The National Health Insurance Bill III: Governance and the State’s ability to manage the envisaged NHI

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

The 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, this third brief with the State’s ability to manage such a project and the fourth brief contains a summary of our conclusions.


The Bill provides that the Minister of Health is responsible for all aspects relating to the governance of the national health system. The Minister is to appoint a Board to govern the Fund,[1] which is to be accountable to the Minister himself.[2] The Minister must appoint a Chairperson from among the members of the Board.[3] A Chief Executive Officer is to be appointed by the Minister, on recommendation of the Board and is directly accountable to the Board.[4] The Minister may remove a Board member.[5] A Benefits Advisory Committee and a Health Care Benefits Pricing Committee are to be appointed by the Minister after consultation with the Board.[6]

Clause 27 of the Bill provides that a Stakeholder Advisory Committee is to be appointed by the Minister after consultation with the Board, to comprise representatives of statutory health professions councils, health public entities, organised labour, civil society organisations, associations of health professionals and providers and patient advocacy groups. However, this Stakeholder Advisory Committee is accorded no duties or responsibilities and what it is supposed to do is left hanging in the air. There is no obligation on the Minister or Board even to consult it.

There is therefore no independent oversight envisaged and all power is effectively concentrated in the Minister. Given the well-known consequences in South African state-owned entities of a lack of governance, little accountability and widespread financial mismanagement, this is not acceptable. The poor oversight by Government of state-owned entities in general is confirmed beyond doubt by the most recent Auditor-General’s report on national and provincial audit outcomes,[7] which was made public on 20 November 2019. The following is taken from that report (where “SOEs” denotes state-owned enterprises):

“None of the SOEs managed to obtain a clean audit opinion”[8]

“The overall audit outcomes of the SOEs are the worst they have ever been”[9]

“The root causes of the regression in the overall audit outcomes of SOEs were weak internal control environments, instability in appointed senior management positions, and a lack of implemented action plans to address previously reported audit findings.”[10]

Statements which attempt to refute the risks in this regard, such as those by Dr Olive Shisana,[11] therefore cannot be taken seriously: she states that many public entities run very well, but then only mentions institutions such as the CSIR and the Council of Geoscience. She does not seem to realise that such statements effectively undermine the very argument she is trying to make. The institutions she mentions are all long-established organisations which cater for niche markets with very specific technical standards - and they are insignificant from a financial point of view when compared to something of the size of the NHI. 

Her comments also include the following:

“… NHI will not be a state-owned entity, but more of a public entity that operates under the Public Finance Management Act, audited by the Auditor General.”

Once again, statements of this nature, with unconvincing denials, simply reinforce doubts about what is actually intended in the NHI project. 

The NHI’s administrative requirements

If we assume that there will potentially be around 58 million users (ie. the whole South African population), and if we add to that 221 508 healthcare practitioners[12] and 814 public and private healthcare facilities,[13] it is evident that what is proposed for the NHI represents a huge administrative task. 

The Government will have to allocate funds to the NHI in the Budget each year, but no mention is made in the Bill of a mechanism to align the services to be covered by the NHI to the budget for funding it - in other words, how to make sure that there is enough money to finance the scope of services to be paid by the NHI. If there is insufficient funding, some healthcare services will have to be excluded. This will require a constant effort on the part of the NHI’s specialised committees and administrators and underlines the administrative burden of managing something like the NHI. A large, suitably qualified staff component will therefore have to be available to deal with the functions of the NHI. 

From the content of the Bill, it is clear that Government has not understood the difficulties of implementing the NHI and continues to underestimate the challenges that it faces. Our view is supported by the presentation by the Financial and Fiscal Commission (“FFC”) to the Portfolio Committee on Health on 9 October 2019.[14] The FFC’s briefing contained the following:

- the 2026 timeline for full implementation of the NHI is too short a target to complete all the necessary steps;

- outstanding issues include the establishment of operational and administrative capacity and costing; and

- critical details which are fundamental to a successful rolling out of the NHI remain unspecified - these include the role of provinces, the flow of funds between the Fund, provinces, districts and private providers, financing of health infrastructure and the ownership structure of public health facilities.

Recent examples of serious managerial and operational incompetency in State entities do not provide any confidence whatsoever in Government’s intentions regarding NHI. The crisis confronting the South African Social Security Agency (“SASSA”) in 2017 provides a salutary lesson in this regard. Following the Constitutional Court’s ruling declaring a tender award for the payment of social grants invalid, SASSA reported to the Court in November 2015 that it had decided not to award a new tender, but would itself take over the payment of social grants before the deadline of March 2017. However, SASSA underestimated the difficulties of implementing such a payment system and became aware in April 2016 that it could not comply with this undertaking. The Minister was informed in October 2016, but SASSA then approached the Court with this news only in February 2017, leading to a last-minute order by the Constitutional Court to extend the operation of an invalid contract in order to avoid grants not being paid. The only additional comment that we can make in the context of this example is that the SASSA payment mechanism is simple and uncomplicated in comparison to implementing the NHI.

Anton van Dalsen
Legal Counsellor

[1] Clause 13(1).

[2] Clause 12.

[3] Clause 14(1).

[4] Clause 19(1).

[5] Clause 13(8).

[6] Clauses 25(1) and 26(1). 

[7] PFMA 2018-19, Consolidated General Report on national and provincial audit outcomes, Auditor-General of South Africa.

[8] PFMA 2018-19, page 13.

[9] PFMA 2018-19, page 114.

[10] PFMA 2018-19, page 139.

[11]BusinessTech, 22 August 2019

[12] Health Market Inquiry, Final Findings and Recommendations, September 2019, page 45.

[13] Health Market Inquiry, page 46.

[14] The FFC was established in terms of Section 220 of the Constitution, which provides that it is to be independent and subject only to the Constitution and the law and must be impartial. Its focus is primarily on the equitable division of nationally collected revenue among the three spheres of Government.