What happens if Ramaphosa finds a pen and signs the NHI Bill into law?

Since president Cyril Ramaphosa said in his State of the Nation Address, that was widely criticised as electioneering, that he is just looking for a pen to sign the NHI Bill into law, there has been an ominous silence from the presidency, making citizens wonder what is happening now and what will happen if he signs it.

Despite various misgivings and submissions that point out everything that is wrong with the National Health Insurance (NHI) Bill, it was passed by Parliament as well as the National Council of Provinces without any changes or incorporating any comments from stakeholders.

Craig Comrie, chairperson of the Health Funders Association (HFA), says his understanding of the president’s comments, the health minister has alluded to the president applying his mind and considering the possible constitutionality of the NHI Bill.

“I would infer from this that the president is most likely obtaining legal advice that will no doubt indicate problems with the Bill. Considering the political expediency of the NHI project and with elections coming in the next few months, it is widely believed that the president will sign the NHI Bill regardless of constitutional concerns.”

ALSO READ: ‘I am looking for a pen’- What Ramaphosa said about the NHI at Sona

Hope that president will act as guardian of Constitution first

However, Comrie says, as the guardian of the Constitution, it would be prudent for the president to send the Bill back to Parliament or even refer it to the Constitutional Court.

The HFA has petitioned the president to withhold assent to the Bill on constitutional and procedural grounds and intends to take the matter as far as necessary and to the Constitutional Court if needs be.

Comrie says the HFA’s primary concerns include:

• Constitutional concerns: The NHI Bill’s clearly infringes on citizens’ constitutional rights, particularly the right to access healthcare and freedom of choice and by implication, the right to life. The Bill is seriously flawed in that regard, undermining the rule of law.
• Procedural concerns: The HFA questions the extent and effectiveness of public consultation during the drafting and review of the NHI Bill, where thousands of submissions resulted in no meaningful changes to the Bill. The HFA advocates a more inclusive and consultative approach.

ALSO READ: ‘NHI Bill must pass constitutional muster’: Call on Ramaphosa not to sign it into law

Yes, the president will probably sign the NHI Bill soon, but …

Dr Paula Armstrong, senior director at FTI Consulting, who wrote a report on the macro-economic implications of funding NHI, if you believe what the president has said in his Sona, she believes the NHI Bill will be signed soon but she foresees legal challenges on the constitutionality of the Bill, which will further delay implementation.

She based the figures in her report on a presentation by the department of health, which indicated that in addition to public funds that can be allocated to an NHI fund, an additional R200 billion will be raised. She also emphasises that this is not the total cost of NHI.

R200 billion is equal to 12.8% of South Africa’s current gross tax revenue or 36.1% of personal income tax or 62.4% of corporate income tax or 51.2% of VAT.

“Since there are no details available about the NHI benefit package, the cost of the NHI, or how these funds will be raised, we focus on the R200 billion only as an illustrative value.”

To raise R200 billion in the current fiscally constrained environment and assuming that the number of taxpayers and their spending remains constant, she says this will require that:

• VAT increases from 15% to 21.5% or
• personal income tax rates increase by 31% across the board or
• a payroll tax on those employed in the formal, non-agricultural sector of an estimated R1 565 per month.

ALSO READ: ‘NHI hopelessly unworkable’: BLSA says health sector getting worse with no recovery in sight

NHI Bill not economically viable

Armstrong says this shows that in its current form and given the fiscal situation of the country, the NHI Bill is not economically viable and a single-payer system is ill-advised in the South African landscape.

“It is unclear what the funding requirement will be. We have not seen a current costing of the NHI and it will depend critically on the benefit package that is offered. Therefore, it is impossible to say with the information currently in the public domain how much it will cost.”

Who will pay for NHI and how? Armstrong says according to the NHI Bill, funding will come from provincial departments and various other sources, including tax revenue. According to a presentation shared by the department of health in December 2022, the other sources include the medical part of the defence force and correctional services, local government, workmen’s compensation, the Road Accident Fund levies, compensation for occupational injuries and diseases, medical schemes, medical insurance and donors.

ALSO READ: Busa, B4SA to petition Ramaphosa to send NHI Bill back to parliament

Still many hurdles to clear

However, Armstrong believes the NHI Bill still has many hurdles to clear until we are at a point where funding mechanisms are likely to kick in.

“If the Bill is implemented in its current form, I foresee South African taxpayers being under pressure. We understand from the department of health that it will likely be decades until any kind of tax increases occur, but putting pressure on the South African tax base is problematic and will have negative consequences on the economy. “

Will people leave the country or stop working if they have to pay more tax for NHI? Armstrong says there is no evidence yet that links emigration to the NHI Bill.

“We know that South African tax rates are high relative to countries with a similar level of economic development. From that perspective, increasing taxes further makes South Africa unattractive from a tax perspective.”