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How NHI will affect your medical aid membership

The National Health Insurance (NHI) Bill aims to introduce universal health insurance in South Africa. We examine how it may affect medical aid members.

19 July 2023 · Fiona Zerbst

How NHI will affect your medical aid membership

South Africa’s National Assembly recently approved the controversial National Health Insurance (NHI) Bill, which aims to pave the way for universal health insurance.

While critics argue that NHI will be financially unsustainable and impossible to implement effectively, we investigate what the bill may mean for the country, and specifically for medical aid members.

Tip: Are you facing medical issues? A personal loan can help you pay health expenses not covered by your medical scheme.

What does the NHI Bill entail?

National Health Insurance aims to provide quality healthcare to all South Africans, regardless of socioeconomic status. The initiative entails pooling money to provide affordable personal health services for everyone.

The pooled funds would come from general tax revenue, payroll taxes, surcharges on personal income tax, and reallocated funding for tax credits currently paid to private insurers.

Once implemented, NHI would function like a mandatory state-run medical aid. Medical aid schemes would only be able to pay for products and services that the new fund doesn’t cover.

No need for concern - yet

Having all South Africans reliant on NHI would increase the burden on the system, which is why medical schemes must be allowed to function, says Dr Ryan Noach, CEO of Discovery Health.

However, medical aid members shouldn’t be overly worried about the implementation of NHI just yet.

“The proposed model requires significant health system strengthening, which means that full implementation may take many years,” Noach points out. “It will also require substantial investment in health system improvement.”

He also believes the bill will face legal challenges, and may be contested on constitutional grounds.

Currently, medical scheme funds are protected under legislation; meaning the government cannot access them to fund NHI. These are seen as mutual funds, whose pool of money belongs to medical scheme members.

Deon Kotze, chief product officer at Discovery Health, says medical schemes and the private healthcare sector will continue contributing to the health and productivity of the economically-active population while the draft legislation is finalised.

Why is NHI viewed as problematic?

Noach says pooling all money currently spent on public and private sectors into a one-size-fits-all NHI will not yield sustainable results. 

“Such an option would only be acceptable if it enabled current levels of medical scheme benefits for all. Unfortunately, this is unaffordable. It also doesn’t consider the challenge of collecting additional taxes based on current private healthcare expenditure,” he says.

“The reality is that medical scheme members would only be satisfied if the NHI could deliver care relative to what they currently receive. If not, they would want the opportunity to buy supplementary cover, which would mean an increase in required expenditure – and this is only likely to be accessible for a few.” 

A Fedhealth spokeperson notes that removing the tax credit attached to private medical schemes membership will have a noticeable effect on members’ take-home pay, including those belonging to the Government Employees Medical Scheme (GEMS).

It remains to be seen whether South Africans, including government employees, will accept this move.

Noach says that while South Africa has the capabilities and resources to work towards universal health coverage, this will require time and excellent leadership. A better course of action, he believes, would be to strengthen the health system through public and private partnerships.

Tip: Build up a medical expenses nest egg by investing in unit trusts.

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