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October 2019 Newsletter

‘NHI no longer affordable in the current fiscal environment’ – SA Treasury

‘NHI no longer affordable in the current fiscal environment’ – SA Treasury Insurance plans — which it insists will be implemented come hell or high water — got barely a mention in Finance Minister Tito Mboweni’s Medium Term Budget Policy Statement on Wednesday, reports MedicalBrief. However, an ancillary Treasury document contained a blunt assessment: it is “no longer affordable”.

Mboweni did not speak in detail on the NHI Bill, which is now before Parliament, except to say that the ministers of Finance and the Department of Health, and their respective departments, were engaged in “ongoing discussions”.

However, the Treasury’s adjusted estimates of national expenditure document, which outlines the status of each government department in relation to the MTBS, noted that the original NHI costs were projected to increase public health spending from 4% to 6% of GDP over 15 years.

Even a limited package of reforms would require an extra R33bn on top of the existing health budget from 2025/26, according to the Treasury. This would rise to R50bn (in 2019 currency) in 2030. These amounts are not budget commitments but indicative cost estimates.

However, given the macroeconomic and fiscal outlook, the estimates to roll out NHI that were published in the NHI Green Paper in 2011 and White Paper in 2017 are no longer affordable,” the policy statement read.

The Treasury assisted the Department of Health in developing an actuarial model with updated fiscal costs and limited policy reforms to strengthen the current healthcare system. These include contracting with private sector GPs, extending the chronic medicine distribution programme, expanding the HIV treatment programme, scrapping user fees at public hospitals, tackling medico-legal claims and establishing the NHI fund, said the Treasury’s chief director for health and social development, Mark Blecher, in a BusinessLive report.

The revised consolidated health budget for 2019/2020 is R222.7bn and is expected to rise at a nominal 7% over the medium term. The health budget grows to R238.5bn in 2020/2021 and then rises to R257.2bn in 2021/2022 and to R272.9bn in the outer year.

Presidential adviser Dr Olive Shisana has previously said that the government would not need “new money” to fulfil its NHI budgetary requirements but would “repurpose existing money”.

Source: Business Day Report

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