'NHI plan needs economy to grow 7%'

2010-10-20 11:46

Johannesburg - The proposed National Health Insurance (NHI) scheme will require that the South African economy grows by an "improbable" 7% a year, consultancy Econometrix said on Wednesday.

Implemented in its current form, NHI could squeeze out other forms of spending such as education, housing and productive infrastructure.

Its analysis comes a day after Reserve Bank Governor Gill Marcus said she expected growth this year to be about 2.8%, increasing to 3.2% in 2011.

Econometrix said the proposed NHI budget released by the ANC at its recent national general council meeting in September meant that the country would not only have to achieve a growth rate of 7%, but sustain it for 13 consecutive years.

"It is far more likely that South Africa will experience growth of between 3.5% and 4.5% per year over the period that the NHI is implemented," said Econometrix's Tony Twine.

"[This] would result in health care expenditure consuming between 22.8% and 28.2% of all government spending and up to 8.5% of GDP by 2025."

In the lower growth level scenarios outlined in the ANC document, healthcare spending would reach nearly 40% of total government revenue by 2025, while at 3.5% it would increase to 28% by the same date.

Government would have to raise the additional funds for the NHI either by increasing taxes or taking on more debt.

Increasing the general tax load too much would simply weigh down the economy, limiting its ability to stimulate growth and create jobs.

"There would also be little point in government borrowing more to fund the NHI, as government would then have to hive off more money to fund the interest repayments," Twine said.

"Policy makers will need to sharpen their pencils and perhaps cut back on some nice-to-haves in the proposed NHI if it is to be sustainable. "

Twine said a crucial early indicator of government's intentions around the NHI proposal would be the Medium Term Budget Policy Statement to be presented by Finance Minister Pravin Gordhan on October 27.


  • Solo - 2010-10-20 12:07

    The ANC may have grand plans for NHI. As the economy stands right now, the treasury will never let it go ahead. It's total pie in the sky. Households are under severe pressure and it's not getting better anyday soon.

  • Realisticly - 2010-10-20 12:11

    Any more tax burden on my already battling business and income and I will start retrenching, I swear! This NHI is a deal breaker, I refuse to be taxed further. I do not work to support millions of free loaders.

  • Julian Frost - 2010-10-20 12:31

    In short, we can't afford NHI. Why are these clowns continuing with this wooden-headed idea?

  • Steve - 2010-10-20 12:35

    That's great. The economy will never grow at 7%, so scrap the NHI. It's just another way of burdening us that already pay our taxes, and pay large sums to medical aid. Tough sh!t for those that cannot afford to do so. They must rot

  • Mo - 2010-10-20 12:37

    Cut down on the Mp's fringe benfeits and luxuries by 30% Add in fines paid for anti competitive behavior since the public suffers from the exorbitant costs increase taxes on private hospitals and you'll have more than enough to sustain NHI

  • martin albert - 2010-10-20 12:48

    Only in our wildest dreams. By the way there is no truth in the rumour that Disney tried to buy SA! Apparently they never made an offer becuse too many guys wanted to be Goofy.

  • DeonGP - 2010-10-20 12:51

    The average visits to Dr's in South Africa is 3.2 per year, but when it is "free" like the NHI proposes, it will probably be 12 visits a year. Who is going to tell the poor they have limits? Probable the service provider! It is bound to crash, even if private GP's helps the state.

  • jasper - 2010-10-20 12:55

    How long will it take for these idiots in goverment to realise that this cannot work ? For G..s sake how dumb can so many politicians be ?

  • Flash - 2010-10-20 12:59

    I am with Realisticly. I have already got my plan in place that if they implement this NHI. The economy can say goodby to 20 Jobs and I will have my product made in China with half the trouble. You may ask why I do not do this already , it is because I make my product here in SA a little cheaper than what the Chinese can.

  • mikeh - 2010-10-20 13:04

    The ANC governmunt cannot manage Home Affairs, Health, Education, Criminal Justice, etc. How are they going to manage the NHI

  • Joe - 2010-10-20 13:11

    NHI is not a done deal. In fact, it is so flawed that it should never proceed and I intend to prevent it. NHI is doomed to fail not because of the economy, but because it is a poorly thought out plan based on ideology, wishful thinking and outright false information and data and it is especially on the last bit that we will fight it and stop it. It is time we get a real government and it is up to us to learn how to use the constitution and its processes to enforce accountable government. Watch this space...

  • Ingrid - 2010-10-20 13:12

    Go Mo! I agree. I saw somebody comment on a previous article - "if we could get government hospitals back to pre-1994 standards through training of medical staff and funding, it would make all the difference without NHI". It was the one of the best points I have heard so far and I support it.

  • Soothsayer - 2010-10-20 13:15

    The present system does not work through incompetence how in the hell is this new one going to succeed.Educate people to run them first,the present bunch should be fired and that includes the cabinet minister.

  • Michael - 2010-10-20 13:17

    Marcus is not speaking truth (again). There is sufficient funds for the NHS. Only problem is that the ruling party are not competent to run South African affairs. Show me a department, municipality, provience, metro, excluding WC that is operating close to any sort of effiency. Stop the rampent fraud and hire trained people and not comrades and one will find a few Trillion Rand (PER NANNUM) to do so much with. The only reason the ruling party cannot see this as they have no clue on how to run SA and not enough qualified people in power.

  • Greg - 2010-10-20 13:19

    The economy can grow at 7% if corruption is tackled and killed. No chance of that happening in the near to distant future.

  • jeff - 2010-10-20 13:20

    and by how much will we have to grow when the stealing stars? 12%

  • MAC - 2010-10-20 13:23

    Very PC Steve... Half-baked proposal by the ANC, once again. Please can someone with an economics degree join the ANC.

  • john - 2010-10-20 13:31

    The next elections are April 2012 = the same year NHI tax deductions will start.There are politics behind it. The economy will not grow more than 2 % this year - less next year. Managers and CEOs of businesses are bogged down by red tape and cannot get to the task of growing businesses. Add to that the threat of Nationalisation

  • Ziggy - 2010-10-20 13:37

    Let all of us tax payers stand together for a change and refuse to pay if they want to increase our income tax yet again. I agree with Realisticly, too many free loaders in this country not to mention the corruption that goes on. Either everyone pays, or noone pays. Increasing VAT by a small margin who be one way to ensure this.

  • rick - 2010-10-20 15:24

    the anc is trying to impress all the blacks in Africa by getting the white to pay for their health. One way to stop this is to fire the domestic....frees up money !! the domestic can then go to the anc for hand outs....the anc has to be one of the dumbest governments in the world.

  • GM - 2010-10-20 15:38

    Revise the R370mil per year budget allocated to the National Youth Development Agency. What is the real benefit of this or shall we rather ask who is really benefitting from this? Rather reallocate a majority of these funds to housing and development, health care etc and help the real people in need.

  • liewe heksie - 2010-10-20 16:53

    well if we take Zuma's many wivies spending money and the MP's luxury items, cut down on the corruption and fire lazy people we might make it. but then again the chances of that happening are next to nothing so gov must forget about getting votes by using my tax money irresponsibly.

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