24 August 2011

NHI proposals 101

Here's what everyone needs to know about the National Health Insurance proposals published recently.


The yardstick for how much people will pay for national health insurance (NHI) is their current contribution to medical funds, according to Dr Yogan Pillay, deputy director general for health.

So what else do you need to know about the proposed NHI?

Here follows a summary of the policy proposals with regards to National Health Insurance as issued by Alexander Forbes Health.

The long-awaited policy paper on National Health Insurance (NHI) was published in the government gazette on Friday for public comment. The Green Paper, as it is known, spells out the government’s approach to the transformation of South Africa’s healthcare financing system through the adoption of a National Health Insurance (NHI) model.

The NHI model will ensure that all citizens of South Africa (and legal permanent residents) are provided with essential healthcare, regardless of their employment status and ability to make a direct monetary contribution to the NHI Fund. This will be achieved through the regulation of private sector healthcare pricing and the improvement in the quality of healthcare as well as the strengthening of the planning, information management, service provision and overhauling of management systems of the public healthcare system.
What healthcare services will be funded by NHI?

The NHI will offer access to a defined package of comprehensive health services based on a Primary Health Care (PHC) approach, with a strong focus on health promotion and preventative care. Quality curative and rehabilitative services appropriate to this level of care will also be rendered at a secondary, tertiary and quaternary level.

The NHI service package will be delivered via a District Health System (DHS) according to three main streams, namely: District-based clinical specialist support teams; School-based PHC services and Municipal Ward-based PHC agents. In addition, PHC services will be delivered through accredited and contracted private practitioners practicing within a District. These providers will be reimbursed using a risk-adjusted capitation system linked to performance management.

How much will the NHI cost and how will it be funded?
The government intends implementing the NHI model gradually over a 14-year period and estimates the cost at R125 billion in 2012, increasing to R214 billion in 2020 and R255 billion in 2025 (figures expressed in real 2010 financial terms). The Green Paper makes the point that the estimated cost of NHI should be placed within the context of current total healthcare spend (including medical aid contributions estimated at R92 billion in 2010) estimated at R227 billion in 2010 or 8.5% of GDP.

The Green Paper also assumes that the increased spending on NHI will be partially offset by the likely decline in spending on medical schemes (as all South Africans will be entitled to access NHI services). While the policy paper acknowledges that the NHI will require an increase in spending on healthcare from public resources that is faster than projected GDP increases, it makes the point that the ultimate estimated level of spending on NHI relative to GDP (of 6.2%) is less than current government spending and medical scheme contributions combined (of 8.5%).

In terms of the funding for NHI, the Green Paper is vague in the detail. It emphasises that funding will come from a combination of sources including the fiscus, employers and individuals and that the subject is a matter of continuing technical work with further clarity to be provided in the next six months. 

Who is required to join the NHI?
Membership to the NHI will be mandatory for all South African citizens however the general public will be allowed to continue with voluntary medical scheme membership if they choose to do so. In other words, while participation in the NHI will be a matter of choice, the payment of a contribution to the NHI will be mandatory for all citizens and legal permanent residents who earn above a certain income.

What is the role of medical schemes in the NHI system?
Although lacking in specifics, an encouraging aspect of the NHI Green Paper is the provision made for the continued existence of medical schemes while acknowledging that the exact form of services offered by medical schemes may evolve into a fully-fledged NHI system. The existing expertise in the area of private healthcare administration and management of insurance funds is also seen as relevant to the development of adequate in-house capacity. 

How will the NHI be rolled out?
In 2012 the first steps towards the implementation of the NHI will be rolled out through a process of piloting. Based on the results of a national audit of 53 healthcare facilities conducted by the Department of Health, 10 districts will be selected for the pilot phase. The funding for the pilot phase will be via a conditional grant from the Treasury.  Thereafter additional districts will be rolled out on an annual basis provided conditions for inclusion are compiled with.

The first 5 years of the NHI will include the pilot studies as well as the strengthening of the public health system including the establishment of  an NHI Fund. The Fund will be established as a publicly administered government-owned entity reporting to the Minister of Health and Parliament.

Although the Green Paper refers to a preferred single-payer entity model with the responsibility to pool funds (collected by SARS) to purchase health services from the contracted public and private healthcare providers, the policy paper  does concede that a multi-payer system may be explored as an alternative. Cosatu has publicly opposed a multi-payer system.

The next steps
The purpose of the Green Paper is to outlines the broad policy proposals for the implementation of the NHI which is published for public comment and engagement. After the 2-month consultation process ends, a White paper will be finalised and thereafter draft legislation will be developed and published for further public engagement, before the legislation is finalised and submitted to Parliament for consideration and approval.

(Summary of Policy Paper, aka Green Paper, by Alexander Forbes Health, August 2011)




Read Health24’s Comments Policy

Comment on this story
Comments have been closed for this article.

Live healthier

Exercise benefits for seniors »

Working out in the concrete jungle Even a little exercise may help prevent dementia Here’s an unexpected way to boost your memory: running

Seniors who exercise recover more quickly from injury or illness

When sedentary older adults got into an exercise routine, it curbed their risk of suffering a disabling injury or illness and helped them recover if anything did happen to them.