The NHI Act has become synonymous with uncertainty – and with that comes an opportunity for advisers to foster stronger relationships with their clients.
Since President Cyril Ramaphosa signed the National Health Insurance (NHI) Act ahead of the national elections earlier this year, there has been a flurry of controversy around it, ranging from uncertainty to outrage.
For his part, the president was quick to talk about a phased approach, attempting to quell concerns by emphasising that nothing would be implemented any time soon. Others have been less diplomatic. Speaking at the International Pharmaceutical Federation Congress hosted by South Africa at the beginning of September, Health Minister Dr Aaron Motsoaledi likened the response to the NHI to the “swart gevaar” fear mongering of the early 1990s. Meanwhile, in the same week, Katlego Mothudi, MD of the Board of Healthcare Funders, published an article suggesting that “smoke and mirrors” are being used to hide the NHI’s flaws.
Right now, there seems to be no clear plan for how the NHI will be structured, where its funding will come from or when it will be implemented. “While the NHI represents a monumental step forward for South Africa’s healthcare landscape, the fiscal, infrastructural, and legislative challenges surrounding it are significant,” says Reo Botes, Managing Executive of Essential Employee Benefits. “The complexities involved in transitioning to a new healthcare financing system are not easy to overcome. National health was first conceived in 1995, and it has taken almost 30 years to develop the Bill and sign it into law. There has been no timeline explicitly stated for implementation; however, it is reasonable to assume that the transition from enactment to realisation is likely to be a multi-year process.”
What there is, however, is a lot of media attention around it, which creates plenty of room for clients to feel uncertain. On the one hand, clients may be concerned about what happens to their medical aid and whether they will still have access to healthcare. This could be particularly concerning for elderly clients and those with chronic health conditions. Other clients may be tempted to cancel their medical cover, believing that state-sponsored healthcare is around the corner.
“The enactment of the National Health Insurance (NHI) Bill has created uncertainty and even fear for many citizens; conversely, there is now hope created for those without access to private healthcare,” says Botes. “Thus, most of our citizens are left unsure about how this new Act will affect their healthcare cover.”
It’s in these times of uncertainty that clients must be able to turn to their adviser as a trusted source of knowledge and voice of reason to guide them on how to proceed.
NHI and the industry
If rolled out in its current form, the NHI could cause a great deal of upheaval. Centralising services under the NHI could lead private medical aids and other healthcare providers to become subject to additional regulation, as well as facing potential market contraction.
The new law doesn’t eliminate existing medical schemes but restricts them from offering cover for services already covered by the NHI, explains Varsha Vala, Medihelp’s Principal Officer. However, as with so many aspects of the NHI, exactly what these services are has not yet been defined. The limitation on the offering of medical schemes will only come into operation once the NHI is fully implemented.
“In our view, the implementation of the NHI will rest heavily on the readiness of the existing healthcare infrastructure and the healthcare workforce, public education and engagement, the political landscape, and the financial resources, of which we are cognisant is a mammoth task requiring many hands and minds to address,” says Vala.
Botes emphasis that we still have a long road ahead, which includes working out how government and the private sector can work together to make the NHI a success. “One of the complexities that still needs to be resolved is what the NHI will cover in terms of the benefits set. The entire framework for what will be delivered, how it will be funded, and how resources will be allocated must still be consulted on, workshopped, and the complete framework created. The Bill also needs to be aligned with the Constitution, and there needs to be clarity on what will happen to private healthcare products.
“Even when this is decided, there may still be gaps in cover – there is no healthcare system in the world that will be able to offer everything to everyone. Administrators and insurers will need to work together to identify the gaps in service and design products that will fill these gaps.”
In the meantime, it’s business as usual, he says. “From a consumer and client perspective, the enactment of the NHI Bill does not mean that medical aid and health insurance cover are currently affected. Advisers should continue to advise existing clients based on the current products and distribute these products to potential clients. There is no eradication of benefits, and additional limitations being placed on existing cover or reducing benefit scales in anticipation of the NHI is ill advised until more clarity emerges. Obviously, the client’s needs, and affordability remains key from an advisory point of view.”
Impact on clients
The NHI aims to provide accessible and affordable healthcare for all South Africans. However, there are concerns regarding the quality and efficiency of services that can be expected under the NHI.
“The existing doctor-to-patient ratio of 1:3000 is already inadequate, and well below the World Health Organization’s recommended standard,” says Vala. “There are also concerns about whether medical practitioners will stay in the country if they are only allowed to charge NHI tariffs, which will probably be much lower than current rates.” This means clients may need to adjust their expectations and prepare for changes in how healthcare services are accessed and funded, she adds.
It could have a big impact on tax, too. So far, the health minister has yet to share how the NHI is going to be funded. But if it’s going to be through tax, taxpayers can expect large hikes. “Recovering the estimated R200 billion for the NHI from tax money would require significant changes to tax policy, which the fiscus cannot necessarily accommodate,” says Vala. “For example:
- Collecting R200 billion through VAT would require a 6,5% increase in VAT from 15% to 21,5%.
- Collecting R200 billion from personal income tax means that tax rates would have to increase by 31% across the board, eroding people’s take-home pay.”
Taking action
While the NHI is intended to make South Africans’ lives better through providing access to healthcare, the concern is that it will have the opposite effect, making it harder for all South Africans to access healthcare and lowering the standard of healthcare available.
“There is a general understanding that the NHI is one of the best acts ever written into existence, aiming to level the healthcare playing field. However, while intentions are noble, there are caveats, gaps, and resource challenges that need to be addressed,” says Botes.
He adds that the health insurance industry has a duty to help ensure the Act is carried out in a way that benefits South Africans. “We are all citizens of this amazing country, and we will all either benefit or be negatively impacted by this Act, and the health insurance industry must use its voice and leverage all opportunities to mitigate and manage the risks,” he says.
The healthcare industry is concerned about the NHI’s financial viability and its impact on healthcare quality, says Vala. “At Medihelp, we believe private healthcare is a fundamental right and should be accessible to all South Africans. The conviction of universal health coverage or national health insurance is noble and one worth striving for. However, ‘for the sake of’ should never become ‘at the expense of’,” she says. “A partnership between the state and the private sector is desperately needed. We believe that by fostering collaboration, leveraging complementary strengths, and prioritising patient needs, private and public healthcare systems can coexist successfully, ultimately leading to better healthcare outcomes for individuals and communities.”
The industry has options it can pursue to protect members’ rights, including engaging in legal challenges against aspects of the NHI they find unconstitutional or unfeasible. Collaboration with industry bodies like the Board of Healthcare Funders (BHF) to lobby for amendments or delays in the implementation is also an option. These options are being explored.
“We are currently considering all our options and are in discussions with various role players to possibly take action as a collective,” says Vala. “Ultimately, we will act in the best interest of our members because they are our stakeholders and highest priority.”
Advisers: the voice of reason
It’s important for clients to understand that there is still a lot of uncertainty around the NHI and that any kind of roll-out is still a long way off. “Even though the president signed the Act, it has not been made operative. The president must bring the Act, or sections thereof, into operation by proclamation. This has not been done, and there is currently no indication of when and how this will happen,” says Vala.
The first sections of the Act that will likely become operative are those relating to the creation of benefit committees. These committees must then sit and determine the benefits, which could take a long period of time. As yet, no set timeline has been given for the NHI’s full implementation. “Given the complexity of the reforms required, it may take several years before the NHI is fully operational,” says Vala.
Because of the phased nature of implementation, there may be interim steps. Clients must not take these as their cue to make rash decisions. “Do not, under any circumstances, terminate your medical aid membership,” cautions Vala. “For now, we are doing business as usual, so make sure you maintain your access to affordable quality care.”
Clients must be advised against panicking and acting recklessly, agrees Botes. “What is clear is that the signing of the NHI act to law does not spell the immediate end of medical aid or health insurance,” he says. “Clients should be advised against panicking or making any rash decisions regarding their healthcare coverage. Unless specific insurers make changes to their products, benefits will remain in place, and if clients want to make changes to their cover, this needs to be done with risks and benefits in mind.”
However, it’s still a good idea to stay informed and in the current age of misinformation, it’s important that clients get their information from a trusted source. Financial advisers will play a crucial role in keeping clients up to speed and preventing them from acting on misinformation, leading to decisions they may later regret. “Staying informed of changes is imperative as we move toward the implementation of the NHI,” says Botes.
It is important to remember that the NHI is not a single event, but a complex initiative that will take a long time to implement due to the many reforms it requires in various government sectors. “The fact that the law was signed by the president does not mean rapid changes are imminent. The president must first promulgate the law or parts of it before any implementation at grassroots level can begin. Many questions need to be answered first,” says Vala.
Botes agrees. “The reality is that it will take time, potentially many years, for the NHI to get off the ground, and neither the Board of Healthcare Funders nor the Council for Medical Schemes has indicated that private healthcare offerings will cease in the near future.”
He adds that now is the time when people will be looking to their advisers for guidance. “For advisers, this time presents an opportunity to build relationships and foster deeper trust by sharing knowledge and new developments and reassuring clients that medical aid and health insurance policies remain valid until the many challenges associated with universal healthcare can be addressed.”
It’s easy to discount the importance of advice when things are going well. It’s in times of uncertainty that people see the true value of having a knowledgeable adviser they can turn to. This is when advisers can make a real difference in people’s lives.
