Neelam Rahim | neelam@radioislam.co.za

3-minute read
18 May 2024 | 13:54 CAT

Cyril Ramaphosa signs the National Health Insurance law in Pretoria, South Africa, on 15 May 2024. Image: Leon Sadiki/Bloomberg

Several organisations are gearing up for litigation against the NHI, which President Cyril Ramaphosa signed into law on May 15, 2024. The reasons for this potential legal action include concerns over the impact on private healthcare providers, the potential increase in taxes, and the perceived threat to the quality of healthcare services.

The Institute of Race Relations has issued a stark warning, stating that the NHI’s implementation could lead to a significant exodus of the middle class and a subsequent catastrophic decline in tax revenue, potentially destabilizing South Africa’s entire healthcare system.

According to the IRR, the government will control South Africa’s entire healthcare system under the NHI system. This means that private health care, too, will eventually be controlled by the government. However, proponents of the NHI argue that this could lead to more equitable healthcare access and improved healthcare outcomes for all South Africans.

In an interview on Radio Islam International, IRR Head of Strategic Communication Herman Pretorius highlighted a key concern. He pointed out that the NHI could introduce a new tax on all South Africans, whether they choose to participate or not, potentially placing an additional financial burden on taxpayers. 

Additionally, Pretorius explains that individuals who want to keep their medical aid scheme can keep it. However, they will still be paying for the NHI. In essence, they will be paying triple for their health care coverage. 

“They’re already paying taxes to fund the public health service that is sub-functional, chaotic and dangerous. On top of that, those who can afford it are paying for private health care and now the NHI Bill will force people to pay for healthcare a third time,” he says.  

The IRR says, “South Africans have seen what happens when the ANC controls critical institutions. They anticipate that health care will collapse, just as has happened with the supply of water and electricity, education, law enforcement and municipal services, to name some examples.”

The South Africans most affected by the introduction of the NHI will be the approximately 1.9m taxpayers earning over R500,000 per year. Almost all of them voluntarily pay for private health care and the deficient public health care they are compelled to fund through taxes. However, it’s important to note that the NHI could also benefit lower-income earners who currently struggle to afford private healthcare, potentially leading to a more equitable healthcare system.

Meanwhile, the potential departure of these taxpayers, who are the backbone of South Africa’s public finances, could have a dramatic and detrimental effect on the country’s economic stability.

If just half of these 1.9m individuals left the country, the South African fiscus would lose around 14% of its total revenue from the decline in personal income tax alone – probably more because higher-income earners are more likely to leave. At the same time, as it suffers a steep decline in revenue, the fiscus would have to fund a health system that costs hundreds of billions of rands, although the exact amount is unknown.

Listen to the full interview on The Daily Round-Up with Moulana Junaid Kharsany and IRR Head of Strategic Communication Herman Pretorius here.