Cape Town - Members of medical schemes will still be able to use the private health sector when the National Health Insurance (NHI plan) comes into effect, but disposable income is expected to shrink for everyone.
At its general council meeting last week, the ANC said that the latest estimate was that the system could cost R376bn by 2025.
But it was still unclear whether this would be sufficient for planned universal coverage, a comprehensive benefits package, the increased costs of training health workers, as well as attracting specialists from offshore.
According to Dr Olive Shishana of the ANC's NHI task team, the new system would be financed by an additional levy on taxpayer's income, a payroll tax for employers and workers, the removal of the existing tax subsidy on medical schemes as well as an increase in VAT.
The plan to increase VAT will have a particularly serious effect on lower-income consumers. On the other hand this means that it will not only be the taxpayer contributing to the NHI, but every single consumer in the country, said Econex economist Mariné Erasmus.
According to her, VAT, as a regressive tax, constitutes a larger proportion of the lower income group's income and consequently the effect of an increase will be heaviest on this group.
The ANC's increased cost estimate for the NHI is, according to industry players, good news because it is much more realistic than previous estimates.
KSL Online analyst Grant Lowton says, however, that it is still lower than what it will eventually be in practice. It will probably significantly increase the tax burden on consumers.
Developing countries where national insurance has been introduced have a much broader taxpayer base than South Africa.
Members of medical funds will still be able to use the private health sector, whereas it was previously mooted that all South Africans would become dependent on state care.
Shishana said people who still wanted to pay for medical insurance would be able to do so and use exclusive, private facilities.
Erasmus reckoned that there would probably be a reduction in medical fund members because not everyone would be able to afford a medical scheme over and above the additional tax for the NHI.
The decline is not expected to be huge. South African consumers regard it as risky to use the public sector's health services and therefore health services comprise an essential product.
She expects consumers to be prepared to alter their consumption patterns as their disposable income shrinks.
There are huge differences in quality between the public and the private sectors. A consumer may opt to buy a cheaper car or eat out less often to continue affording a private medical fund.
The ANC's latest proposal that the plan be phased in over 14 years from 2012, instead of in the five years that the party initially proposed, is considered more realistic by role-players. They however agree that more detail is required. Health economists Alex van den Heever said he was concerned because no corroboration or analysis of the figures was available.
- Sake24