Johannesburg – Finance Minister
Pravin Gordhan may announce in next week's medium-term budget policy statement that tax allowances on medical aid contributions will be scrapped by 2012 to help fund National Health Insurance (NHI), experts say.
While these mini budgets are not the most rousing of affairs, Gordhan looks certain to set pulses racing with any mention of NHI.
Last month, the ANC caused a storm with the announcement of the first specific details of its NHI strategy, including plans to spend billions on revamping hospitals and an implementation timeframe (from 2012 over 14 years).
It will be funded by an additional income tax, possibly a VAT rise and the R14bn to R15bn it will save from the scrapping of tax deductions on medical aid contributions.
Dr Peter Breitenbach, a healthcare analyst at the global consulting firm Frost & Sullivan, expects Gordhan to formally announce that by 2012 all tax deductions on contributions will be nullified.
While Olive Shisana, chairperson of the NHI ministerial advisory committee, said the new NHI tax – estimated to be between 3.5% and 5% on all salaries – will be implemented in 2012, this has been denied by government.
Gordhan will probably say that government is still considering the fiscal merits of the NHI, and allocate funds for the supposed implementation date of 2012, Breitenbach said.
However, he does not believe implementation will take place by 2012. "The 2012 date is an ANC construct and I suspect that this view is not shared by the department of health subcommittee (on the NHI)."
So far the NHI has very much been driven by the ANC and not government.
The recently published cost estimates of the planned NHI were from the ANC only, said Econex economist Mariné Erasmus. The ANC estimates that an additional R11bn is needed to establish the NHI in 2012.
"We have not seen any official documents or statements from the government or the ministerial advisory committee in this regard.
Provinces not spending money wisely
"Except for Health Minister Motsoaledi’s announcement of increased spending on the upgrading of five large academic hospitals (which should be included in the medium-term expenditure framework), there have not been any formal estimates about the costs of the proposed NHI by the government," Erasmus said.
Heidi Kruger, spokesperson for the Board of Healthcare Funders which represents medical schemes, thinks Gordhan could announce that the NHI ministerial advisory committee may move into the realm of the department of health.
Gordhan may also announce new investments in upgrading SA’s health infrastructure as part of the NHI.
Breitenbach expects an increase in the allocation to the Hospital Development Grant.
"Although the problem is not the money that is available - it is rather that provinces do not spend it, and when they do, there have been questions about where they are spending it."
New money to fund nurse training and colleges may also be announced, he thinks.
Erasmus would welcome an increased budget for health in general, to boost the delivery of primary healthcare services with a specific focus on rural areas.
"A lot has to be done before any large health system reforms can be implemented, and any increases in the budget could be well used towards upgrading the public sector to deliver higher quality healthcare. Important also is provision for increased HIV/Aids-related costs over the medium term."
The minister may finally "concretise" the NHI, Breitenbach added.
Kruger believes the most important thing that the government could do now is to consult with stakeholders.
"There has been a lot of speculation in the press on things like affordability, the private sector's role, etc. But this has not been based on any government document. My view is that the consultation needs to take place before the white paper (on the NHI) is released."
- Fin24