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Thursday, March 1, 2012
Five year focus

National Health Insurance (NHI) is to be phased in over a 14-year period beginning this year, 2012. According to Alexander Forbes Health, “The first five years will focus on strengthening the public sector in preparation for the new system. During this phase priorities in health spending include hospital infrastructure, the comprehensive HIV and Aids treatment and prevention programme, and expanding health professional training.”

To achieve this, the health sector will be allocated an additional R12.3 billion over the next three years. Key allocations include the following:
• R1 billion is allocated for NHI pilot projects and increasing primary health care visits;
• R450 million has been provided to upgrade 30 nursing colleges;
• R426 million is allocated for the initial rebuilding of five major tertiary hospitals; and,
• R968 million is made available over the medium term, for the extension of antiretroviral treatment at the CD4 count threshold of 350.

Over the medium term, general taxes will remain the primary financing mechanism. However, over the longer term the NHI system will require funding over and above current budget allocations. Funding options to be considered will include a payroll tax (payable by both employees and employers), a higher value-added tax (VAT) rate, a surcharge on taxable income, or some combination of these. The use of co-payments or user charges will also be explored.
It is expected that an additional amount of approximately R6 billion will be needed in 2014/15, which is not currently provided for in the Medium Term Expense Framework (MTEF). Longer-term financing requirements will depend on the progress of reforms and health service delivery capacity, which cannot yet be reliably determined. Preliminary estimates suggest that full implementation of NHI by 2025 may require public health financing to increase from the current 4% of GDP to 6%.
The Minister of Finance emphasised that an appropriate balance in the funding of NHI would be necessary to ensure that the tax structure remains supportive of economic growth, job creation and savings. A discussion paper on the funding options for NHI and a review of associated transition issues, including the role of medical schemes, is expected to be published by the end of April 2012.

Copyright © Insurance Times and Investments® Vol:25.3 1st March, 2012
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