The contentious National Health Insurance (NHI) Act again faces court action, with HFA's NHI court challenge marking its sixth legal challenge. This time, HFA's NHI court challenge is brought by the Health Funders Association (HFA). The HFA represents a significant portion of South Africa's medical scheme industry, including Discovery Health Medical Scheme. It has formally petitioned the court to declare the landmark legislation "irrational and unconstitutional."
Financial Viability and Section 33 Under Scrutiny
At the heart of the HFA's NHI court challenge are grave concerns regarding the financial implications of the NHI Act. Specifically, Section 33 is controversial. If fully implemented, this clause would prohibit medical schemes from offering cover for benefits provided by the NHI. The HFA argues that this move would effectively destroy the private medical scheme industry.
The HFA's arguments are heavily supported by a report commissioned from Genesis Analytics, an economic consultancy. The report paints a stark picture. It contends that even under the most optimistic scenarios, substantial savings and efficiencies of at least 45.5% on current medical scheme expenditure are required. Yet, providing comprehensive healthcare for all South Africans at the level currently enjoyed by medical scheme members is "impossible."
The HFA's founding affidavit states that South Africa “lacks both the funds and the healthcare professionals to achieve that goal".
Astronomical Costs and Unbearable Tax Burdens
According to Genesis Analytics' most favourable projections, the NHI would cost more than R900 billion a year. This is R410 billion more than South Africa's current total healthcare expenditure. Raising this additional revenue would necessitate extraordinary tax increases, the report warns.
The consultancy found that to fund the NHI, a payroll tax of 25.5% would need to be introduced. This would be in addition to existing income tax. Alternatively, the average personal income tax rate would have to rise from 21.3% to 47.5% of taxable income. This would result in the highest income tax bracket increasing from 45% to an unsustainable 68.4%. Meanwhile, the lowest bracket would rise from 18% to 41.4%.
HFA CEO Thoneshan Naidoo asserted in his affidavit that the government can't raise money at this scale. The additional funds required would demand extraordinary tax increases well beyond global norms. Such amounts exceed what the current tax base can sustain. This could reduce overall tax revenue.
These concerns echo those raised by other industry bodies in their legal challenges. The Hospital Association of SA (Hasa), representing private hospitals, and the SA Medical Association (Sama), representing doctors, have voiced similar concerns. Both have independently argued against financing the NHI Act within the current fiscal environment.
Shortage of Healthcare Professionals and Deterioration of Care
Beyond the financial quandary, the Genesis Analytics report highlights a critical shortage of healthcare professionals in South Africa. The report indicates that for the NHI to match the level of care currently provided by medical schemes, the country would need to double its number of general practitioners. Moreover, it would need to triple its specialist count.
Naidoo warned that without sufficient personnel, medical scheme beneficiaries would face a significant reduction in services. They currently enjoy a higher standard of care. There would be delays, rationing, and medicine shortages.
Shortage of Healthcare Professionals and Deterioration of Care
The HFA's case further scrutinises the government's plans to scrap medical scheme tax credits during the NHI's transition period. The Genesis Analytics report projects that this move alone could render medical cover unaffordable for between 500,000 and 840,000 individuals, many of whom are not high-income earners. The report reveals that 44% of South Africa's 9.1 million medical scheme beneficiaries earn less than R16,000 a month.
The act's prohibition on medical schemes offering "supplementary cover" once the NHI is fully implemented would, according to Naidoo, "virtually obliterate medical schemes". He argued that this ban contradicts the approach taken by almost all other countries pursuing universal health coverage. These nations include those cited as successful examples by Health Minister Aaron Motsoaledi. Examples are Brazil, Indonesia, Mexico, China, Costa Rica, Ghana, Turkey, and Thailand, which do not adhere to a single-fund model.
An "Unreasonable and Unjustifiable Infringement"
Naidoo asserted that the NHI Act constitutes an "unreasonable and unjustifiable infringement" on the right to healthcare, enshrined in Section 27 (1) of the Constitution. He argued that there is "no rational relation between the severe limitations and their purpose." Moreover, there are several substantially less restrictive means to achieve universal health coverage.
A Proposed Alternative: Hybrid Model for Universal Coverage
The HFA, in line with alternatives previously suggested by other stakeholders, has proposed a hybrid model for healthcare. This model would combine the NHI with a supplementary role for medical schemes. Under this proposal, all taxpayers would contribute to the NHI Fund. Yet, individuals would retain the choice to belong to a medical scheme for additional cover. This approach aligns with an earlier NHI policy position that was abandoned in the final White Paper on NHI in 2017.
The HFA's legal action follows similar challenges from trade union Solidarity, the Board of Healthcare Funders, Hasa, the SA Private Practitioners' Forum, and Sama. The health and finance ministers, the National Treasury, and the President have been cited as respondents in the HFA's application. They have 10 days to indicate their intent to oppose HFA's NHI court challenge. The outcome of this and other legal challenges will undoubtedly shape the future of South Africa's healthcare landscape.