South Africa: Parliament passes National Health Insurance Bill

Employer Action Code: Monitor

Controversial legislation to create a universal single-payer National Health Insurance (NHI) system was approved by South Africa’s Parliament at the end of 2023 and is awaiting the president’s signature. The proposed changes would be phased in over five years and, when fully implemented, would limit company medical plans and individual private health insurance to coverage of only those services not covered by NHI. Various groups — including from the business and private healthcare sectors — have voiced strong concerns about the potential cost (and how this will be met) and the government’s ability to properly oversee a vastly expanded system. If signed into law in its present form, it’s expected to be fiercely contested in the judicial system. Currently, no national healthcare program exists, but every resident has a right to healthcare provided by the state at designated clinics and hospitals; funding is from general tax revenue, which is distributed to provincial authorities (and combined with local revenue).

Key details

• The NHI system would apply compulsorily to all citizens, resident taxpayers and children. Individuals would be able to access, at no additional cost, NHI-contracted public or private general practitioners (GPs), clinics or hospitals closest to them.
• The system would be funded by employer and employee contributions and personal income tax surcharges. All South Africans with the ability to pay would be expected to contribute to the fund, whether they are members of a private healthcare plan or not. The rates for contributions and tax surcharges are still to be established by implementing regulations.
• An NHI Fund would contract with public and private providers for services, while members would select a GP to act as gatekeeper for services and consultations with specialists. The NHI Fund would pay healthcare providers directly for services provided to members, based on prescribed rates set by the Ministry of Health.
• NHI coverage would include basic and comprehensive healthcare services, such as primary care (e.g., doctor visits and consultations at community health centers), diagnostic services, emergency medical services, outpatient and inpatient care, dental care, medicines, rehabilitation and palliative care. A list of benefits covered would be determined by a Benefits Advisory Committee via regulations.
• When NHI is fully implemented, company medical plans and private health insurance would only be permitted to provide complementary coverage for services not covered under NHI.

Employer implications

Although the proposed new system is intended to expand access to healthcare and improve the quality of services, stakeholders are concerned regarding the government's ability to cope with the healthcare benefits and services as envisaged, the cost and the role of private healthcare upon implementation. Total spending on healthcare equaled 8.6% of GDP in 2020 (World Health Organization data), roughly half of which was private spending, primarily on voluntary health insurance. Presumably most of that spending would be shifted to the public sector under the NHI. How medical professionals in the private sector will react to the creation of a single-payer system as their primary source of income is another concern. Among companies surveyed, 77% provide supplemental healthcare benefits to employees and their families. The new system would likely affect employers’ budgets and employees’ net compensation, given the anticipated new contributions and tax surcharges, as well as private healthcare plans, as benefit coverage would be limited once the NHI is fully implemented.

Contact

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Euan Dixon-Smith

Head of Health and Benefits, South Africa

email Email phone +27 11 912 9089

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