Our in-depth look at the health minister’s legislative proposals covers the finer details and sweeping changes of the NHI megafund and its sister-Act, the MSA.

Health minister Aaron Motsoaledi presenting the NHI and MSA bills in Pretoria, 21 June 2018. Image: Matthews Diale

Before health minister Dr Aaron Motsoaledi finally unveiled details about the National Health Insurance (NHI) bill on 21 June, 11 years after its birth at the Polokwane Conference, the healthcare industry didn’t know whether to prepare for sighs of relief or nail-biting. Nearly a week later, a uniform response has yet to emerge. The bill’s contents had been a favourite guessing game of industry insiders for some time, but what the minister eventually unveiled was both in line with expectations and shocking in its potential to change national healthcare.

The press conference had actually been called to discuss not only NHI but also another proposal, the Medical Schemes Amendment (MSA) bill. The minister was quick to point out that the bills did not represent finished legislation but were being presented for comment as part of a very long-term implementation that would likely conclude in 2026. The bills were being introduced now to ensure a smooth, harmonious transition and buy the government time to amend 12 pieces of legislation the bills were in conflict with, especially the National Health Act (2003) and Mental Health Act (2003).


Motsoaledi considered the necessity of the bills to be beyond debate. “The cost of private healthcare is out of reach of even well-to-do citizens,” he stated, adding that available data reflected poorly on rising costs in the private sector. “Of the 8.7% of GDP we spend on healthcare, 4.5% is spent on private healthcare, serving 16% of the population, while 4.2% is spent on the 84% who use public healthcare. This is gross inequality by any standard.” 8.7% is roughly equal to the amount of money European countries spend on the healthcare, yet our systems and theirs differ “like chalk and cheese.”

The minister referred to a 2012 World Health Organisation study that found South Africa’s share of voluntary health expenditure as a percentage of total health spending to be the highest in the world at 42%. He characterised South Africa as the only country in the world where an equivalent percentage of money was being spent on the health of such a small slice of the population.

NHI is meant to solve this disparity by establishing a central megafund so that South Africans will be able to access quality healthcare “based on their health needs and irrespective of their socio-economic status.” Currently, the healthcare system could not be seen as being in line with Section 27 of the Constitution, which guarantees access to health services, since the distribution of services was unequal. “There is a private hospital in Johannesburg that has more gynaecologists on staff than Mpumulanga, Limpopo and Northwest combined,” Motsoaledi said.

However, he was quick to dismiss speculation that the aim of NHI was to destroy the private healthcare system. “The whole essence of NHI is that South African citizens may have equal access to public and private healthcare,” he said. “Currently, only the rich have access to both, and this is what we are trying to change.”


The minister argued that public and private health could not be seen as two separate systems, but were best viewed as “conjoined twins,” one affecting the other. As an example, he pointed to the vast amount of public money that was partly subsidising the private sector. The Government Employees Medical Scheme (GEMS), for example, was contributing R20.5 billion annually to the private sector by 2018. High-ranking civil servants who are not on GEMS, like the minister, are subsidised to the tune of R1.8 billion a year, while SOE employees together contribute R7.2 billion. There is also the matter of credits and rebates for belonging to medical schemes, currently totalling R26 billion annually. The total state subsidy of private healthcare was an annual R57 billion.

Motsoaledi confirmed that his department was well aware of the state of public healthcare, referring to the OHSC’s finding that 80% of state facilities failed inspections based on the metric of staff attitude alone. However, he emphasised that the current form of the NHI viewed poor public sector service quality and exorbitant private costs as obstacles of equal size, as outlined in the National Development Plan 2030 (NDP).

Attendees at the 21 June 2018 NHI and MSA presentation

The NHI and MSA presentation generated a great deal of public interest. Image: Matthews Diale


Nonetheless, dealing with issues in the public sector was a priority, he claimed, highlighting the issue of corruption. “Corruption really became entrenched in our system the moment service procurement was outsourced to the provincial level,” he said, adding that NHI will do away with the procurement powers of provincial MECs. Instead, NHI envisions a split between the purchasing and provisioning functions of provincial governments. Currently, the provincial health MEC handles both functions. Under NHI, administrators at the district level will purchase directly from providers accredited by the OSHC and the Treasury’s chief procurement officer. By limiting the number of hands involved in the procurement process, the minister seemed hopeful that corruption could be limited. There would also no longer be a tender process in the health department since it was seen as a major source of corruption.

Although he did not refer to it as corruption outright, the minister pointed out that private sector pricing was often unreasonable and did not at all take the patient’s financial wellbeing into account. He decried the fact that there were often different prices for a single procedure such as circumcision, which could cost up to R7000 at certain private hospitals. Meanwhile, US agency PEPFAR is paying KZN-based doctors R950 to perform the exact same procedure.

He also promised that NHI would stop fee-for-service payments, under which patients get charged for every single item or service applied during their treatment – even unnecessary ones. “If a nurse misses a vein they will throw away the needle but still charge you for it,” he said. “Never mind that you are paying for their mistake!” Instead, NHI will see the implementation of diagnostic-related groups (DRGs), under which providers will charge the fund a standard rate per procedure. “That way, the number of cotton wools you use is your own indaba”.

Although several possibilities had been looked at, including petrol levies, surcharges and cellphone levies, there was no definite word on how NHI would be funded. Motsoaledi was adamant that the responsibility for securing NHI funding rested with the Treasury and not his own department. However, as made clear by section 3 of the bill, NHI prepayments would be mandatory. “All South Africans will have to contribute to it. You can’t opt out of it, just like you can’t opt out of the Constitution.”


In contrast to the current system, in which health consumers often bypass primary care, the entry point to the NHI system would be clinics, GPs and other primary healthcare providers. “The system of bypassing primary care makes no sense,” the minister said. “You can’t have the flu and get treated by a professor of medicine.” The total cost of healthcare could be decreased by up to 25% simply by following the correct referral pathways, he said, emphasising that patients who do not do so would not receive cover under the proposed rules of the fund.

One of the minister’s more bizarre admissions was the claim that patients would only be able to use the single primary healthcare provider registered to their account to access the fund. As he explained: “You will have to decide on and register your personal primary healthcare service provider, usually in the form of a GP. But if you get the flu while you are in Joburg and your GP is registered in Durban, you will have to go to Durban to access treatment.” Strangely, this did not receive any coverage in local media reports.

In keeping with the UK’s NHS model, NHI will not be solely under state control but jointly administered by the department and many ministerial committees that will include civil society stakeholders such as academics, activists and NGO representatives. These committees will determine key factors including pricing, benefits and the future direction of the scheme.

A private healthcare expenditure infographic

Graphic showing projected increases in healthcare spending up to 2029 under the current system. Image: National Department of Health.


While details regarding the NHI attracted the most attention, the MSA was as much of a bombshell, detailing 10 comprehensive changes to the medical scheme environment. The changes are informed by the fact that medical aids are not legally supposed to be profitmaking entities. They are:


Motsoaledi was adamant that co-payments were unnecessary, saying that “either every cent charged to a patient must be settled fully or no settlement must be made at all.” Schemes cannot be said not to have enough money in reserve because of a legal requirement that forces them to keep 25% of their income in reserve. However, schemes have closer to 33% in reserve at present, totalling R60 billion. “We also contend that these reserves are mostly accumulated through high premiums, because for the last 15 years contributions have been increasing by more than consumer price index,” the minister said. Motsoaledi pointed to the experience of Egyptian implementers of universal health coverage, who did not abolish co-payments, only for them to now make up 60% of all health payments in Egypt.


Almost two-thirds of medical aid members pay up to R90 a month to insurance brokers, sometimes without their knowledge. Currently, these total R2.2 billion annually which could be better spent on patient care. “There is no real use for brokers,” Motsoaledi said. “Their job is already being done by the Council for Medical Schemes so the health system doesn’t need them.”


While PMBs mostly applied to hospital conditions, CSBs will also cover primary healthcare services including family planning, vaccination and screening services. This is because schemes often don’t pay for primary interventions that could improve healthcare outcomes later on, the minister averred, citing the lack of funding for contraceptives as an example. “I often ask schemes why they aren’t prepared to pay for contraceptives, which are cheap,” Motsoaledi said. “Let’s suppose a young woman does not receive contraceptives, as a result falls pregnant and undergoes a backyard abortion. She could easily end up in ICU and cost the scheme R200 000.”


Under NHI the registrar of the CMS will have to approve benefit options before they can be implemented. The registrar will be charged with determining whether such options are in the best interest of members.


It will be illegal to run a medical scheme without being registered as one with the CMS. This is meant to curb the large number of medical aid providers who have opted to register with the Financial Services Conduct Authority (previously the Financial Services Board).


This registry will allow the tracking of data related to option selection, member age, disease profile and the geographic distribution of diseases. This will provide information that will enable changes and improvements to NHI implementation. Schemes are traditionally reluctant to part with this information and there is currently no act to compel them to do so. The registry will be administered by the CMS.


Whereas presently contribution tables charge poor and high-income earners the same amount to access the same benefits, NHI would introduce a system whereby members would pay according to their means. “This is already the principle behind our income tax system,” the minister said. Essentially, rich members would be subsidising poor ones, healthy ones would be subsidising sick ones and young ones would be subsidising old ones.


Schemes currently compel members to use designated service providers to save money. The savings generated, however, are retained by the scheme or administrator instead of being passed on to members in the form of premium reduction. This amendment is meant to establish the principle that savings should be passed on to members, not schemes.


Between a member joining a scheme and accessing premiums there is an interim period in which they cannot access benefits. The MSA will do away with this waiting period and abolish late-joiner fees and penalties for rejoining schemes. This is also meant to protect the interests of living spouses after the passing of a principal member. In many cases, spouses who lose their significant others must first register as the principal member themselves before accessing treatment.


Key decision-making positions in medical aid schemes may only be held by individuals who meet certain minimum education requirements. This will ensure that decisions will be taken by people who fully understand the workings and implications of a scheme’s day-to-day activities.


While the industry reaction to the NHI and MSA leaned towards the positive, surveys have indicated skepticism among the general population. Nagging questions remain. The minister did not address questions about how medical negligence claims would be treated under NHI, despite the vast backlog of unpaid negligence claims threatening to bankrupt provincial health departments in Gauteng and the Eastern Cape. He also appeared to deliberately downplay the potential of corruption and mismanagement, despite the presence of both at other state-administered funds like the Road Accident Fund.

What he did perhaps achieve was to undermine the narrative that private healthcare was a working alternative to public healthcare, by highlighting its exorbitant costs in such a public forum. He also appears to have halted calls for his axing, at least for the time being. However, as Motsoaledi himself pointed out, the NHI programme represents a long-term commitment by the ruling party and is by no means his baby alone.