Repairing A Rolls-Royce: Unpacking the NHI Discourse

by May 27, 2024Article, Health, Socio-economic Issues

Having waited what should be the requisite few days for the dust to settle before commenting on something as significant as the dramatic signing into law of the National Health Insurance Bill (NHI) on the 15th of May – I believe it is time for us as a nation to have an honest and level-headed conversation about the true nature of the currently proposed health reforms.

Social and print media alike have been awash with deeply polarising headlines on the rationale behind the decision by President Ramaphosa to sign the Bill, two weeks before national elections. While the constitutionality of certain segments of the Bill are to be challenged in court, barring some impressive legal jiu-jitsu or dramatic changes in election polls, the NHI (in its current or adjusted form) is here to stay and will become a major influence on the structure of the South African healthcare system for decades to come.

It can certainly not be ignored that the timing of signing of the Bill is likely being used as a political football to score points with the voter base. It is easy to be caught up in partisan politicking, where the NHI is framed either as salvation for all of the country’s ailments or the death knell to the South African health system and economy. Yet, these narratives both serve as a clear distraction from the deeply necessary constructive analysis and critique of the Bill itself. An analysis long overdue and overshadowed, but important nonetheless, to ensure that the NHI framework is made fit for our purpose and is best positioned to tackle the many challenges it must face.

I have been involved in running NHI learning workshops around the country since 2018 for groups of health workers, activists, unions and community health workers, and it is clear that much of the popular understanding of the contents and intended implementation of the bill runs along political lines. Both praise and critique, with very little but a cursory attachment to the details of the bill.

Failings of the government

It would be remiss of me not to acknowledge the deeply valid source of the anger with and mistrust of the government and healthcare administration. It exists in those of us who have worked in the public sector, as all healthcare workers have at some point. It affects all of us who have had to resuscitate newborn children by torchlight because of a lack of electricity, all of us who have had to wait too long for an ambulance in an emergency, and who have not had the essential medications that we needed for our patients, or who have dealt with faulty poorly-maintained machinery and overcrowded waiting rooms. Administrative failing, loadshedding, stockouts and a history of tender corruption make it difficult to trust at face value any systems reform.

All this, in the context of South Africa’s significant quadruple burden of disease, makes day-to-day survival a strenuous enough task for patients and healthcare providers alike. This is not to mention the cost in exhaustion, burnout and inevitable brain drain of skilled workers. These failings fall squarely at the feet of the government.

There is much fear. There are also very real risks and obstacles to overcome. These are subverted, however, by some of the invalid criticisms driven by protectionist free-market agendas who paint the Bill with a single brush of ANC incompetence and who deliberately ignore many opportunities for structural health system change embedded in the process. We do not want the NHI to become another shipwreck on the route to Universal Health Coverage (UHC) and the goal of Health For All – as defined in the Declaration of Alma-Ata in 1978.

Health quality and structure are inseparable

Financial and quality improvement reforms are often envisioned as two entirely separate processes: “why do we need to change the financial structure? Can’t we show that we can improve the quality of services in the current system first?” This is a mistaken approach that we must dispel. Improvements in the other building blocks of the health system are inextricably intertwined with changes in structure and funding.

It should come as no surprise, though it remains shocking, that South Africa is a two-tiered health system with approximately 49% of national health expenditure servicing 86% of the population in the public sector and 51% of expenditure servicing the 14% of the population in the smaller private sector. This together, as a total GDP spend, is around 8.5%, more than covering recommendations by the WHO World Health Report to spend approximately 6% of GDP to achieve UHC goals.

Per capita spending in the private sector is nearly 5 times that in the public sector and growing! This is alien by any comparison. No country in the world has a higher proportion of health expenditure spent in its private sector – and we are more than six times the OECD average! Even within private healthcare costs, we are an outlier – with cost equivalency to the United Kingdom, Germany and France, despite their significantly larger GDP and measurably better health outcomes. Furthermore, these private hospital prices continue to increase year-on-year at rates above the Consumer Price Index (CPI), passing on a greater and greater financial burden to the middle class. This leads to medical aid benefit packages being depleted earlier each year and to out-of-pocket expenses and leaves an overburdened public health system to pick up the pieces. This is to say nothing of the inequity in staffing, with nearly two-thirds of specialists working in the private sector.

Social determinants of health and the role of community health workers (CHWs) remain on the backburner in the hospicentric debate around the NHI.

The President’s statement about wanting the NHI to build a “Rolls-Royce system of healthcare” for the country is certainly crude electioneering rhetoric. But we are currently in the situation of overpaying for a second-hand model of that very same Rolls-Royce, usable by only a small proportion of the population, running for only a portion of the year before it breaks down and being overcharged for the very parts needed to repair it. Only then are we dropped off at the taxi rank.

It can be clearly argued, with an overwhelming evidence base globally, that a tax-funded, primarily single-payer model of healthcare provision is not only a more efficient form of health financing. It also safeguards the other key provisions of UHC – namely: equity, effectiveness of care and affordability.

Yet there are many public sector interventions that do need to occur to capacitate any rolling out of NHI funds. What are some of these valid areas of contention, where groups such as Section 27, the Health Justice Initiative, TAC, Rural Health Advocacy Project and the People’s Health Movement have been vocal?

  • Major investment required: accreditation of facilities and providers by the Office of Health Standards Compliance will require major investment in public facilities to ensure that they meet newly set standards in order to access NHI funds. Without this, the Bill risks further disenfranchising public facilities and only strengthening funding streams to private facilities. Austerity budgeting only serves to further weaken these necessary systems in Health.
  • Rural areas left out: there is no clear focus on ensuring equity in resource distribution to rural areas. The availability of an NHI Fund may motivate some private practitioners, GPs and even hospital groups to move into areas where they previously did not have a sustainable customer base. However, without a focus on equity many rural communities may be left by the wayside, waiting without any mechanism to benefit from funding changes.
  • Centred on hospitals: social determinants of health and the role of community health workers (CHWs) remain on the backburner in the hospicentric debate around the NHI. Many cost-effective interventions could be rolled out to tackle some of the major disease burdens in areas of , non-communicable disease (NCD) and maternal and child health. This would require the formalisation of CHW cadres, standardised scopes of practice and training and local management systems within a Community Oriented Primary Care model.
  • No provision for refugees: registration for services by refugees, asylum seekers and undocumented individuals will need to be addressed. The Bill makes provision for SA citizens, residents, inmates and refugees. However, coverage for asylum seekers and illegal immigrants is limited to notifiable conditions, child health and emergencies. There is no rational constitutional, economic or public health provision that can allow for such a limitation. The health status of one person by necessity affects those around them.
  • Emergency care only: a focus on emergency care alone is short-sighted. For example, a Type 1 Diabetic under this system would only be able to access insulin during an emergency such as a hospital admission for a diabetic coma. They would then be discharged without chronic medication support, to inevitably return again to an ICU. Even from an economic perspective, let alone a human rights one, the logic is flawed.
  • Reform of private sector needed: The interventions outlined in the Health Market Inquiry are long overdue, almost uniformly accepted and provide a basis for reform of the overserviced private sector that can and should operate in parallel to the developing NHI.
  • Unanswered questions: Contracting Units for Primary Care (CUPS) will function at the sub-district level and serve as the basic unit through which NHI payments are transferred to public and private providers. They will need to be capacitated. How will these CUPs be managed? What administrative and accounting capacity will they have? And will there be space for community input? These are all questions that remain to be answered in practice.
  • Corruption must be designed out: Corruption in the healthcare sector can no longer be viewed as an intractable and uniquely South African moral failing. It needs to be designed out of the system, with extensive budgetary checks and balances, enhancement of District-Level Management capacity, highly transparent procurement and provider payment mechanisms and a data-led approach to priority setting.
  • Minister too powerful: The role of the Minister remains inordinately powerful under the Bill, with responsibility for the appointment of NHI Fund CEO, board members and the membership of benefits, stakeholder and pricing advisory committees. An effective fund requires a transparent and accountable oversight mechanism to protect from gross state capture.
  • Civil society oversight required: The role of civil society oversight within the Bill is relegated to the Stakeholder Advisory Committee. Those to be selected for this area of engagement are still to be defined. However, limiting critical civil society monitoring to one advisory committee will not engender trust in system reform. Accountability at all levels of the model will allow for greater protection against potential misuse of resources.
  • Standardisation needed: Definition of the Health Benefits Package provided by the NHI is essential to allow for the calculation of patient costs, assessment of whether services will be comprehensive and universally available and ensuring that they include all areas of preventative, curative, rehabilitative and palliative care. Standardisation of treatment protocols, guidelines and the use of Health Technology Assessments could uncomplicate a lot of healthcare costs in this country that are deliberately obscure.

Any one of these and a number of other issues could threaten to derail the NHI project if clarity is not sought. Many submissions on these issues to parliament and during the NHI public roadshow have simply been ignored. Yet each also represents an opportunity for significant positive reform in the current system, should they be championed.

What does the road forward from here look like?

Professor Nicholas Crisp, the Deputy Director General in charge of the National Health Insurance, introduced many of the newly appointed NHI staff at the annual Public Health Association Conference in September 2023. He further reiterated on a BBC interview on the 15th of May that NHI Fund is to be fully phased into being gradually over time, taking decades, with a number of election cycles likely to pass before it is ubiquitous.

Minister of Health Joe Phaalha has stated that the NHI will undergo a first transitional phase until mid-2026. In this phase human resources will be allocated, further NHI relevant legislation will be developed, amendments made (such as to the Medical Schemes and National Health Acts), a schedule 3a Public Entity established, and potentially some early purchasing of services for vulnerable groups. From then until 2028 NHI services will be rolled out more extensively.

Both the Discovery group and Momentum Health have released statements to their members supporting the aim of UHC and seeking to calm fears that the NHI signing means any imminent change to medical aid functioning. They have been reassuring members that the private sector will continue to exist well into the future.

Section 33 of the Bill is a key area of contention that will be challenged by these groups as it currently states that once “fully implemented” medical schemes will be limited to only offering cover for services not provided by the NHI fund. It is argued that removing this provision will allow for flexibility in care for those who can afford and are willing to pay additional voluntary costs for private services, thus decanting them from burdening the public sector. A change to this section of the Bill would have to be balanced with a reduction in the potential monopsony power of a single purchaser in negotiating and setting lower prices with pharmaceutical and medical equipment companies.

Building the Fund will require funnelling of existing funds – from government medical schemes, significant medical aid tax credits (private subsidies), general tax revenue, shifting of provincial equitable share funds and shifting of conditional grants into the fund.

Thereafter a potential payroll tax and a surcharge on personal income tax may be introduced through a money bill by the Minister of Finance. Gradually, medical aid spending will reduce as the population moves away from a reliance on private schemes which are no longer subsidised.

Five NHI Chief Directorates have been established covering: 1.) User and Service Provider Management, 2.) Healthcare Benefits and Provider Payment Design, 3.) Health Products Procurement, 4.) Health Systems Digital Information, and 5.) Risk Identification and Fraud Management. Appointments in each of these directorates have been made and numerous systems will have to be constructed within each to enable the running of a health system.

Major health information systems and ICT reforms will need to be rolled out. An extensive national electronic patient records system, as well as a separate provider registration and payment system, will need to be designed and implemented – some of these processes are long underway.

If one imagines a future in which the NHI is accelerated into a workable operating form – one wherein these concerns of maladministration and payment delays are resolved (a big ‘if’) – there will still remain clearly identifiable differences between employment in the private and public sectors. For example remuneration: state employees will remain salaried workers operating within set hours and overtime hour constraints, whereas independent/private practitioners will contract with the NHI directly and likely set their own hours and earn via reimbursement on a case-by-case basis, according to the parameters set by the NHI pricing committee, in coordination with the new Office of Health Products Procurement.

There are clear differences in service incentives between these models which may either contradict or compliment each other.

Payment calculations at hospital level are based on a global budget – however there is a potential to shift to something called Diagnosis Related Groups – where hospital reimbursement is much more aligned and adaptive to the specific comorbidities of the local populations served. This will require time and extensive data management and collection.

Funds for Primary Health Care (PHC) including GPs will be transferred at the sub-district level to CUPs using a capitation model. EMS will use a capped case-based fee, with adjustments for case severity; public ambulances will be reimbursed through provincial equitable allocation.

What is needed is a collective governance that simultaneously recognises the need for financial reforms and a dramatic structural change in public sector investment and management to the district level.

Separate technical and political issues

This is not naivety or wishful thinking. This is a recognition of a clear responsibility incumbent upon engaged civil society and the state. Technical problems must have technical solutions! This is not to say that these solutions will inevitably be found, nor that they do not require constant directed effort to achieve. Improvements here must be iterative, seeking to improve step-by-step the quality and operation of the NHI model. Incrementally and not without difficulty – this is the only way the quality of health outcomes in our country will improve.

If we can disarticulate the political from the administrative or civil service aspects of governance, then critique of the NHI need not be relegated or dismissed to the realm of private sector or economic elitist interests.

It is all too easy to reduce problems to intractable ideological difference and not actually put in the work to address their solvable components. At every step along the path there are technical questions to be asked and answered.

We cannot hope to counteract any of these challenges without a public and civil society discourse that moves beyond the vitriolic and towards the details.

Dr James van Duuren is the Deputy Secretary of the People’s Health Movement South Africa. He writes in his personal capacity.

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