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Gordhan: NHI won't increase tax burden

Aug 11 2011 12:42 Reuters

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Pretoria - South Africa will fund a proposed National Health Insurance (NHI) programme through the fiscus, employers’ contributions and other funding mechanisms, and the government does not want the plan to increase the burden on taxpayers, Finance Minister Pravin Gordhan said on Thursday.
A government source citing a policy paper to be released on Friday said earlier that the NHI, which is aimed at giving greater access to healthcare for the country’s poor, will require R125bn in 2012, R214bn by 2020 and R255bn by 2025.

If the NHI is implemented, it will be one of the biggest changes brought in by the ANC since it came to power in 1994.

Gordhan said the government did not want to increase the burden on taxpayers with the introduction of the NHI and the programme will be funded through the public finances, contributions from employers, surcharges and partnerships with the private sector.

“There is money in the systems and there may be extra money required,” Gordhan said.

The government has previously said it was investigating how the NHI would be funded and among the options were surcharges on taxable income and VAT increases. Analysts expect the main source of revenue to come from general taxation.

But Gordhan said: “We don’t want to burden anybody more than they need to under normal taxation."

“The goal is to try and finance healthcare for everybody,” Health Minister Aaron Motsoaledi told reporters at a briefing.

Motsoaledi said that proposed system will not be able to mirror South Africa’s advanced private healthcare sector but would give millions of poor people better access to healthcare.

“NHI is not intended to destroy the private healthcare sector. (It) is one meaningful way to reach across the wealth gap. We all need decent healthcare.” he said.

South Africa is spending about 8.5% of gross domestic product on public healthcare, but the standard of service is poor. Giving the majority access to world class private facilities aims to improve quality of health treatment.

Contributors to private healthcare schemes are concerned that the NHI would force them to seek treatment at poorly run and overcrowded state facilities.

The policy will be published in the official government newspaper on Friday, kicking off a three-month consultation process.

Health industry officials said many private healthcare providers were not opposed to the NHI.

“Private healthcare professionals are not opposed to the NHI because it will bring more business to them, but they want to see what the paper sets out,” said Dr Norman Mabasa, president of the South African Medical Association.

“We want to see what government plans to include on the NHI and how it will be implemented. We don’t expect the free system to cover everything that private medical offers.”


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