, which is really
ideologically wedded to this single fund monopoly.
Might there be some shifts which might change
that? Yes, that's a very interesting point, and
let's look at that. What is it that must shift?
What has to shift is the idea, you can have NHI,
I mean, all these proposals contain NHI form.
What must shift is what is in the Act of Section
33 of the NHI Act, which establishes a government
monopoly. That's the key point. If you take that
out, Section 33, then... It says that medical
schemes may not provide the benefits which are
covered by the NHI. Correct. Absolutely correct.
So can Section 33 be changed? Well, let's look
at the different forces that are at work. The
first force at work is lawfare or court cases.
There are currently eight cases in the high courts
against the NHI Act. Now, we cannot go through
all the arguments of all eight cases, but I think
it's fairly certain to say that at least some
of the cases in some of the aspects which they
challenge will be successful. There's a ninth
court case, which is not against the NHI Act,
it's against the National Health Act, which is
different, and it challenged the notion that
doctors can be prescribed where they can work.
This was declared unconstitutional by the High
Court. sections 36 to 40 of that act. It was
appealed by the health department and it served
before there was a hearing in September before
the constitutional court and we're waiting for
the outcome of that judgment. But that's the
National Health Act. The NHI Act, as I say, being
challenged by eight court cases, there will probably
be some adverse findings and then you will have
to do a redesign. There are people who are suggesting
that it's a deliberate political strategy to
let the court cases run, let them rule against
the parts or totality of the act, of the NHI
Act, and then you're forced to redesign. There
are people saying that's a strategy. But lawfare
is certainly one force. And what is happening
politically? Politically, it's very interesting.
In January, the DA launched a complaint at the...
a clearinghouse which deals with disputes between
coalition partners, members of the government
and national unity partners. And that was resolved,
according to the Minister for Planning, in an
interview that she gave to News24 in January,
that was resolved with the ANC agreeing to take
Section 33 of the Act out. However, the Health
Minister... January 2025. January 2025, the beginning
of this year. The health minister, Minister Motsoledi,
reacted very vociferously and said, no, that
will never happen. But nevertheless, there was
an agreement. I have made inquiries whether the
agreement was reached and there is confirmation
that it was reached. But since then, everything
went quiet. And I think that gives credence to
the view that political leaders are waiting for
the courts to pronounce. And then you can start
the political process of redoing the act. They're
not putting their political capital on the table.
Not yet. Before it's necessary. Before it's necessary.
So that may or may not be the case. That was
in January. In February, there were press reports
that factions in ANC have put forward. suggestions
on the NHI Act, which provided for the NHI Fund,
as the Act does, but also for private medical
aids to keep on functioning and servicing people.
So it's a kind of, again, the idea of a hybrid
system. Now that proposal, those proposals would
take care of the Section 33 monopoly issue. But
again, it went quiet. The minister was not happy
with the reports and he said, no, it won't happen.
Everything went quiet. So there's something brewing
in the political sphere and we will see what
comes out. And the minister is obviously not
the only voice in this whole bigger debate. I
think that's an extremely important point you're
making. In fact, I think the more important voice
when it comes to NHI is not the minister of health.
It's the minister of finance. For two reasons.
Only the Minister of Finance can impose money
bills. The Minister of Health can't do it. It's
a technical thing and that's what it is. But
secondly, the question is, is there money? Now,
it's very interesting the medium -term budget
statement that we had last week. The Minister
was very emphatic that he's not going to take
away or abolish the medical aid tax credit which
medical aid members enjoy. He called it, quote,
unquote, an attack on the middle class. Those
are strong words. Those are strong words. So
it tells you where the minister comes from. Now,
this is important because abolishing the tax
credit and taking that money into the NHI fund
is one of the ways in which the health department
wanted to finance or wants to finance the NHI
fund. It's one of the pillars of their whole
building. And if you now take that out, there
is even less money available. So the fact that
the Minister of Finance has come out so strongly
against it, I think is quite a serious indication.
If you look at the budget numbers that we got,
both in May with the main budget and now last
week with the medium -term statement, it's quite
clear that there isn't a lot of money for NHI.
In fact, there's about just under 10 billion
rand allocated in the budget to NHI, and that
is for developing a patient information system,
developing a central chronic medicine dispensing
and distribution system, and a medicine stock
surveillance system. So you're talking about
infrastructure. You're talking about technical
infrastructure that helps you to spend the money
better. That's what the 10 billion is going for.
That is not nearly enough. If you think that
you spend 530 billion on health in South Africa,
10 billion is really nothing. So I don't think
there's going to be money in the next few years
for NHI. We can take that as a fairly certain
thing. So you've got court cases, you've got
politics, you've got the pressure from money.
Those three forces may force a change in thinking.
But there's a fourth force which I think is also
important, and that is the difference between
insiders and outsiders. What do you mean by that?
I saw that heading and I wondered. What it means
is that Section 2 of the NHI Act is applicable
to all of South Africa, but not to policemen,
not to members of the Defence Force, and not
to members of the State Security Service. So
those three categories of employees, state employees,
are excluded from the Act. Now, what it means
at the moment is that the roughly 1 .2, 1 .3
million civil servants all belong either to GEMS,
GEMS is the Government Employees Medical Service,
a medical scheme, or in the case of higher ranking
officials, many belong to Discovery and other
funds. They've got more discretion in who they
can belong to. Now, if you're going to say to
all these people, guys, you must now stop being
part of GEMS, you must stop being part of Discovery
or whatever other fund you belong to, and you're
now going to belong to the NHI. But by the way,
this does not apply to soldiers, policemen and
spies. I don't think the public sector unions
will take kindly to this. They are, the COSATU
public sector unions, COSATU aligned, are very
much in support of NHI. I'm not sure they will
stay in support if they see this kind of discrimination
and, you know, how it can affect them. and they
may have to pay more taxes. So this inside and
outside the divide could also still play a role.
So you've got these four things. You've got lawfare,
you've got politics, you've got money, and you've
got trade union pressure. And that may result
in a change in the NHI approach. And talking
about trade unions, there are new developments
on the ground, which also may... change things
over the next years? Yes, not a hell of a lot,
but there is, for example, in August, NUMSA,
which is the most left -wing trade union in South
Africa, they are left, of course, out there,
and they are very much in favor of things like
the NHI and so on. They negotiated an agreement
in the Motor Industries Bargaining Council. It
was the first in that industry for lower -paid
garage workers to belong to a medical aid fund.
Now, you're talking about people who don't earn
a lot, people who are semi -skilled, low -level
skills, and they have now been given the benefit
of a medical aid with certain benefits. I think
we will see more and more of that kind of agreement
being made, and that creates a reality on the
ground that you cannot ignore. It's another group
of people that you will have to say to, sorry,
guys, you must now stop belonging to your fund.
We're going to transfer the money to NHI. The
unions are also not going to just wait for NHI
to happen. In the presentation to Parliament,
the department said 15 years. Absolutely. That
is a new idea. It is a new idea. If you look
at the timelines in the Act, signed and approved,
the timelines are much, much shorter. So there
has been what I would call a swerve to realism.
In terms of the timelines, it should have kicked
in now in the 25, 26 financial year. Well, it
hasn't kicked in. We know that from the budget.
And we know the minister has said he's not going
to cancel tax credits. So although it was supposed
to be year one, it's not. So there has been a
swerve away from the rigid timelines in the act,
and I would say unrealistic timelines, to a much
more realistic approach. The thing that we can
take from that, Ruda, is that NHI is not going
to be a big bang. We're not going to start on
the 1st of January of a particular year and now
there's NHI and everything changes. It's not
going to be like that. It will be an incremental
process over time. And in the case of the department's
schedule, over 15 years. Now the point is, a
lot of water in 15 years is going to flow under
the NHI breach. I mean, for one, in 15 years
you can have enough economic growth. to generate
the wealth to enable the country to afford better
universal health care. That's one. Secondly,
over 15 years, you can find many new and other
ideas developing, as we have already seen from
the alternatives proposed, that can improve the
current NHI dispensation, or proposals rather.
It is a bit ironic that between 1994 and 2007,
we had incremental reforms towards, call it universal
health care, that was scuppered by the NHI. Now
the NHI itself wants to use the incremental approach
over 15 years. It's something like karma. in
that. In 15 years, of course, the political landscape
may also shift. I am quite sure it will. I'm
quite sure it will. And it'll create a reality
that the current NHR planners will have to deal
with. So what? There's a lot of information in
this half hour. Yes, I'm afraid it is longer
than usual and we apologize for that, but it's
a complex topic and it may pay you to actually
read the document itself. But back to the old
thing of so what, what are the so what's? Well,
the first thing, the health care in South Africa
is unsustainable and it has to change. I think
there's nobody serious that really disagrees
with that kind of approach. We had huge deregulation
in the late 1980s and the beginning of the 1990s
with the medical professions. And it is creating
all kinds of results that is not working neither
for private patients nor for public patients.
The second so what is that the NHI in its current
form is fiscally and institutionally. unimplementable.
And that was Aslam Dasu of the Progressive Health
Forum's eloquent summary, and one can't really
improve on that. It is not fiscally and administratively
or institutionally implementable. Thirdly, from
all evidence, and this is really the nub of the
story, a hybrid system in which NHI exists alongside
private funds is the better route to wider and
better healthcare. That idea of not having a
monopoly, but having a hybrid and this competition
between funds and suppliers is a key issue. Regulation
of the private sector health sector to curb excessive
costs is an essential part of reform. As I've
said, the business for South Africa has calculated
that if we implement the recommendations of the
health market inquiry, it can lower private costs
by as much as 20%. So it is something that must
be part of a reform program. And I think lastly,
both the Department of Health and the other side,
the people who say no NHI at all costs, no, nothing,
never, I think both of them must climb down a
bit. and come to the middle and develop, must
take a step back and come to the middle and develop
a different route to the ultimate aim, which
is better healthcare for all. Thank you very
much. Thank you for all the work that went into
this because there is so much information out
there and to get it into a structured form is
an achievement. Thank you very much. Thank you
for listening to the So What Podcast. If you
enjoy this content, please don't forget to leave
a review and a rating, and please consider subscribing
so you don't miss any future episodes. Also,
tell your friends. Remember, you can find a written
version of all JP's content at jplandman .co
.za.