National Health Insurance (NHI) Bill: Department response to public submissions (with Ministry)

Meeting report

Chairperson’s opening remarks

The Chairperson congratulated the Springboks, as they have made the country very proud. He said that the Committee would want to wish every player good health. The Springboks have made South Africa number one in the world.

He noted that the National Health Insurance (NHI) Bill was referred to the Select Committee on Health and Social Services in the National Council of Provinces (NCOP) in June 2023. The purpose of this meeting was for the National Department of Health (NDoH) to brief the Committee on its responses to the written submissions on the Bill.

Introductory remarks by the Minister of Health

Dr Joe Phaahla, Minister of Health, said that the Department had gone through the written comments that were sent to the NCOP on the NHI Bill. The Department supported the NCOP during the briefings to the provincial health portfolio committees and the public hearings in the nine provinces.

The written submissions came from a diversity of medical and health organisations, businesses, civil society groups, and individuals. The Department’s response focused on the common issues that were raised. Most of the issues that were raised are not very different from what had been raised when the Bill was before the National Assembly, but the Department has diligently responded to those issues again.

He assured the Committee that the Department was available to assist with any matters that arose during the public hearings.

NDoH responses to written submissions on the NHI Bill

Dr Nicholas Crisp, Deputy Director General: NHI, took the Committee through the summary of the issues raised in the written submissions, and the Department’s responses.

• Some stakeholders said that it is unfair for the state to impose that everyone’s healthcare needs must be funded by a few taxpayers, that NHI is not a good policy solution, and that it does not lead to the realisation of equity in health.

In response, the Department said that the NHI is a health financing system that reforms and redesigns the funding mechanisms in the health system to create a strategic purchaser to meet the personal health needs of all South Africans. NHI is a policy designed to contribute towards the state’s obligation to progressively realise the right to health for all.

• Some stakeholders said that the NHI violates a number of constitutional provisions, such as the right of choice of users, professional autonomy, and the right to economic activity.

In response, the Department said that the NHI builds on the provisions of the Constitution, especially from the Bill of Rights. NHI is intended to support the realisation of every citizen’s right to healthcare.

• There were a lot of comments about ministerial overreach, and that the Bill allows the Minister too much influence over the operations and functioning of the NHI Fund. Some want Parliament to appoint the ad hoc panel.

In response, the Department said that the Minister is the Executive Authority tasked with ensuring effective, equitable, and accessible healthcare to the entire population. The powers indicated in the Bill are intended to support this. Bill B contains changes that accommodate mechanisms for stronger governance, with the Minister engaging with Cabinet on appointments where necessary.

• Some stakeholders are concerned with the future role of provinces.

In response, the Department said that Clause 32(2) is key to the shifting of the public health sector funds to the NHI Fund as the functions are re-aligned to enable the strategic purchasing of personal healthcare services for the population. This will occur as the purchaser/provider split is implemented and the provinces are delegated only the provider functions.

• Many stakeholders have raised the issue of corruption and fraud.

In response, the Department said that corruption and fraud are widespread in the country and are common in both public and private health sectors. It is often the complexity that creates perverse incentives and many ways to hide illegal and unethical activities, but moving towards a one-payer system that has one common set of benefits removes many of those perverse incentives.

• Some stakeholders raised concerns about the NHI Fund’s ability to manage the amount of activity and money.

In response, the Department said that all public entities are governed by the PFMA, and all Schedule 3A entities report to Parliament. Until the Fund is capacitated (Phase 1), Department officials will manage functions and transfer the administrative processes to the entity. Policy on recruitment and other HR matters will be separate from the public service and will be published by the Board, so it will be in the public domain. People with appropriate skills will be recruited from the many competent bodies around the country.

• Some stakeholders also claimed that South Africa’s economy is too weak and that it cannot afford to finance NHI.

In response, the Department said that the NHI is not designed to simply request more funding into the health sector. Tax is not only paid by the employed – all 62 million people in SA pay tax (including indirect taxes such as VAT, fuel levies, etc) so even poor people contribute to the fiscus.

• Some stakeholders raised concerns about the funding (especially on affordability and taxes).

In response, the Department said that Clause 49 (2)(a) of the Bill provides for sources of funding including the additional sources that will be mobilised. Clause 49 also provides a framework that outlines the options that the government must pursue in raising revenue for the NHI Fund using a mandatory pre-payment system. The determination of the actual extent of the taxation will be articulated in a Money Bill that is developed and published by the National Treasury.

• Some stakeholders questioned the role of medical schemes and the impact on members of medical schemes.

In response, the Department said that the introduction of single-payer NHI ensures that the Fund will strategically utilise its capabilities to purchase healthcare services on behalf of the entire population, through utilising mechanisms that draw on all health sector resources, public and private. Clause 33 is inevitably a central tenet of the health sector reforms. The Constitution regards everyone equally before the law and enjoins the State to undertake rational and reasonable steps towards progressively ensuring that everyone, not only those with control of resources, have access to needed healthcare services.

• There were some concerns about professional autonomy and individual choices

In response, the Department said that there was no intention to limit practitioner autonomy. Practitioners will need to be accredited in order to link to the digital system for reporting and for payment. The Fund will pay for benefits, including the products in the guidelines. Product prices will benefit from economies of scale. Professional Councils will continue to regulate the scope and ethics of professions (not NHI Fund).

Each person (user) will choose their own principal primary health care (PHC) provider. Users must commence (non-emergency) care in PHC either at a general practitioner or a clinic. These providers must refer to another practitioner or establishment if they cannot care for the person. The referral pathways will be based on availability (bed, etc) and accessibility for the patient/user.

• There were a lot of comments about health care for foreigners. There are many opposed to the care of foreign nationals and others adamant about inclusion.

In response, the Department said that in principle, the Fund must honour all international agreements in caring for people in the country. The Bill proposes that those illegally in the country be cared for but not all of the benefits of those legally in the country – the exception is children and pregnant women, all of whom must be cared for.

• Some stakeholders made comments about the transition and timing.

In response, the Department said that the transition to the NHI will be a journey and not an event. During the transition, the Bill says nothing is changed until it is actively changed. Clause 59 states “different dates may be fixed in respect of the coming into effect of different provisions of this Act” to allow for capacity to match functions. The NHI will be implemented in two phases.

• Some stakeholders were opposed to the exclusion of the Competition Act from the NHI Bill.

In response, the Department said that the Fund must be in a position to effect monopsony purchasing and to contract providers of health care without being subjected to the competition laws. Clause 3 (5) on the NHI Bill has also been reformulated to exempt the Fund but not the providers and suppliers of health care services from the Competition Act to prevent collusion amongst providers and suppliers. NHI Fund should not be subjected to the Competition Act because health is a public good, and competing for selecting all providers would be counter-productive.

(See Presentation)

Minister Phaahla noted that the presentation had focused on the various issues that were raised in the written submissions, although there were submissions that generally accepted the provisions in the Bill.

Discussion

The Chairperson thanked the Department for the presentation. He invited Members to comment.

Ms E Nkosi (ANC, Mpumalanga) appreciated the detailed and informative presentation. She observed a few issues during the public hearings. One of the issues is that the Western Cape’s public hearings were conducted outside of the period allocated to provinces, so the outcome of those public hearings was not part of the report.

Another issue is that some written submissions were not accepted by the Committee Secretary, because they arrived an hour late. This meant that these written submissions were not incorporated into the report. She proposed that all submissions must be captured and included in the report so that the Department can respond to all the written submissions received.

Ms D Christians (DA, Northern Cape) said that many stakeholders raised the issue of funding and financial transparency of the NHI Fund. This has remained a concern. To date, the Department has not been clear on the detailed breakdown of how the NHI would be funded, especially on the total estimated cost and the tax implications for South Africans.

Although Dr Crisp highlighted that South Africa currently spends 8.5% of gross domestic product (GDP) on health, this substantial amount that is currently being spent on health has not shown any significant improvement in the country’s healthcare system. South Africa's healthcare system has been steadily and drastically declining. The current tax revenue has not had the desired outcome in the health care system, because of fraud and corruption in the Department. It is not clear how the 8.5% of GDP would create a different outcome under the NHI. The potential strain on taxpayers remains a concern.

She believed that it was important to reiterate concerns about the governance and accountability of the healthcare system. She asked how the NHI Bill sought to address concerns about the governance and potential misuse of resources, especially in light of the recent incidents of fraud and mismanagement in the public sector. She asked if the Department had any safeguards in place to prevent poor governance in the future.

She said that the public health system is obviously a huge concern. She asked how the NHI Bill would enhance and refine the existing health system to address concerns about accessibility and the quality of public health services. She asked if the Department had a turnaround strategy to address the existing challenges, to ensure that the NHI will result in a turnaround of the public health system. She asked how the NHI Bill aimed to strengthen human resources and improve the working conditions for healthcare workers in the public sector.

Mr E Nchabeleng (ANC, Limpopo) appreciated the presentation. He seconded Ms Nkosi’s proposal that all submissions must be captured and included in the report, including the written submissions that were received after the closing date. He said that the Committee should engage on all written submissions before it proceeds to the next step.

The Chairperson noted that Ms Nkosi’s proposal had been seconded by Mr Nchabeleng. He said that the Committee’s report on the public submissions is considered incomplete because there are some submissions that would have to be captured and included in the report.

Mr M Bara (DA, Gauteng) noted that the concerns about infrastructure and human resources were some of the key issues that were raised in the public hearings. There were complaints about the standard of equipment that is available in health institutions, poor infrastructure, and lack of medical personnel, to the extent that people would have to be referred to other health institutions.

He said that South Africans might be sceptical that corrupt individuals are going to get whatever they want out of the NHI Fund. He suggested that South Africans are looking for any kind of safeguard against corruption.

He believed that the NHI could be a good prospect for the country, but the existing health services should first get to a level where people are happy and feel confident that the NHI will be able to provide quality health care for all South Africans. He questioned how the rural communities would benefit under the NHI because there is currently not enough equipment in rural areas.

He also supported Ms Nkosi’s proposal that all written submissions must be included in the report and that the views expressed in the Western Cape’s public hearings should also be included. He said that the Committee must find a way to accommodate all inputs, regardless of whether it is in support of the Bill or not because this is a democratic country. Some of those inputs might enrich this legislative process.

The Chairperson said that the Committee would follow the procedure, given that Ms Nkosi’s proposal had been seconded. This meant that the meetings on the NHI Bill would be postponed until all written submissions (particularly those that were submitted late) were included in the Committee’s report, as well as the views that were expressed during the Western Cape’s public hearings. The Department should also respond to all the inputs.

Mr Nchabeleng agreed that no input should be left behind. He asked how long it would take for the late submissions to be captured and included in the report, as this should determine when the Committee should schedule its next meeting on the NHI Bill.

Ms Nkosi suggested that the Committee should convene next week Tuesday, 7 November, as this will give the staff enough time to capture all inputs.

[The Chairperson lost internet connectivity; Mr Nchabeleng was nominated as Acting Chairperson in the interim]

Mr Bara suggested that the Department should respond to the issues that were raised in this meeting while noting that the Committee will host a follow-up meeting for the Department to provide further responses on all inputs.

Mr Nchabeleng replied that the Department’s analysis of the submissions would be inaccurate if it excluded the other inputs that were made.

Minister Phaahla concurred with Mr Bara. He said that it would be valuable for the Department officials to respond to some of the matters, based on what has been presented today. As suggested, the Department could come back and respond to the additional inputs. 

Mr Nchabeleng noted the Minister’s suggestion that it would be fruitful for the Department to respond to some of the matters today. The Department will provide further responses once all inputs have been collated.

[The Chairperson reconnected]

Responses

Minister Phaahla referred to Ms Christians’ comment about the total estimated cost and tax implications. He replied that it is envisaged for the NHI to be implemented in phases, so the costing would depend on the “package” that will be rolled out. The NHI Fund is a single-payer and single purchaser, so it will have the benefit of economies of scale. South Africa currently spends 8.5% of GDP on Health with 4.2% in the public sector serving more than 85% of the population. The idea is that the NHI would expand, by bringing in private providers at the PHC level. There will be negotiations in terms of the reimbursement for those services. At this stage, it would be premature to do a cost analysis of the services that will be provided.

He believed that those who claimed that the NHI would be unaffordable were basing this on the current costs of the private sector, especially in terms of the cost for specialists and private providers at the hospital level, which are highly inflated and not standardised. In this regard, the NHI aimed to increase regulation of the cost of the various health services.

A team had been delegated to prepare for the implementation of the NHI. The team will work out all the details once the Fund has been fully established. He reiterated that it would be premature to do costing of that nature at this stage because it would depend on the services, economies of scale, and the negotiations with providers.

He noted Ms Christians’ comment about the lack of improvement in the country’s healthcare system, despite the increased expenditure. He replied that this is because of private funding, where medical scheme cover has been rising year-by-year. The cost of medical cover has been rising above inflation, which is why various medical schemes have announced that they will be raising tariffs, even far above the consumer price index. The private sector currently serves less than 15% of the population; whereas the public sector serves more than 85% of the population, without an accompanying or relevant increase in finance. The NHI seeks to address this inequity.

It was not correct to paint the entire public health system as not being able to provide quality services because of corruption. A lot of the challenges are due to underfunding as a result of the stress on the fiscus. The NHI will make it possible for equitable distribution, to close the gap between the private providers and the public providers.

On governance issues, Minister Phaahla said that the NHI will have transparent processes in terms of the establishment of the Board and other areas of expertise. He noted that some stakeholders proposed that the Board should be appointed by Parliament. He said that the Department was hesitant about this because Parliament is a political structure. The Department believed that the appointment of the Board should be done in a transparent manner, in consultation with the Cabinet, and that this should be reported to Parliament.

He agreed that the improvement of quality health care is “not a question of either-or”. The Department believed that the equitable distribution of funding under the NHI would ensure that all healthcare facilities are accredited and that the quality is kept up to standard. This also addresses the question about the turnaround strategy. The Department was in consultation with the National Treasury to look at other forms of funding beyond the year-to-year allocation of the fiscus, especially for the improvement of infrastructure and equipment at a faster pace.

The challenges of human resources are due to the skewed nature of funds between public and private health care. Almost all healthcare professionals are trained in the public health system, but once they become qualified specialists they migrate to the private sector that can provide them with higher levels of income. Minister Phaahla said that the NHI would resolve this by redesigning a more equitable distribution of funds so that the public sector can also contract private providers at a much better cost.

Dr Crisp explained that the GDP spent on public health care for the vast majority of the population is only about 4.2%, this translates to R5000 per person/per annum. Whereas in the private sector, it is slightly more than R27 000 per person/per annum. So, one cannot expect to see the same quality of services and environment in the public and private sectors, when the private sector has five times the amount of money available. The Department is aware of these challenges and has acknowledged them. The issue is that the private sector has enormous resources, for instance, 67% of all specialists in South Africa work in the private sector. And in some disciplines, notably in oral health, more than 90% of all dentists work in the private sector.

Reports (especially of the Health Market Inquiry) suggest that general practitioners are not used and accessed effectively. A lot of health care goes directly to specialists, which general practitioners could more than adequately attend to at a lower cost. Because the majority of the specialists are in the private sector, the Department must find ways to improve access to specialist care in the public sector, either by bringing those specialists back into public facilities or by referrals.

He referred to the question of how accessibility would be enhanced under the NHI. He mentioned the example of the community in Diepsloot, Gauteng, that must currently access hospital services at Charlotte Maxeke or Tembisa Hospitals. It is quite a mission to get to these hospitals, especially by taxi during peak traffic hours. He noted that there are several private hospitals along the way. Ideally, people who have routine hospital needs should not be going to big tertiary hospitals, as this should be reserved for people with serious illnesses. Under the NHI, the Fund would purchase health care from private hospitals that are nearer to the community of Diepsloot, which would take the load off Charlotte Maxeke and Tembisa Hospitals. If this is done countrywide, it will divert the over-utilisation in the private sector. It will enable highly competent specialists in the private sector to cater to patients who are really sick, instead of catering to minor conditions that a general practitioner can attend to. This realignment will not happen overnight but over time it will reduce the unit cost of care for a patient, will ensure that there is greater access to a larger number of people, and ensure that the resources and skills are utilised effectively.

Dr Crisp referred to Mr Bara’s comment that the Department should first fix the public healthcare sector, before considering the NHI. He replied that in order to fix the public sector, the Department would need a greater allocation of funds, which will clearly not happen in the current climate. At the same time, the country has a failing private healthcare system. Over 25% of all people who are on medical schemes only have hospital plans, which means that they must pay out of pocket for primary health care; and many times when they go into the hospital they are still not covered for the care, because the amount that they paid and their levies are insufficient to cover a significantly big package.

The Department believed that in order to address the challenges in both the public and private healthcare sectors, this required the country to integrate resources, intellect, and the way in which things are done. The NHI will provide the framework for this path.

Closing remarks

Minister Phaahla referred to Ms Christians and Mr Bara’s concerns about corruption. He said that the Department was not oblivious to the challenges of corruption. Overall, the public sector is huge and caters to the vast majority. There is a lot of awareness and interventions because this is taxpayers' money. Amongst others, the Department does have safeguards in place, such as the Health Sector Anti-Corruption Forum, which includes various stakeholders such as the Special Investigating Unit and the Hawks.

The Department is conscious of the risk of corruption and has mitigating interventions in this regard. It is mostly the tender system that bedevils our society. Despite what people think, the NHI Fund will not be too involved in the procurement of goods, and the providers will not be contracted on a tender basis. The acquisition of services will be done in a very standard and transparent manner.

The Chairperson thanked Minister Phaahla and Dr Crisp for their responses to the questions. He said that the Committee would convene on 7 November for the Department to provide further responses on the submissions that were submitted late. On 14 November, the provinces will present their negotiating mandates, and the final mandates will be presented on 21 November 2023.

The meeting was adjourned.