Why schemes will contest the NHI Act now that it is signed

Laura du Preez | 15 May 2024

Laura du Preez has been writing about personal finance topics for more than 20 years, including eight years as personal finance editor for two leading media houses.

The Board of Healthcare Funders (BHF) has already done much work on a High Court application it plans to file soon to challenge the constitutionality of the National Health Insurance Bill, Neil Kirby, the director of Werksmans Attorneys says.

Kirby, who has been briefed by the BHF, told the organisation's annual conference held in Cape Town recently that the BHF had formally warned President Cyril Ramaphosa that it had concerns about the bill which he signed into law on Wednesday May 15.

The Board of Healthcare Funders is an industry organisation that represents about half the medical schemes in the country and their administrators.

David Geral, a partner at Bowman Law who is acting for Business Unity South Africa (Busa), told the conference that the President's decision to sign the bill that was approved by both houses of parliament last year, means he has dismissed the constitutional concerns that have been raised to date.

If the President had shared the concerns about the constitutional problems, he would have been obliged to send the bill back to the National Assembly to be reworked with the National Council of Provinces, Geral said.

Busa is considering its options following the president's decision to sign the bill into law, its chief executive officer, Cas Coovadia, has said.

Act must be constitutional from inception

Kirby said even if the bill is implemented in phases and with clarifying regulations, this was not good enough – the act needs to be constitutional from its inception. The unconstitutionality of the act could not be fixed through its regulations, he said.

Medical schemes will be directly impacted when the bill becomes an act, as the act will drastically reduce the benefits schemes can offer when NHI is fully implemented.

Schemes cannot wait for further developments because the judiciary would question why they had hesitated to go to court, Kirby said.

Geral said it was quite shocking that stakeholders had been asked to accept a bill that has so many issues and to trust that these problems would be resolved through regulation.


Constitutional right to healthcare

The constitution guarantees South Africans the progressive realisation of right to healthcare, Geral said.

For better or worse we have achieved a healthcare system that does cater for the healthcare needs of many people in varying degrees, Geral said. The World Health Organisation has stated that South Africa’s two-tier public and private healthcare systems meet the definition of universal health coverage, he said.

It is compelling to argue that the realisation of certain people’s right to healthcare needs to be pulled back in order to achieve social solidarity, but this idea needs to be tested against the constitution, Geral said.

There is also an argument that limiting medical scheme members’ right to healthcare using post-tax income was unnecessary to achieve the outcomes NHI sought to achieve by way of a single centralised fund that would purchase health care, he said.

In fact, there is a lot of evidence that schemes are indispensable as co-providers and co-funders of health care, he said.


Lack of clarity on implementation

The NHI bill says that when NHI is “fully implemented” medical schemes will no longer be able to deliver the benefits provided through NHI and will have to move into the role of providing only complementary top-up insurance.

Geral said there is no framework for the Minister to determine what constitutes full implementation but the bill refers to full implementation being complete by December 2028.

It also makes confusing references to the amendment of other legislation including the Medical Schemes Act that make it unclear whether amendments to these acts must be initiated or will be achieved when the NHI bill passes into law, Geral said.

He said if the bill is signed, it could be read as amending the Medical Schemes Act and preventing schemes from offering maternity benefits as soon as it is effective.


Single funder risk

Geral said the government has not clearly articulated why NHI requires a single funder. While there is rationale for centralisation to achieve economies of scale, it is not clear why the private sector cannot be a co-funder of health care, he said.

Healthcare providers are concerned about the risk of the government not paying them or paying late.

When medical schemes are also paying providers, it creates an element of cashflow stability and predictability, Geral said.

In establishing a single purchaser of healthcare services the NHI bill seeks to create something almost unique as most other countries allow private funders to co-exist with the state, he said.

There should be very compelling data to prove why it is a good idea to have a single purchaser, but no such data has been presented to parliament, he added.


Adversarial engagements

Geral said anyone who raises issues with the NHI Bill is treated as an adversary who is against the bill and against universal healthcare, when this is not necessarily true.

The bill may be necessary to extend and make universal healthcare fairer, but South Africans are not being presented with this information and the bill is problematic, he said.

Engagement would be preferable to forcing legislation through causing the private sector to go to court and the judiciary to weigh in on a political issue, wasting time and money, Geral said. He said he hoped there was still time for engagement based on evidence.


Low-income benefit options challenge

The BHF has also challenged the Council for Medical Schemes' decision to grant insurers offering low cost primary healthcare plans exemptions from complying with the Medical Schemes Act. These plans are regarded as doing the business of a medical scheme but do not offer all the prescribed minimum benefits (PMBs).

Most recently, the eight-year-long exemption was extended by another year to March 2025.

The council and the Department of Health are still busy with a long drawn-out process of developing regulations to allow medical schemes to offer these plans without all the PMBs.

Kirby said the delays in finalising the option framework prevented schemes from competing for business when they were in fact better suited to administer claims and communicate with members than insurers who are flourishing in this market.

Allowing schemes to provide these options could contribute to the actualisation of improved universal health coverage, he said.

* This article was first published on 10-05-2024 and updated on 15-05-2024 to reflect that the NHI Bill has now been signed into law.