There has been extensive discussion regarding the National Health Insurance (NHI) Bill in South Africa, but what impact will it have on citizens’ finances specifically? President Cyril Ramaphosa officially approved the bill on the 15th of May 2024, following more than ten years of anticipation.   The bill’s approval by the President means that the NHI will now be put into action. It is important for South Africans to comprehend the content of the bill and the issues that have been raised by important figures in the healthcare industry. 

What Is The National Health Insurance (NHI)?

According to the South African Department of Health, the NHI Bill is a government fund used to purchase healthcare services for South Africans from public and private sector healthcare providers. The goal of the NHI is to lower healthcare costs for everyone and make healthcare more accessible. In essence, the NHI will care for healthcare expenses and remove fees at healthcare facilities, similar to medical insurance programmes.

Why Is The NHI Bill Necessary?

The Constitution recognises healthcare as a fundamental human right, stating that “everyone has the right to have access to healthcare services.” Essentially, the NHI Bill aims to provide universal access to quality healthcare for all South Africans. As a result there are a few reasons as to why The NHI Bill is necessary: 

• Despite an increase in the government health budget, rural communities continue to face challenges in accessing healthcare services even with the presence of more public hospitals and clinics. 
• Residents in urban areas are forced to rely on overcrowded public health facilities that have limited health professionals and inadequate equipment. 
• The amount spent on healthcare for individuals with medical aid is significantly higher, five times more, than for those who depend on public health facilities. 
• The healthcare disparity between the wealthy and the less privileged is growing, going against the country’s policy of equality in other sectors. 
• While the majority of patients utilize public clinics and hospitals, most healthcare professionals such as doctors, dentists, and specialists work in the private sector, leading to understaffing in public hospitals. 
• The dual healthcare system has not been successful; the government sponsors public healthcare services for the disadvantaged and offers tax benefits for private medical schemes, leaving out those who cannot afford private care of health professionals and facilities in the private sector seeks to achieve this by ensuring that all citizens can receive necessary healthcare without financial barriers.

Will The NHI Bill Limit The Benefits Provided By Medical Schemes?

People will continue to have the choice  choice of keeping their medical aid schemes, although they will not be able to cease contributing to the NHI Fund. The government will no longer provide tax benefits for contributions to medical schemes. However, medical aid schemes will not be able to offer any services offered by the NHI and will only be able to provide for “complementary or top-up cover” which does not overlap with that which is provided for by the NHI.  Consequently, some people may opt to discontinue their medical aid scheme payments as it would seem unnecessary to be part of both the NHI and medical aid unless they intend to undergo cosmetic or non-essential treatments.  

The Financial Implications

Funding the National Health Insurance (NHI) is a major concern. The proposed Bill suggests raising taxes substantially to make medical scheme premiums nationalised, causing concern in the private sector. Profmed has pointed out that despite ongoing discussions since the Bill was introduced in 2009, these concerns have not been addressed. 

This method of funding could result in increased financial pressures on both private and public healthcare sectors. Combining medical scheme premiums and public funds into one NHI Fund may help improve healthcare services, but the specific benefits and costs of the NHI are still unknown.   It is challenging to commit to paying for a service without knowing the advantages it offers. 

The Financial Implications on Personal Debt

According to Business Tech, studies show that each formally employed South African would need to contribute R1,500 per month through a payroll tax for the National Health Insurance (NHI) scheme. Alternatively, there could be a 22% increase in VAT or a more than 30% rise in income tax to meet the funding needs of the NHI.  

As a result of these costs the possible effects on individuals’ financial obligations:

• Rise in Payroll Tax: The R1,500 per month in payroll taxes will decrease income considerably. This decrease could result in a surge in personal debt as people find it difficult to meet their current financial commitments.
• Possible Increase in VAT: This could result in higher prices for goods and services, causing everyday purchases to become more costly.   This may result in increased personal debt as individuals rely on credit to cover essential expenses.
• A significant increase in income tax could lead to a decrease in disposable income, adding more financial pressure on families. This could result in individuals relying on loans and credit cards to cover expenses, possibly causing personal debt to rise.
• Increasing Debt: In general, the heavy financial strain caused by these tax hikes may push many individuals towards acquiring greater amounts of debt.   The extra monthly spending or rise in living expenses might surpass the income growth, thus making it more challenging for individuals to avoid accumulating debt.

If you are struggling with personal debt due to the financial strain from increased taxes or other expenses, Vantage Debt Management is here to help. We understand the challenges that come with managing debt and offer tailored solutions to meet your specific needs. Our team of experts can provide guidance on budgeting, debt consolidation, and repayment strategies to help you regain control of your finances. Don’t let debt overwhelm you.

For the NHI to succeed, it is imperative to address its current flaws and ensure that both public and private healthcare services are world-class. This requires a balanced approach that considers practical implementation steps and thorough testing of its constitutionality. Protecting the health rights of all South Africans should remain a top priority.