EXCLUSIVE: Government to Abandon NHI

The National Health Insurance (NHI) Act is losing traction under the Government of National Unity (GNU). When President Cyril Ramaphosa signed the Act into law in May 2024, the state committed to creating a single, centralised healthcare system by nationalising South Africa’s world-class private healthcare providers and banning private medical insurance. Yet the government never presented a proper impact assessment of the deep negative consequences this would have for South Africa, its economy, and its ability to hold onto its entrepreneurial middle class.

Now the balance of political opinion in the government has turned against the policy, and a move is afoot to replace it with a more sensible alternative.

The changing mood was on display last week when senior African National Congress (ANC) leader and Finance Minister Enoch Godongwana told journalists that cutting medical-aid tax credits would amount to an attack on the middle classes. Leftist activists had urged the Treasury to axe such credits, which taxpayers receive where they pay for their own private healthcare. The ANC has haemorrhaged middle-class support, and a tracking poll conducted by the Social Research Foundation last year found that the NHI policy had a deep negative effect on ANC voter behaviour.

The ANC’s coalition partner in South Africa’s government, the Democratic Alliance (DA), has long been critical of the policy. In a statement, DA MP Michele Clarke last week urged Health Minister Aaron Motsoaledi to: “put his pride aside” and rebuild the policy from the ground up.

An insider told The Common Sense that a very small circle of hard-left ANC ideologues remained in favour of the policy, but that the balance of their colleagues had come to realise the harm it was causing both to investor perception and to the political standing of the ANC itself.

The legislation has also faced multiple court challenges. Civil society organisation Sakeliga contends that the Act would effectively prohibit private medical insurance and necessitate income tax increases exceeding 30 percent. Their legal challenge warns of creating a healthcare monopoly vulnerable to the same governance failures that have plagued state-owned enterprises like Eskom. Other parallel challenges have followed from representative business bodies, and legal advice was that these were likely to succeed in overturning much of the policy.

The Common Sense was told that the government and key stakeholders would now meet to discuss a way forward. One option was the introduction of low-fee medical schemes that would allow millions of poor South Africans access to much higher standards of healthcare. These may even be made compulsory for large employers, but this is something that organised business opposes – although the cost could be offset by tax rebates. Unions are said to be supportive of the idea that large employers fund such coverage for their staff. Another proposal is that the state would provide cover to the poor via a new state fund, and that this might look to compete with private providers.

Research seen by The Common Sense shows that expanding access to low-cost medical scheme products may be a pragmatic solution to improve overall healthcare access in South Africa. Such an approach would allow millions more people access to healthcare professionals, meaning that personal healthcare problems could be caught early, before they reach the stage requiring very complicated and expensive treatment. As a consequence, a broad insurance footprint would bring down the per-capita cost of health insurance funding in the country, whilst ensuring a healthier society and a more productive workforce and economy.

The policy retreat comes as the public health system continues to battle severe problems caused by poor management and corruption – but not, in the main, by a lack of money. The R2 billion looting spree at just one small Gauteng regional hospital is said to be commonplace across the public healthcare sector, and nationalising private healthcare funds would simply have seen them looted in the same way.

South Africa's private healthcare sector, by contrast, has demonstrated world-beating innovation and efficiency, both via insurance and out-of-pocket expenditure that serves millions. It provides some of the cheapest and most expert healthcare anywhere in the world, and is essential to South Africa retaining its entrepreneurial middle class, and hence its capital base. The loss of that private sector would have triggered cataclysmic social and economic repercussions that might, in and of themselves, have brought about a failed state horizon for the country.