Taxes and more taxes: what to expect from NHI

South African Health Minister Zweli Mkhize. Source: TimesLIVE

A sneak peek at the National Health Insurance Bill shows the government is planning a single national pricing regimen and a surcharge on personal income tax, as well as an employer tax, and a minor role for medical aids.

The target date for full implementation is 2026.

The 88-page bill, which Times Select has seen before its public release on the morning of Aug 8, is now destined for heated debate in the National Assembly.

Past draft bills sparked vigorous debate, with the government claiming private medical schemes were its staunchest opposition. This bill provides more details than the proposed bill released in 2018.

In its preamble, the bill says it is targeted at addressing social-economic inequality and wants to “improve the quality of life of all citizens and to free the potential of each person”.

To make this a reality the government is proposing to establish and maintain a National Health Insurance Fund financed through “mandatory prepayment” that aims to achieve sustainable and universal access to quality healthcare services.

According to the bill, this fund will serve as the single purchaser of all healthcare services – pooling finances and strategically buying healthcare services, medicine and products from accredited service providers.

But where will the money come from?

The fund’s chief source of income will be appropriated from money collected from general tax revenue, including centralising money, now allocated to provincial health departments.

Doctors and hospitals will have to adhere to certain treatment protocols and guidelines determined by the minister and fund, and will prescribe medicine and health products from a “formulary” or a list provided by the government.

Income will also be derived from a payroll tax and a surcharge on personal income tax.

Medical scheme tax credits currently paid to medical aid members in the form of a tax deduction will also be reallocated into the NHI.


The first notable change for many South Africans pertains to the current referral system. Patients will now be made to first access healthcare services at primary healthcare level (a general practitioner or nurse) and will only see a specialist if referred.

Inside a hospital ward in South Africa. Source: Gallo Images/City Press/Muntu Vilakazi

Second, academic hospitals such as Cape Town’s Groote Schuur, Durban’s Albert Luthuli and Johannesburg’s Chris

Hani Baragwanath will be run by the national government instead of provincial health departments.

Their administration, management, budgeting and governance will be “made a competence” of national government.

Healthcare service providers, establishments and suppliers will have to be properly accredited and meet high standards before they are reimbursed for their work, and in the case of specialist services payments will be based on performance.

Emergency medical services will be reimbursed on a “capped case-based fee” basis with adjustments made for case severity where necessary.

All patient information, including fingerprints and residential addresses, will be recorded on a single database, the National Health Information System.


Doctors and hospitals will have to adhere to certain treatment protocols and guidelines determined by the minister and fund, and will prescribe medicine and health products from a “formulary” or a list provided by the government.

All medical professionals will have to adhere to a single national pricing regimen.

The minister has been empowered by the bill to make regulations that payments are conditional to meeting quality standards of care, “or the achievement of specified levels of performance”.

The minister can also determine how an individual health worker will be paid.

Private medical aids

The NHI Bill makes a one-sentence mention of the role of private medical schemes. It says that once it is fully implemented medical schemes may only offer complementary cover for services not reimbursable by the NHI Fund.

The target date for full implementation is 2026.

Asylum seekers and what the bill describes as “illegal migrants” will only be entitled to emergency medical services and “services for notifiable conditions of public health concern” (contagious diseases).


NHI will be implemented over three phases, according to the bill.

The first, which sought to pilot “health system strengthening activities”, supposedly took place between 2012 and 2017.

The second phase, scheduled from 2017 to 2022, seeks to continue these undefined health system strengthening activities; develop NHI legislation and amendments to other legislative documents; establish institutions that will act as the foundation for a fully functional NHI Fund; and purchase personal healthcare services for vulnerable groups.

The third phase is scheduled for between 2022 and 2026, during which the establishment and operationalisation of the fund as a purchaser of healthcare services must be completed.

The article by Katharine Child was first published by Tiso Blackstar on Aug 8.

With an aim to provide universal healthcare and increase taxes, there was extreme national interest in the future of the National Health Insurance (NHI) bill as it affected every South African. This was the first time the bill, which had been planned for years, was making it close to becoming law and ending years of mystery. Coverage by Times Select and TimesLIVE began in July, when it was clear it had been approved by senior members of the government. Hours before the proposed law was even released at midday on Aug 8, a team of reporters from Times Select, Tiso Black Star broke down the implications of the bill at 5am on the same day. With the help of political reporter Amil Umraw, Times Select scored a copy of the country’s new draft NHI plan from a senior trustworthy source the day before it was made public. The team then deciphered 88 pages of jargon and published the story with clear explanations of what was to come for readers from a middle class background. It suggested that health insurance would end as the middle class know it, leaving unanswered questions regarding their access to healthcare. Some of the flaws raised by the report include how it was unclear that bureaucracy will fix the health system as well as the lack of evidence that the ideas suggested were viable. Times Select was the first news website to lay out the government’s plan, which was widely condemned by economists and health experts as being unimplementable, poorly thought out and not designed to fix the broken state health system. In the follow-ups published on Times Select and TimesLIVE, the papers wrote about loopholes and a lack of clarity in the bill, which the department of health never addressed. The team also interviewed the man in charge of the office meant to deliver NHI to give readers real information – continually.