The National Health Insurance Bill I: The current situation in the health sector and how the NHI Bill proposes to change it

This brief is the first of a series of four on the National Health Insurance Bill (“NHI”). They are based on the submission which the HSF made to Parliament on 29 November 2019 on the National Health Insurance Bill (“the Bill”).

This first brief deals with the current situation in the health sector and how the NHI proposes to change it, the second with the lack of detail that has been provided on crucial aspects of the proposed NHI and its financing, the third with the State’s ability to manage such a project and the fourth brief contains a summary of our conclusions.

Government as the purchaser of health care services

The Bill provides for Government to act as the single purchaser of health care services in both the public and private sectors. This purchasing mechanism, which is to be controlled and managed by Government, underlies the present NHI proposals. The focus of financing, rather on governance and management, has evidently become an idée fixe.

The condition of the public health service

The Office of Health Standards Compliance (“OHSC”),[1] reported in its 2016/17 Annual Inspection Report on 851 public sector health establishments, that 62% of these establishments were non-compliant with norms and standards for healthcare quality.[2] In that report, the OHSC states that the public health sector revealed several areas with deficiencies. Particular note should be taken of the first of its conclusions, which reads as follows:

“Leadership and management, including operational management, was poor or lacking, leaving subordinates without the required level of supervision, knowledge, competency and support from senior staff, including clinical professionals. Governance structures in the greater number of health establishments were not available, impacting negatively on leadership. Where Governance structures were in place, there was no evidence that they provided oversight to ensure quality care, accountability and good management.”[3]

The inadequacy of leadership and management structures in the public health sector is patent; this is a matter of public record.[4]

The defects of the private health sector

The findings of the Health Market Inquiry (“the Inquiry”) into the private South African healthcare market were published on 30 September 2019.[5] In the first paragraph of the Inquiry’s report, it is stated that 

“In our review of the South African private healthcare market we found that it is characterised by high and rising costs of healthcare and medical scheme cover, and significant overutilization without stakeholders having been able to demonstrate associated improvements in health outcomes.”[6]

Other major findings of the Inquiry are:

“We have found there has been inadequate stewardship of the private sector with failures that include the Department of Health not using existing legislated powers to manage the private healthcare market, failing to ensure regular reviews as required by law, and failing to hold regulators sufficiently accountable. As a consequence, the private sector is neither efficient nor competitive.”[7]

“For effective and efficient regulatory oversight of the supply-side of the healthcare market, we recommend the establishment of a dedicated healthcare regulatory authority, referred to here as the Supply Side Regulator for Healthcare (SSRH).”[8]

“… irrespective of the final formulation and timing of the NHI, having a cost-effective, competitive and appropriately regulated supply of private healthcare services, will support the development of the NHI.”[9]

The Inquiry found that in respect of the private healthcare sector, the State itself has failed in its duty to regulate the sector in an adequate manner. In spite of its demonstrated inability to regulate the private healthcare sector, Government now intends to include it within the ambit of the NHI - unless the services it provides fall outside the NHI package (which has not yet been defined). 

We are surprised that the Bill was published before publication of the Inquiry’s final report. As a consequence, the impression cannot be avoided that Government did not consider it relevant for the Bill’s provisions. This once again raises questions about the rationality of Government’s action in respect of NHI and the Bill.

The problem of quality control

South Africa is confronted with a health sector which offers increasingly unacceptable standards of service in both the public and private sectors (as explained above) and nowhere is it explained by Government how the NHI will improve the service (quantitatively or qualitatively). This is a staggering omission. The fact that all health care within the NHI’s scope is planned to be paid for by Government in terms of the Bill will not on its own solve the quality problem. Technical, staffing and administrative considerations, amongst others, render the quality problem far more complex. 

Whilst the 2017 White Paper and the Bill mention the need to ensure the quality of health care, it is not at all clear how the NHI is to address this challenge. There is a mention in the 2017 White Paper[10] that health facilities will have to be certified by the OHSC, the very same entity whose 2016/2017 Inspection Report revealed the widespread non-compliance of health establishments with applicable norms and standards for healthcare quality. The Bill empowers the Minister to make regulations regarding the relationship between the NHI and the OHSC.[11] However, simply setting standards does not guarantee compliance. The Bill also includes quality monitoring in general terms in the functions and powers of the NHI.[12] However, in this context it needs to be mentioned that the Auditor-General has found that the Department of Health does not have sufficient monitoring controls to ensure adherence to its internal policies and for purposes of taking corrective action.[13] 

If the thinking behind the Bill is that the NHI will be able to improve the quality of health services by using its muscle as the sole (or main) purchaser of medical services (ie. by refusing to accredit and pay providers who do not conform to minimum standards), it would, at first glance, seem to make sense. But will public (and private) entities be excluded from the NHI if they do not offer acceptable services? Is Government prepared to render public health establishments redundant as a consequence of unacceptable standards? 

These questions arise from the logic of using the NHI to improve the quality of healthcare. We would assume that political realities would suggest that the answer to the above questions must be “no”, which effectively undermines the logic behind this approach. If the answer is “yes”, it would represent a drastic approach from Government and raises the question as to what Government intends to do with health establishments and personnel that are excluded from the health system. Close them down and fire the personnel? It is difficult to see this happening, but this is one of many instances where it becomes clear that distressingly little thinking has been devoted to the practical implementation of the NHI. 

An effective quality control mechanism would, on its own, require very substantial personnel resources. The OHSC in its current form, with a total of 121 personnel posts[14] and an annual budget of R130 million, is completely inadequate to perform the quality control role for something as extensive as the NHI. This is one of the many instances of the Bill which has not been thought through in an appropriate manner. 

Concluding remarks on Government’s focus

We believe that Government’s focus on the purchasing mechanism is misplaced. The fundamental issue should be how the floor level of medical services available to all South Africans can be raised as far as available resources allow.

Only once the quality and number of medical service facilities and providers (public and private) have been substantially raised, can a proper discussion on a project such as the NHI be commenced. In addressing the purchasing mechanism before quality, Government is effectively putting the cart before the horse. In its current form, NHI is nothing more than a centralised funding and payment system. It is not a health care delivery plan.

Anton van Dalsen
Legal Counsellor

[1] Established in terms of the National Health Amendment Act of 2013, to ensure that public and private health establishments comply with the required health standards. It is listed as a public entity in terms of the Public Financial Management Act and is funded by moneys appropriated by Parliament. The OHSC regards itself as independent, but the OHSC Board is appointed by the Minister of Health and its CEO is appointed by the Board in consultation with the Minister.

[2] OHSC, Annual Inspection Report 2016/2017, page 31, available at

[3] OHSC, Annual Inspection Report 2016/17, page 178.

[4] As examples, see in this regard, a question to the Minister of Health on 16 September 2019 (NW397) in which the Minister replied that a certain hospital in Limpopo had been without a CEO since February 2019. In response to a further question (NW206) the Minister noted that there is a total of 42,926 vacancies in the nine provincial departments. National Treasury notes as follows in its 2019 Budget Review: “Claims against health departments grew from R28.6 billion in March 2015 to R80.4 billion in March 2018. Over the same period, payments for claims increased from R498.7 million to R2.8 billion. The mounting value of claims puts enormous pressure on provincial health budgets, with departments increasingly forced to divert funding from service provision to pay these claims. Medico-legal claims have risen because of inadequate quality of care, weaknesses in administration (including patient record management and legal capacity), and increasingly litigious behaviour from law firms.”

[6] Health Market Inquiry, page 1.

[7] Health Market Inquiry, page 30.

[8] Health Market Inquiry, page 35.

[9] Health Market Inquiry, page 210.

[10] Department of Health, National Health Insurance for South Africa, June 2017.

[11] Clause 55(1)(k).

[12] Clauses 10 and 11.

[13] Department of Health, Annual Report 2017/18, page 105.

[14] OHSC, Annual Performance Plan 2018/19, page 11, available at