Economist Dawie Roodt calls for complete privatisation of health industry as alternative to NHI

June 16, 2024 47 12 1

Economist Dawie Roodt calls for complete privatisation of health industry as alternative to NHI

Published May 7, 2024

There have been many debates surrounding the feasibility of South Africa’s National Health Insurance (NHI) plan that the government is currently pushing into law.

Although universal healthcare programmes have succeeded in other countries with larger tax bases, critics feel that South Africa’s government simply lacks the funding and the ability to successfully implement such a plan.

Well known economist Dawie Roodt has presented an alternative vision for the NHI, and one that calls for the entire health industry to be privatised.

Speaking at AfriForum’s NHI conference in Pretoria on Monday, Roodt said that total privatisation was the only workable alternative to the envisaged national health plan.

Under his proposed solution, membership of a medical aid scheme would be compulsory for all South Africans, and this would allow existing medical aid customers to continue with their membership unhindered.

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The rest of South Africa’s population would then be grouped into one of at least three private funds that would give them access to limited, but “high quality” private medical care.

“The funding for this will be drawn from the state’s healthcare budget, which is currently pumped into struggling or dysfunctional hospitals or clinics,” Roodt said.

He added that patients requiring further medical care could be accommodated in training hospitals.

Unity Health CEO Vernon Chorn said South Africa’s ageing population makes the NHI unviable. This is because an increasing number of people, following their retirement, won’t be contributing to the country’s tax base.

“The NHI simply will not survive under the current projections, as it requires a significant amount – approximately R600 billion – to be successfully implemented. There is no way to raise this amount without raising taxes and this will ultimately result in a weaker GDP,” Chorn said.

But would poorer South Africans actually receive adequate healthcare under a fully privatised healthcare system? The jury is certainly out on that point, and the chances of government allowing the entire industry to be privatised would surely be slim to none.

President Cyril Ramaphosa is aiming to sign the NHI Bill into law soon. AfriForum has stated that it will challenge the bill in court.

It is widely expected that the government would raise taxes to fund South Africa’s NHI system.

ALSO READ: Can South Africans expect an increase in taxes to fund the NHI?

The Department of Health describes the NHI as a national medical aid to which all South Africans will contribute via taxes and special contributions. However, it’s unlikely to affect existing medical aid members any time soon.

Paresh Prema, head of actuarial consulting solutions at Alexforbes, said the NHI system could take eight to 10 years to fully implement. However, when the system is fully operational, private medical insurers will likely only offer complimentary cover for procedures not covered by NHI.

Written by: goldfmc1

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