NHI: The good, the bad and the potentially ugly?

The current state of the health system requires significant investment to achieve the level of quality of care promised in the National Health Insurance Act, says the writer.

The current state of the health system requires significant investment to achieve the level of quality of care promised in the National Health Insurance Act, says the writer.

Published Jun 7, 2024


Hassan Mahomed

On 15 May, President Cyril Ramaphosa signed the National Health Insurance Bill (NHI) into law after it was passed by both the National Assembly and National Council of Provinces. According to the “Understanding the National Health Insurance (NHI)” information sheet provided by the government, “the NHI is a fund paid by our taxes, from which the government will buy healthcare services for all of us who live in the country from healthcare providers in the public sector and private sector”.

The main driver behind the NHI is the healthcare inequity between the public and private sectors. Some 16% of the population is currently on medical aid, but it is estimated that about half of the expenditure on health care occurs in the private sector, as Janet Michel and her co-authors pointed out in an article in the Journal of Global Health Reports (2020).

The 2022 General Household Survey released by Statistics SA showed that medical aid membership has been steadily decreasing since 2014. This is due to high inflation in the private sector where medical aid premiums have been increasing and benefits reducing.

This is a significant issue which raises questions about the sustainability of the private healthcare sector.

There have also been significant concerns about competitiveness and quality of care in the private sector as set out in the Healthcare Market Enquiry, as reported by the Competition Commission in 2019.

An estimated 9.7 million South Africans are on medical aid out of a population of 62 million. The goal of the NHI is to centralise all health funding (tax and medical aid contributions) into one fund which is then to be used for the benefit of the whole population – to achieve equity.

The ideal is a more fair distribution of health care funds to benefit all South Africans and to achieve quality universal health coverage.

Major changes

So, what are the key changes? First, all available health funds will be centralised into a single NHI Fund to pay for most current healthcare needs. Healthcare services are to be provided by Contracting Units for Primary health care Services (Cups) and hospitals – patients will not need to pay for health care at the point of service.

The Cups will consist of a group of healthcare practitioners and health facilities that will deliver primary health care to a population in a defined geographic area.

Private practitioners can be contracted as part of the Cups to deliver health care so it is not true that the private sector will disappear.

Secondly, the mechanism of payment to practitioners will be in the form of capitation similar to the National Health Service in the UK, where payment is for responsibility for a defined population rather than per service provided.

This is being put in place to reduce healthcare inflation and the perverse incentive inherent in fee-for-service type healthcare systems.

Thirdly, Cups and hospitals will contract directly with the central fund and the nine provinces will not play any role in this. This is a major change, although the provinces will still play some limited role within health care.

Lastly, while private medical aid schemes will still be able to separately fund private sector healthcare services, this will be limited to services not funded by the NHI as stipulated in section 33 of the act.


While some people have welcomed the NHI, others remain sceptical. The private sector and current medical aid funds are not happy with section 33 of the act and have threatened legal action once the bill is signed into law.

They feel that medical aid schemes should still be able to fund all kinds of healthcare services rather than being limited to just those not funded under the NHI.

Even before the NHI was signed into law, concerns were raised about its implementation. Confidence in the government to effectively implement and manage the NHI is low given its history of corruption and mismanagement of the public sector. Given the changes in government due to the May elections, it remains to be seen if these concerns will be addressed.

Since the provinces are responsible for healthcare delivery in terms of the Constitution, they are likely to challenge the change in funding mechanism proposed in the bill as this bypasses the current route of healthcare funding which goes via the provinces.

In terms of funding for the NHI, the government does currently subsidise healthcare in the private sector through tax rebates and can redirect these funds to the NHI.

However, access to current company and individual contributions to medical aids will be less straightforward and may only be achieved through new or additional taxes which are likely to be unpopular. In other words, while there is a significant proportion of healthcare funding available in the private sector, how these will be accessed for the purposes of the NHI fund is less clear.

Lastly, the current state of the health system requires significant investment in order to achieve the level of quality of care promised in the act.

There are current mechanisms in place to measure and improve the quality of health care, such as the Office of Health Standards Compliance and the Ideal Clinic/ Hospital initiative. Their assessments have demonstrated widespread deficiencies in the current health system which need to be addressed.

It should be pointed out that the act is meant to be implemented in stages and there is at least a three-year preparation phase that is built into the act before it can be implemented.

Should the NHI be implemented, it is likely to take several years to be fully implemented.

In a recent article in the South African Medical Journal, Geetesh Solanki and his co-authors reported that it could take 15 to 30 years for the NHI to be fully realised. If the experience in other countries that have implemented NHI-based type systems is anything to go by, we shouldn’t be expecting miracles anytime soon.

We definitely need healthcare reforms in both the public and private health sectors. There are many questions about whether the NHI can address the current healthcare challenges that the country faces, and only time will tell if we are able to achieve better equity with improved quality of care for all our citizens through the NHI.

* Dr Mahomed is an extraordinary professor in the Division of Health Systems and Public Health, Department of Global Health, Faculty of Medicine and Health Sciences at Stellenbosch University. The views expressed are those of the author and do not necessarily reflect those of the university.

Cape Times