The Democratic Alliance (DA) and others have been vocal in its criticism of the National Health Insurance scheme.
The DA has claimed that the plan to fund the NHI is “magical thinking”, but such views often reflect a lack of historical understanding of universal healthcare provided elsewhere and fails to appreciate the moral imperative of equitable healthcare.
Section 27 of the Constitution is unequivocal: “Everyone has the right to have access to healthcare services, including reproductive healthcare.” This is not a negotiable goal — it is a legal and moral obligation. Yet, 30 years into democracy, access to quality healthcare remains unequal.
About 16% of the population ( 9.6 million people) benefit from private healthcare, consuming more than 50% of total healthcare expenditure, 84% rely on an underfunded and overburdened public system. This disparity perpetuates structural inequality, denying the majority of South Africans quality healthcare. The NHI Act aims to redress this imbalance by ensuring that no one is excluded from healthcare based on their income or socio-economic status.
Much of the opposition to the NHI is driven by financial interests. The private healthcare sector has been one of the most profitable industries over the past two decades.
Regarding private hospital groups, Netcare reported profits of R4 billion in 2023, up from R2.9 billion in 2020; Mediclinic earned annual profits of more than R3 billion, driven by high patient fees; and Life Healthcare saw R2.5 billion in profits, despite the economic downturn.
Among medical aid schemes, Discovery Health’s medical scheme administration fees have ballooned, earning the company R3 billion annually, while Bonitas and Momentum Health also generate significant profits from member contributions, while limiting coverage.
Over the past 20 years, private healthcare profits have grown exponentially, often outpacing inflation and GDP growth. These profits come at the expense of affordability and accessibility for most South Africans.
The DA’s claim that the NHI will bankrupt the country is based on misrepresentations and exaggerations. Momentum claims the NHI will cost R1.3 trillion, but this figure assumes a Rolls-Royce system that mirrors private healthcare for all. A closer look at international examples shows that universal healthcare systems are not only affordable but also improve overall health outcomes.
In Thailand, universal coverage costs just 2.7% of GDP. South Korea’s phased approach to universal health starting with industrial workers, proved fiscally sustainable and was later expanded. Its costs during its expansion phase were about 4.5% of GDP. In Canada, despite initial cost concerns, its system now delivers excellent healthcare at 10% of GDP, lower than South Africa’s combined public-private expenditure.
For South Africa, based on a GDP of R7 trillion, this translates to R189 billion (Thailand’s model) to R315 billion (South Korea’s model) annually. Even with a blended per capita cost of R8,625 (weighted average of public and private expenditures), the estimated cost for NHI is R750 billion to R890 billion, far below the alarmist R1.3 trillion figure.
The NHI’s estimated cost of R750 billion to R890 billion annually can be funded through progressive payroll taxes, reallocation of existing resources and efficiency gains from bulk procurement.
Integrating private healthcare infrastructure into the NHI system reduces capital costs for new facilities. While private hospitals will require compensation, economies of scale and centralised procurement can save 10% to 15% annually, equivalent to R67 billion to R139 billion.
Global studies show that single-payer systems often reduce administrative overheads, costing just 3% to 8% of total healthcare expenditure. For the NHI, this equates to R33 billion to R46 billion, manageable within the existing fiscal framework. This is significantly lower than the current fragmented system.
Universal healthcare systems worldwide rely on innovative funding mechanisms, which South Africa can adopt.
Progressive taxation: A modest payroll tax of 2% to 3%, coupled with employer contributions, can generate significant revenue. For example, Taiwan funds its health scheme through a premium equal to 5.17% of wages, ensuring sustainability.
Reallocation of existing resources: The current healthcare budget of R259 billion can be supplemented by redirecting wasteful expenditures and tackling corruption, which costs the public sector billions annually.
Dual contribution model: A phased approach allows voluntary private insurance, enabling people to top up their coverage while ensuring universal baseline care.
The DA points to the problems in public hospitals as evidence that the NHI will fail. This argument ignores the fact that the NHI is designed to address these very issues. Centralised funding and oversight will improve accountability; pooling resources will reduce disparities between urban and rural healthcare facilities; and bulk procurement of medicines and equipment will lower costs, benefiting both public and private sectors.
Critics ignore that many public hospitals, despite their problems, continue to save lives every day. My 95-year-old grandmother, Amina Khan, was recently treated at a public hospital for a severe infection. For five days she received compassionate and effective care, despite the hospital’s resource constraints. Her story is a reminder that the public healthcare system is not broken — it is burdened. The NHI will help lift this burden.
Countries that have implemented universal healthcare systems faced similar scepticism but their experiences prove that these systems can be transformative. After nearly a decade of planning, Taiwan’s single-payer system improved health outcomes while keeping costs low. South Korea’s dual insurance model balances public and private contributions, offering a potential blueprint for South Africa.
If we compare ourselves to the US, especially during the Covid-19 pandemic, we did well. South Africa can learn from good and bad examples by adopting a phased, iterative approach to implementation. Start with high-need districts, refine the system based on the experience and expand coverage progressively.
The health minister and his team must conduct and publish detailed cost estimates to help counter misinformation and build public trust. More importantly, implementation must begin without delay. Target high-need districts first to manage costs and build capacity.
The problems must be confronted head on — poor management, lack of accountability and underfunding are precisely why the NHI is necessary.
By centralising funding and oversight, the NHI can improve accountability through standardised service delivery; ensure equitable resource allocation across provinces and facilities; and address staff shortages with better recruitment and training incentives.
As Maya Angelou said, “Do the best you can until you know better. Then, when you know better, do better.” The NHI will not be perfect from day one, but with iterative learning and refinement, it can achieve its goals.
Faiez Jacobs is a former ANC MP and advocate for equity and justice.
