Resistance to NHI deductions could make e-tolls look tame
This column was first published in Business Day
The debate over National Health Insurance (NHI) is fundamentally dishonest. On the one side there is a stubborn refusal to face economic reality. On the other, there is a refusal to recognise that the system of unequal access must change.
Universal healthcare systems are becoming more common. Rwanda introduced one in 2000, providing basic benefits that now cover 92% of its population. Thailand introduced a scheme in 2001 that by 2011 covered 98% of the population. While definitions shift, one group of academics counted 58 countries that now have universal health schemes.
But in SA’s case, the probability that NHI will be successfully implemented is close to zero.
Consider the factors prominent in countries where universal health care has been successful (in part borrowed from work by academic Martin McKee and colleagues):
- Economic resources. Expansion of coverage is linked to economic growth. The direction of causation could be either way, but international studies show introduction of sustainable schemes usually happens when countries are running budget surpluses.
- Social unity. Societies that are divided are much less likely to support redistributive policies such as universal health coverage. One global study found that greater religious and ethnic variation correlated with lower public investment in healthcare. Put simply, people don’t support social systems that seem to benefit people who are different to them.
- Existing institutions. When a country has vested interests in existing private healthcare provision, including insurance and private hospitals, there is a powerful lobby to resist change.
- Windows of opportunity. Universal healthcare tends to be introduced following major shocks. The National Health Service in Britain was introduced after World War 2 and Rwanda’s following the genocide. In other countries it is often accompanied by election of a new government with a large popular mandate (as in Thailand).
- Power held by the left. Particularly in Europe, universal health coverage was closely associated with social democrat movements gaining power.
In this context, SA’s situation does not inspire confidence. The biggest challenge is economic resources. Throughout the debate over NHI the subject of how it will be paid for has been fudged. The bill says it will be funded by a payroll tax and surcharge on income taxes, as well as stripping medical schemes of their tax benefits, but there are no amounts attached.
Given that SA is already facing massive budget shortfalls out to 2025 when NHI is mean to be implemented, funding is going to require direct and dramatic increases in taxation. Given the structure of SA’s employment base, with only 10-million employed in the formal sector, the ratio of beneficiaries to payers is going to be very high. While high unionisation rates internationally have generally been associated with smoother introduction of universal health care, in SA I anticipate massive resistance from labour that will suddenly face new payroll deductions. While a progressive income tax element will also play a role, SA’s top marginal tax rate of 45% is already far higher than the world average. Workers will take to the streets while the rich take to the skies. Resistance to NHI deductions could make e-tolls look tame.
SA is also surely experiencing a low in social unity for the post-democratic era. Voting patterns make that clear. Only 27.9% of eligible voters supported the ANC in the election earlier in 2019, down from 46.7% in 1999 (the ANC still commanded a majority because of the low voter turnout). With the country still reeling from the Zuma state-capture era, trust in the government is weak. In the case of NHI, that is worsened by the poor outcomes of the trials conducted to date. We are very far from a united population with faith in the government to undertake a dramatic and fundamental overhaul of the healthcare system.