Government Weighs NHI Retreat Amid Corruption Concerns

South Africa’s National Health Insurance (NHI) policy is at a critical juncture. Political support within the government has waned, with many stakeholders questioning the scheme’s viability, even as Health Minister Aaron Motsoaledi insists it can be implemented without succumbing to corruption or state capture.

Signed into law by President Cyril Ramaphosa in May 2024, the NHI aims to create a single, centralised healthcare system, nationalising private providers and restricting medical insurance. Critics warned that the government had failed to present a comprehensive assessment of the policy’s economic and social impacts, raising concerns about fiscal sustainability and the effects on South Africa’s entrepreneurial middle class.

Political signals now suggest a shift away from the NHI. Finance Minister Enoch Godongwana rejected proposals to cut medical-aid tax credits, highlighting the potential harm to middle-class taxpayers. The Democratic Alliance urged Health Minister Motsoaledi to rebuild the policy from the ground up. Insider sources say only a small group of hard-left African National Congress ideologues remain committed, while most party members recognise the policy risks alienating voters and undermining investor confidence.

These doubts are reinforced by South Africa’s public healthcare record. The Special Investigating Unit recently revealed R2 billion in looting and procurement fraud at Tembisa Hospital, stoking fears that the NHI could become another vehicle for corruption. Motsoaledi, however, maintains that the NHI’s design will prevent such abuse. By separating funders and providers - provinces remain service providers while the NHI acts as the central funder - the system aims to remove conflicts of interest. Procurement committees will include healthcare professionals, ensuring equipment is needed and appropriate, avoiding previous mismanagement, such as the purchase of unnecessary items like jeans for hospital staff.

“Governance failures should not deny South Africans access to universal healthcare,” Motsoaledi said, citing academic hospitals like Baragwanath and Steve Biko, and St John Eye Clinic, as examples of facilities already NHI-ready.

Critics remain sceptical. Civil society groups argue that the Act effectively bans private medical insurance and could require income tax hikes exceeding 30%, creating a monopoly vulnerable to mismanagement. Public commentary warns that the NHI could replicate past failures, with taxpayers funding both universal healthcare and private care without reforms that guarantee proper governance. Legal challenges from business and civil society groups could force the courts to overturn significant portions of the Act.

Alternatives under discussion include low-fee medical schemes for poorer South Africans and employer-funded coverage for staff. Such schemes could broaden access, catch health problems early, reduce costs, and maintain private-sector efficiency. Another approach would provide state coverage for the poor while allowing private providers to continue operating.

South Africa’s healthcare future hangs in the balance. Any reform must demonstrate credible governance, clear costing, and fiscal responsibility, balancing universal coverage ambitions with economic realities and public trust.