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South Africa: The National Health Insurance Act: Your top 10 questions answered

27 May 2024
– 8 Minute Read



  • This article provides answers to the top 10 questions posed by our clients regarding the South African National Health Insurance Act 20 of 2023.

The National Health Insurance Act 20 of 2023 (NHI Act) was signed into law by President Ramaphosa on 15 May 2024 and published in the Government Gazette on 16 May 2024.  The President has not yet proclaimed the effective date of the NHI Act, either as a whole or in part.

Here are answers to the top 10 questions posed by our clients to help you navigate national health insurance (NHI). 

    1. What is the purpose of the NHI Act?

      The purpose of the NHI Act is to achieve improved universal health coverage of the South African population, in line with section 27 of the Constitution, which provides that ‘Everyone has the right to have access to health care services, including reproductive health care [and] No one may be refused emergency medical treatment’.

      The plan set out in the NHI Act is to consolidate various sources of healthcare funding within the country, in a National Health Insurance Fund (NHI Fund), that will eventually be the only entity that purchases and pays for healthcare services on behalf of the population.  

    2. What are the key legal and structural changes introduced by the NHI Act?

      The primary intervention is the establishment of the NHI Fund, the entity that must become the single purchaser and payer of healthcare services. The Act also creates a Benefits Advisory Committee (BAC), which will determine what the healthcare service offering will be;  a Health Care Benefits Pricing Committee, which will determine what the NHI Fund should pay for and the available services included; a District Health Management Office, which will co-ordinate the roll-out of primary healthcare (PHC) treatment at district level; a Contracting Unit for Primary Health Care, which will contract with service providers at district level; and a Health Products Procurement Unit (HPPU)(within the NHI Fund) to determine what health products the NHI Fund should procure and to manage supply chain and pricing matters. The HPPU and the BAC must collaborate to determine the national Essential Medicines List, Essential Equipment List and Formulary.

      Before the BAC is established, the Minister is obliged to establish four advisory committees, on Tertiary Health Services, Training and Development, Health Care Benefits and Health Technology Assessment.

    3. Who will be covered by the NHI Fund?

      Subject to certain exclusions set out in the NHI Act, the NHI Fund will be mandated to purchase healthcare services on behalf of:

      • South African citizens
      • permanent residents
      • refugees
      • inmates (as provided for in terms of the Correctional Services Act)
      • certain categories or individual foreigners as determined by the Minister of Home Affairs

      All children, including children of asylum seekers or illegal foreigners, will be entitled to basic healthcare services.

      Asylum seekers or illegal foreigners will only be entitled to emergency medical services and services for notifiable conditions of public health concern. 

    4. How will I access healthcare services provided by the NHI Fund, and what services will be provided?

      A person who is eligible to receive healthcare services will be required to register as a ‘user’ with the NHI Fund at an accredited healthcare service provider or health establishment (i.e. a GP, clinic, etc.).

      A registered user will be entitled to receive healthcare services at no charge from an accredited healthcare service provider or health establishment.

      People who have registered as users must initially approach their nominated PHC facility, and depending on their assessment and treatment requirements, will be referred onwards in the system.  They may not access non-PHC facilities or services directly.

      Healthcare services that will be provided will include primary healthcare, emergency medical services, medical treatments, rehabilitation services, and so on. 

    5. Now that the NHI Act has been signed into law, must I access healthcare services through the NHI Fund? May I remain a member of my medical aid scheme?

      Even though the NHI Act has been signed into law, the NHI Act is not yet in effect.  Once the Act does take effect it will take a while for the NHI Fund and its related structures to be fully operational.  No one knows when the NHI Fund will become operational.

      In the meantime, the current structures, including membership of medical schemes, will operate as usual. According to the NHI Act, once the NHI has been ‘fully implemented’ as determined by the Minister of Health through regulations in the Gazette, private medical schemes may only offer ‘complementary cover’ to services not reimbursed by the NHI Fund. 

      The NHI Act provides no description or definition of ‘fully implemented’ so it is not clear whether that occurs when the first service package is determined by the BAC, or when the NHI Fund commences funding some services, or when a more comprehensive benefits package is developed, or on 31 December 2028, which is the date that the NHI Act has set for the NHI Fund to be operational.

      Government commentators have suggested that the NHI project will not be ‘fully implemented’ soon.

    6. How will NHI be funded?

      According to the NHI Act, the NHI Fund must be funded by Parliament through new taxes, including a general surcharge on personal income tax and an employer and employee payroll tax, as well as by the removal of the individual medical schemes tax credit and reallocation of almost the entire provincial health budget to the NHI Fund. The details of these new financing arrangements will have to be presented to Parliament as a money bill (a bill that follows a particular procedure in making its way through Parliament).

      It is not clear when the proposed new taxes will take effect, but it does seem that they must take effect before the NHI is ‘fully implemented’, which raises the question of whether taxpayers will contribute to the NHI Fund and their medical schemes (without the medical schemes tax rebate) for a period of time.

    7. Can I opt out of the NHI Fund system and continue using private healthcare funding?

      It is not clear from the NHI Act whether eligible persons may simply opt-out, as the language of the NHI Act is ambiguous in this respect.  On the assumption that one can opt-out though, once the Minister of Health declares the NHI to be fully implemented, medical schemes will not be able to offer most of the basic services that they currently provide, so healthcare services, products and treatment would need to be paid for on an ‘out of pocket’ basis.

      According to the NHI Act, the Medical Schemes Act is to be amended with immediate effect to remove maternity and pregnancy-related benefits from the scope of medical schemes (even before the NHI is fully implemented), unless the President addresses this apparent anomaly by proclaiming a deferred effective date for that amendment.

    8. What does the NHI Act mean for business?

      For enterprises that operate outside the health sector, there will be impacts on their employment relationships and healthcare subsidies, post-retirement medical aid arrangements and the like, and these will need to be considered by employers.

      In addition, enterprises in the health sector will need to be familiar with the significant shifts in procurement, pricing and contracting, and consider how this affects them from a strategic planning perspective.

    9. Is the public sector affected?

      Yes. Approximately 90% of healthcare administration by provinces will be removed from the provincial sphere and reassigned to the NHI Fund, and accordingly, the associated parts of their budgets (provincial equitable share and grant funding) will be reassigned as well. The Department of Health will need to engage provinces on the anticipated impacts on provincial staffing in relation to healthcare and financial administration.

    10. What does the NHI Act mean for healthcare practitioners and private hospitals and pharmacies?

      Healthcare practitioners will still be entitled to practice for their own account, but they will need to contract with the NHI Fund. Practitioners will not, however, be entitled to set their own rates for NHI-funded benefits. Rates will be set by the NHI Fund. Patients will also have to first access healthcare services at a primary healthcare level.  Patients will not be able to consult a specialist directly.

      Healthcare service providers and establishments will also need to be accredited by the NHI Fund in order to participate in the NHI system, that is, in order to render services to NHI users and to be paid for those services by the NHI Fund.

      This accreditation is in addition to the registration with a statutory health professional council and certification by the Office of Health Standards Compliance. The criteria for this accreditation include: minimum range of services; appropriate number and mix of healthcare professionals; adherence to treatment protocols including prescribing medicines and procuring products from the Formulary; compliant referral pathways; contributing to the national health information system; and adhering to the national pricing regimen. Accreditation lasts for five years but appears to renew automatically unless there is a default.

      The NHI Act amends the Medicines and Related Substances Act to introduce the NHI Fund’s influence into the appointment of members of the pricing committee, but otherwise proposes no amendments to that Act.

      It amends the Prevention of and Treatment for Substance Abuse Act by shifting the Minister’s procurement and contracting powers under that Act to the NHI Fund.

      The NHI Act also amends the Medical Schemes Act to remove maternity and pregnancy-related services (including termination) from the business of a medical scheme.

      It is not clear how these changes may indirectly impact supply, demand, cost, range and innovation in relation to private services, including retail pharmaceutical and the related private supply chains.

      It does appear that being contracted to the NHI Fund does not preclude private sector providers from servicing non-users, but it is unclear how that market will look or operate for them.