August 11, 2011 / 9:03 AM / 9 years ago

S.Africa health plan will need billions

PRETORIA (Reuters) - Plans to introduce national health insurance, one of the biggest changes proposed by South Africa’s ruling African National Congress, will require an estimated 125 billion rand in 2012 and 214 billion rand by 2020, a government source said on Thursday.

A cholera patient drinks water inside the male ward of Budiriro Polyclinic in Harare December 1, 2008. REUTERS/Philimon Bulawayo (ZIMBABWE)

The National Health Insurance programme, being discussed by the government and other parties in South Africa’s healthcare system, will require an estimated 255 billion rand by 2025, the source said, citing a policy paper due to be released on Friday.

If the NHI, meant to give the poor greater access to healthcare, is implemented, it will be one of the biggest reforms made by the African National Congress since it came to power in 1994.

Analysts said the cost of the NHI could push up the budget deficit, which is already under strain from expanding personnel costs from more than 1 million state employees and new spending aimed at reducing the country’s persistently high 25 percent unemployment rate.

“I am still of view that developmental state policies overall (including NHI) will pull the long run deficit higher to 4- 4.5 percent from around 3 previously,” said Peter Attard Montalto, an emerging markets economist at Nomura International.

Finance Minister Pravin Gordhan said the government did not want to unduly increase the burden on taxpayers, saying the insurance programme will be funded through public finances, contributions from employers, surcharges and partnerships with the private sector.

“There is money in the system and there may be extra money required,” Gordhan said.

The government plans pilot programmes over the next few years that will give it a better indication of spending and funding requirements.


The government has previously said funding options under study included surcharges on taxable income and increases in value added tax (VAT). Analysts expect the main source of revenue to come from general taxation.

But Gordhan said: “We don’t want to burden anybody more than they need to under normal taxation.”

But Health Minister Aaron Motsoaledi said the rich, who almost exclusively rely on private healthcare, may be asked to pay more to finance the public system.

“The goal is to try and finance healthcare for everybody,” Motsoaledi told reporters at a briefing.

Motsoaledi said the proposed system will not be able to mirror the advanced private healthcare sector but would give millions of poor better care.

“NHI is not intended to destroy the private health care sector. (It) is one meaningful way to reach across the wealth gap.”

South Africa is spending about 8.5 percent of GDP on healthcare but the standard of service is poor.

Contributors to private healthcare schemes are concerned that the NHI would force them to seek treatment at poorly run and overcrowded state facilities.

The policy will be published in the official government newspaper on Friday, kicking off a three-month consultation process.

“Private healthcare professionals are not opposed to the NHI because it will bring more business to them but they want to see what the paper sets out,” said Dr Norman Mabasa, president of the South African Medical Association.

“We want to see what government plans to include on the NHI and how it will be implemented. We don’t expect the free system to cover everything that private medical offers,” Mabasa said

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