NHI is a government fund set to be establishment to create one pool of healthcare funding for private and public healthcare providers that will buy healthcare services for South Africans (most of whom are not currently covered) from healthcare providers both in the public and private sector.
Establishment of the NHI fund will be in accordance with the NHI Act, a national legislation that was assented to law on 15 May 2024 to the reform of South Africa’s healthcare system by introducing universal quality health care services in the Republic of South Africa. The commencement date of the NHI Act is yet to be proclaimed.
The NHI Act further makes provision for creation a strategic framework for procurement/purchasing of health care services by the fund on behalf of all races, rich or poor and legal long-term residents for all medical care costs.
The enactment of the NHI Act, is informed by and seeks to align with the following domestic and international laws the Government of the Republic of South Africa (“South Africa”) is bound by and party to:
section 9 read with 10 of the Constitution which provides that “everyone has a right to equality and human dignity”;
section 27(1)(a) of the Constitution, which provides that “everyone has the right to have access to health care services.”
section 27 (2) of the Constitution which provides that “the State must take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of the right of access to health care services”;
in terms of section 27 (3) of the Constitution which provides that “no one may be refused emergency medical treatment”;
section 28 (1) (c) of the Constitution which provides that “every child has the right to basic health care services”;
article 12 of the United Nations Covenant on Economic, Social and Cultural Rights (1966) which provides that “everyone has a right to the enjoyment of the highest attainable standard of physical and mental health”; and
article 16 of the African Charter on Human and People’s Rights (1981) which states that “everyone has a right to enjoy the best attainable state of physical and mental health, and requires State Parties to take the necessary measures to protect the health of their people and to ensure that they received the medical attention” when in need.
The objective of the NHI Act is thus to provide universal access to quality health care for all South Africans as enshrined in the Constitution to address the prevalent issues in South Africa’s healthcare system.
According to the South African Department of Health, “South Africa’s health system is very complicated and expensive. The health outcomes do not match the resources invested to the system. Both the public and private sector have challenges that make the healthcare delivery system unsustainable to service all South Africans”, and it is for this reason, among others, the NHI is being introduced and enacted into law, with an ultimate goal to achieve universal health coverage (UHC).
The NHI Act seeks to address these issues and ensure that “no one is deprived of their Constitutional rights because of their socio-economic status” and “one public health fund is created with adequate resources to plan for and effectively meet the health needs of the entire population, not just for a selected few.”
How will it be funded?
The NHI Fund will receive money from general tax revenue and from special contributions by individuals who earn above a specified level and their employers. We will all make a contribution.
Employers play a central role assisting the NHI Fund by ensuring that they match their employee contributions to NHI and ensuring that employee NHI contributions are collected and submitted in a manner similar to UIF contributions.
It is not clear when the proposed new taxes will take effect, but it does seem that they must take effect before the NHI is ‘fully implemented’, which raises the question of whether individuals will contribute to the NHI Fund and their medical schemes (without the medical schemes tax rebate) for a period of time.
Challenges and Legal Implications
Unlike other countries such as the UK where registered users of the state-funded National Health Service (NHS) are free to take out medical insurance to receive any health care treatment they need from the private health care sector doctors and hospitals, it has been observed, from consideration of the provisions of the NHI Act, that the NHI Fund bars registered users from taking out private health insurance for health care covered by the NHI Fund, which is proving very controversial and cause for concern.
It is anticipated that full implementation of the NHI Fund will take around 10 to 15 years. The primary challenges that will need to be address in the meantime are, inter alia, establishment and implementation of the NHI Fund, funding and sustainability and impact on the private sector.
Healthcare service providers and businesses such as pharmacies will also need to be accredited by the NHI Fund in order to participate in the NHI system, that is, in order to render services to NHI registered users and to be paid for those services by the NHI Fund.
With respect to businesses that are not within the health sector, there will be impacts on their employment relationships and healthcare subsidies, post-retirement medical aid arrangements and the like, and these will need to be considered by employers. In addition, various legal challenges are anticipated as the various stakeholders within and outside the healthcare landscape will be faced with significant regulatory and compliance changes.
In conclusion, the obvious legal challenges resulting from the introduction of the NHI Act will include:
regulatory compliance;
employment relations implications; and
patient rights and privacy.
It is therefore, crucial for individuals and businesses to stay informed and prepared for the changes that the NHI Act will bring. At DM5, we have the legal expertise to assist with the provision of legal services to all stakeholders navigating the new landscape arising from the coming into effect of the NHI Act.
