BLSA’s CEO’s Weekly Newsletter – The NHI Bill is a threat to SA’s healthcare sector

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At the same time as the private sector is being brought in to solve the electricity and water crises, it is being forced out of the medical sector. This is schizophrenic.

Last week saw major strides forward in the legislative and policy environment, and a major stride backwards. Amendments to the Electricity Regulation Act were passed by the National Council of Provinces, meaning it awaits now only the president’s signature. This legislation consolidates the major reform effort that has been made in the electricity sector. It will result in the unbundling of the grid operator from Eskom and the establishment of an open market for electricity, radically transforming how electricity is generated and sold. Producers will compete to sell electricity into the grid, potentially reducing the cost of electricity for the first time in many years and consolidating the end of load shedding.

Similarly, the National Water Resources Infrastructure Agency Bill, also passed by the NCOP last week, is an important part of the overall strategy to stabilise water supply in South Africa. The agency will oversee the planning and implementation of large-scale bulk water infrastructure, consolidating the Trans-Caledonian Tunnel Authority and other assets to rationalise the management of bulk water infrastructure. It should be able to crowd in private sector funding, driving critical investment that is needed to fix and build new infrastructure. This is a key plank of the wider effort to provide quality clean water to all, though the last-mile efforts of municipalities still need significant work in many places.

Both of these show the power of the state and private sector working in tandem. The private sector is good at managing operational risk, raising investment and building infrastructure. It is good at maintaining infrastructure, given that it depends on consistent and functional infrastructure to provide the outputs that generate its revenue. Good partnerships between the state and private sector are formed when there is appropriate allocation of risks to those who are best positioned to manage them.

These kinds of structural reforms are vital for economic growth. They don’t deliver immediate results – rather they establish the environment in which investment can happen and, over time, much greater economic activity results. It is key to solving our unemployment crisis, which saw official unemployment reach 32.9% last week, the highest level outside of the Covid pandemic.

The National Health Insurance Bill, signed into law last week by President Cyril Ramaphosa, is a stark contrast to these. Instead of yoking the best of public and private, it poses a major threat to the private sector as it stands. Despite significant objections from the private sector, ranging from healthcare practitioners to medical aids, the president has chosen to ignore the many recommendations that would have improved the workability of a national health insurance scheme. BLSA signalled its strong concern in a media statement last week, noting that the legislation is unworkable, economically damaging and contrary to the precepts of the South African Constitution. It establishes a single buyer model – effectively the opposite of what has been done in the electricity sector – and proposes to force all other medical insurance to restrict itself to only those benefits not provided by the single fund. This flies in the face of the demonstrated success of competitive markets in providing services that the state used to monopolise.

The Bill is a huge blow to professionals working in the private sector who must now consider their options for their futures. Our ability to attract global skills depends on having access to quality medical services for their families. Our ambitions of becoming a regional hub for business across the continent is now seriously threatened. If you were looking to set up a new business with a choice between South Africa’s cities and competitors like Mauritius, Nairobi or Gaborone, where would you go?

The good news, if I can call it that, is the legislation is unworkable. There is simply no funding for it. It also faces many legal challenges; from the way it was drawn up to its constitutionality. I expect that litigation will start from various quarters about the bill. Even on its own timeline, full implementation is only going to happen after 2032/33. While it is scant assurance, I hope our healthcare professionals, as well as the many medical scheme members who depend on them, will remain committed to the existing system.

The tragedy is that there are ways to deliver universal healthcare that are feasible, which business strongly supports. Organised business, among others, made many recommendations as part of the consultation process on how these can be achieved. Those recommendations were roundly ignored. The legislation is in every way counterproductive – it will damage both the private and public healthcare systems while missing an opportunity to actually deliver improved healthcare for everyone.

There is so much that can be achieved for South Africa when we work productively together, drawing on our respective strengths. Last week in many ways showed that, with big strides to solve our electricity and water challenges. It is a tragedy that the opposite was also true – counterproductive and unworkable legislation that will leave everyone worse off. My sincere hope is that the next administration can resolve this incoherence.

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BLSA is a business organisation that believes in South Africa’s future and shares the values set out in the Constitution. BLSA is committed to playing its part in creating a South Africa of increasing prosperity for all by harnessing the resources and capabilities of business in partnership with government and civil society to deliver economic growth, transformation and inclusion.

 

 

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