Recent media reports indicate that Zimbabwe's Ministry of Health is determined to introduce National Health Insurance (NHI). As quoted in March 2024, Health and Child
Care Minister, Dr Douglas Mombeshora, who maintains that Zimbabwe's own strategy for NHI (The NHI Bill), will be presented in parliament by July, this year (2024). Already, coordination and strategy formulation are being worked out by inter-Ministerial personnel, from the Ministry of Finance (which is working out funding) and the Ministry of Health, among others.
NHI is a system which provides completely free healthcare for all citizens, whenever they visit a government-managed medical facility (clinic, hospital, dentist, optometrist, etc).
If implemented, that would mean that all medical procedures at government facilities will be both fully available and completely free. In order to shed more light on how a National Health Insurance system works, last week's article was dedicated on describing South Africa’s NHI, which was approved by President Cyril Ramaphosa (on 15 May 2024) for immediate implementation.
By offering details on developments in South Africa, it can be easier for local stakeholders and policymakers to determine whether or not Zimbabwe should proceed with establishing its own NHI.
This week, this article focuses on further details which should inform local authorities on the capacity of government to carry out such an ambitious program. Much reference will also be made of South Africa, in order to describe the challenges and benefits which are likely to be faced in the pursuit of establishing NHI.
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Main motivation for NHI
In South Africa, the government there chose the NHI route, in order to intervene and change the huge differences between public and private healthcare. 84% of South Africa's population uses public healthcare, whilst the other 16% uses the generally expensive private healthcare.
However, only 30% of the country’s doctors operate in public healthcare (clinics, hospitals, etc), whereas the majority (70%) works in private healthcare, which serves only 16% of the population.
Adding to the imbalance is the fact that, the South African government spends about
49% of the country's total yearly health expenditure on the 84% of the population which uses public healthcare. On the other hand, the other 16% of the population, which use their personal funds in private healthcare, spends 51% of the country’s total health expenses.
Clearly, those who are richer and can afford private healthcare enjoy greater benefits and efficiency than those who use public facilities.
Due to underfunding and lack of resources, public clinics and hospitals are therefore associated with long queues, delays, lack of essential medicines, lack of doctors and overstretched doctors, among other things.
As a result, the burden (frequency and impact) of disease is higher among the poor in South Africa.
This is what motivated the South African government to try and bring balance by introducing National Health Insurance.
Going forward, doctors in both private and public healthcare will be mandated (obliged) to serve any citizen who walks in to a private or public healthcare facility, for assistance.
The South African government will then pay the doctors and healthcare facilities for serving the citizens.
Almost all medical procedures will be offered to citizens for free, including maternal health, organ transplants, dentistry, optometry, the management of chronic illnesses, etc.
The NHI in South Africa will also distribute the burden which had become overwhelming for public healthcare facilities, so that it is also shared by practitioners in private healthcare.
What changes will NHI bring?
If the NHI manages to provide sufficient healthcare for all citizens, then the country's labour force will be more productive. Absenteeism due to sickness will be reduced, since adequate healthcare implies that the country's burden (frequency and depth) of disease will be lessened. When citizens have adequate healthcare that also means that the country's life expectancy will increase (people will live longer lives).
South Africa's NHI strategy argues that, a 1 year increase in a country's life expectancy, usually leads to around 4% growth in annual national productivity (GDP), in the long-term (in 10 years or more).
So, the NHI can lead to economic growth, if it manages to adequately serve its purpose as intended.
The elimination of the importance of medical aid schemes and replacing them with NHI means that citizens who used private healthcare can now stop paying extortionate (extremely high) medical aid subscriptions.
A successful implementation of the NHI would also mean that the nation would generally be happy, with no pressures on mental health (anxiety and depression) due to the fear of inadequate personal funds in the case of a medical emergency.
The fact that there won't be a need for out of pocket personal payments for healthcare needs, also means that the citizens can save up more of their income and use it for spending or investing in entrepreneurial activities. That can also drive economic growth.
What are the limitations?
Although the South African government is determined to implement NHI, the program has its strong critics who argue that it should be abandoned. It is fair to state that, the arguments made by the program's critics also apply to Zimbabwe.
Critics maintain that the South African government does not know the actual figure of the cost of NHI at full implementation. Some medical experts, including health economists insist that, it will cost at least R450 billion (or US$25 billion), per year.
That figure (R450 billion) is about twice the amount which the South African government has been spending on public healthcare (R200 billion). The critics also outline that the cost of delivering NHI may reach as high as R1 trillion (or US$55 billion), each year. Clearly, the South African government does not have the capacity to fund that amount (R1 trillion), as yet. Zimbabwe should also do a proper costing so that, it does not initiate an NHI program which will end up collapsing (unable to perform what it promises).
The danger in this is that, a failed NHI can result in widespread deaths and also suffering, among the living.
In order to raise funds for the extra R250 billion needed to implement the NHI, the South African government aims to raise personal income taxes, payroll taxes (which are also paid by employers) and VAT.
Since the required R250 billion is about 4% of South Africa's GDP (total annual economic activity), that means that, additional taxes worth 4% of GDP, will be required.
As a result, VAT (in South Africa) might be raised from 15% to 21.5%, whilst personal income taxes are increased by 30% or more. Clearly, such a steep increase in taxes can stifle economic growth. People will have much less disposable incomes. In fact, that much of an increase in taxes can lead to a tax revolt. The rich and skilled citizens may emigrate (leave the country), whilst those who stay may end up conspiring to under-declare their earnings.
Such a systemic (cultural) transition towards a resistance to payment of taxes can collapse government revenues (tax collections). In that case, the overall economy would also stumble (decline rapidly).
Even if the South African government were to raise the R450 billion expense needed to implement the NHI, there would also be no actual guarantees that the NHI would operate efficiently, as intended.
The UK government, for example, provides £171.8 billion (US$213 billion) per year, for its own National Health Insurance. However, the medical system of the NHS (The UK's NHI) has resulted in a higher demand for healthcare services by citizens such that, there are now huge waiting lists, where citizens have to wait for weeks or even longer, in order to be attended to by a doctor.
Understanding that the UK and its 67 million inhabitants has about the same population size as South Africa (62 million), shows that, financing public healthcare in the manner of NHI can be extremely difficult.
If 67 million UK inhabitants cannot be adequately served by an annual NHI funding of US$213 billion, then there is no guarantee that South Africa will find success with a much smaller NHI budget.
Zimbabwean policymakers will also need to take note of this.
Additionally, the poor record of South Africa's government in managing state owned institutions in other economic sectors (water, electricity, ports, railways, etc) also implies that the NHI has a huge risk of being a failure. If implemented as planned, the NHI would be South Africa's largest State Owned institution.
Thus, in order to have an understanding of how well the government will do, it is fair to look at its management of state owned institutions in other economic sectors. Similarly, the Zimbabwean government will need to accept that a local NHI would be among the largest local state owned institutions in the country's history. If the country has failed to manage the NRZ, ZESA, CSC and Zimpost effectively, there are no guarantees that it will successfully operate a huge undertaking such as the NHI.
Since the South African government plans to eliminate medical aid schemes and replace them with NHI, there is the danger that the normal flow of economic activity will be disrupted. This is because private healthcare is responsible for around 4% of South Africa's total yearly economic activity (GDP).
Disrupting it may result in massive job losses (especially in medical aid schemes) and economic decline. Zimbabwe does not plan to eliminate medical aid schemes for NHI but it’s implementation can still result in job losses at medical aid companies.
Recommendations
After evaluating South Africa's chances of success with NHI, it is quite apparent that implementing it will be a huge challenge. The same can also be expected of Zimbabwe.
It does not seem that both countries have the capacity to fully roll out (implement) a policy of such magnitude. Instead, both governments should focus on growing their economies through other reliable policies, such that, at some point in the future, they will be able to afford National Health Insurance. For now, the goal should be to increase investments in primary healthcare (government clinics and disease preventative programs) so that their respective populations have a reduced need for more advanced healthcare procedures provided by hospitals and medical specialists.
Incremental investments in capacitating existing public hospitals (with more doctors, medicines and equipment) will also be essential.
Additionally, the two governments may strive to have medical aid schemes to create low-cost options, which allow the poor to also have access to private healthcare for some minimal benefits (doctor consultations, certain medical tests, etc). Introducing medical aid schemes with monthly subscription fees which start from US$5, for example, would be appropriate for some of the poorer citizens and the informal sector.
When such people can have greater access to private healthcare, the burden on doctors and equipment in public healthcare would be reduced.
The government can also subsidise low-cost medical aid payments for people with the most prevalent diseases and conditions, so that they too can have access to private healthcare.
Extra payments (subsidies) to medical aid schemes of US$3 (per month) for each poor person who has hiv, TB or is pregnant, can quickly reduce the burden on public healthcare. Basic medications used by those citizens can be coordinated to be moved from government stocks to the private sector, for dispensing to the citizens.
Such alternatives and innovative interventions should produce better health outcomes for the country, instead of an insurmountable (unachievable) mission to provide totally free healthcare for all citizens, such as the NHI.
- Tutani is a political economy analyst. — tuanikevin@gmail.com.