The National Health Insurance Act and your medical aid


The National Health Insurance (NHI) Act has already been through the full parliamentary legislative process. The Portfolio Committee on Health approved it in May 2023, parliament passed the Bill in June 2023 and sent it to the National Council of Provinces (NCOP) for approval. Major stakeholders in the process raised a number of objections to the Bill at that point, largely to do with the financial, constitutional and operational viability of the NHI as laid out in the Bill.

Despite these objections, the NCOP passed the Bill in December 2023 without any significant amendments, and President Ramaphosa signed it into law on 15 May 2024. The next day, the Bill was gazetted as the NHI Act, but with no effective operational and implementation dates yet stipulated.

There has been much debate about how the NHI Act will affect private healthcare provision in South Africa. But what are the facts?


All of us have the right to accessible, quality healthcare


The NHI is a health insurance system that aims to pool funds to provide access to quality, affordable health services for all South Africans based on their needs, regardless of socioeconomic status. As the government has repeatedly stated, the goal of the plan is universal health coverage, the term used by the United Nations World Health Organization to distinguish such plans from private health insurance policies, commonly called medical aid schemes.

The NHI plans to provide equity and access to primary healthcare for all South Africans, regardless of income or contributions to existing private medical aids. The stated goal is to create 1 public health fund with adequate resources to plan for and meet the health needs of the entire population. As supporters of the NHI point out, current medical aid schemes and hospital plans cater only for those South Africans who can afford them.


What will happen to private medical aids?


The question those who already pay for private health cover are asking, is what will happen to private medical aid schemes now that the NHI is being implemented? Private healthcare funders operate these schemes in partnership with healthcare providers, including private hospitals, and specialists and general practitioners in private practice. They provide you with healthcare that your medical aid pays for.

According to the NHI Act, private healthcare schemes will continue to exist, but their role will change. They will provide cover, on a voluntary membership basis, for services that the NHI fund does not cover.

Private healthcare providers will continue to operate, but under the auspices of the NHI, their fee structures will change. In addition, no healthcare or related providers (such as private ambulance companies) will be allowed to deny services to anyone who is not covered by private health insurance or medical aid.

The implication is that private healthcare providers must now treat anyone, but they will only be allowed to charge NHI rates (which the NHI fund will pay) for patients without private medical coverage.


The future of private healthcare


The future role of private medical aid schemes once the NHI is implemented is a central issue. The Act states that when the NHI is ‘fully implemented’, medical schemes will not be able to provide cover for services that are paid for by the NHI. The private healthcare insurance industry takes the view that the NHI will limit healthcare provision simply because of funding shortfalls, mismanagement and corruption, as has been the case on many occasions at public healthcare institutions. 


The success of the NHI will depend on how reliably it is financed, resourced and implemented


The private healthcare industry has already stated that limiting the role of medical schemes will not work, because the public health sector has insufficient resources to meet the needs of all South Africans – a cornerstone of the NHI policy. Private providers also argue that preventing those who can afford medical aid from using private facilities, and forcing them to use the NHI system instead, will increase the financial burden on the national budget and reduce the resources available to people who need them most.

Here are some other objections to the scheme as it stands that private healthcare insurance providers have raised:

  • It is not certain when government will consider the NHI ‘fully implemented’, as stated in the existing legislation. Resource constraints are likely to delay full implementation for several years.

  • There is no clear definition of services that the NHI will cover, and it appears that government will revise this definition at regular intervals.

  • The NHI Act is still open to interpretation. It states that medical schemes cannot cover services that are covered by the NHI. At the same time, the Act states that to obtain reimbursement, patients will have to follow the NHI’s ‘referral pathways’. If patients choose their own providers, they will not be able to claim from the NHI, but they will be able to claim from private health insurance.


How will we finance the NHI?


For most South Africans, sick of the high cost of private healthcare, a reliable, cheaper national alternative makes a lot of sense. But any fundamental change that improves quality and access and seeks to contract with private providers will need substantial additional funding, which National Treasury has not yet costed officially.

At this point, government might consider payroll taxes and a surcharge on personal income tax as sources – but given the general state of the country’s economy, this is likely to take longer than imagined. National Treasury has committed to publishing a costing document, and the Act itself specifies that payroll taxes and a surcharge on personal income tax could be considered as sources of funding.

But the Minister of Health has also said that he expects no tax changes over the 3-year period of the current Medium Term Expenditure Framework. This suggests that the rollout of the NHI will be slow unless there is a substantial improvement in South Africa’s economic prospects.

Nobody should be denied access to quality healthcare, but existing inequalities in South Africa make this difficult to achieve – as the history of our public health sector demonstrates. It’s not simply a matter of devising policy and passing legislation. The success of the NHI will depend on how reliably it is financed, resourced and implemented.

For the foreseeable future, it’s likely that the NHI will contract with some GPs to supplement primary care services, and that it will contract out certain high priority services to address specific gaps in public sector provision. If the NHI achieves this, it will already be a significant step forward for access to care in South Africa. Beyond that, it is also likely that public sector clinics and hospitals will continue to deliver the vast majority of NHI services, and that medical schemes will continue to fund private hospitals, specialists and other providers.

We have a valuable, highly skilled and world-class healthcare professional community in South Africa. These professionals work hard, provide excellent care, and are committed to our country.

Stay informed about the progress on the NHI and its implications for your private healthcare priorities. Until there is a plan to roll out and finance the implementation of the Act as it stands, private cover for you and your family remains an investment in your long-term well-being. Nedbank is here to help – contact our Value for Life brokers now.