Issued by Sonia Twongyeirwe on behalf of the FW de Klerk Foundation on 11/07/2025

Introduction

South Africa’s health care system is facing multiple constraints as health care professionals take the brunt of shortfalls in funding, with an increasing number becoming unemployed. The situation is exacerbated by budget constraints, freezing of USAID by the Trump administration and most recently when the President assented to the National Health Insurance Act, 2023 (“NHI Act”), on 15 May 2024. The NHI Act is not yet operational (section 59(1) of the Act).

What does the NHI Act Seek to do?

Section 27 of the Constitution states that everyone has the right to have access to health care services, including reproductive health care, and that no one may be refused emergency medical treatment. The NHI Act seeks to give effect to section 27 by realising universal access to quality healthcare, otherwise referred to as Universal Health Coverage.

To accomplish this, the NHI Act establishes a National Health Insurance Fund (“NHI Fund”). This Fund will be the core purchaser and provider of medical services (section 2(a) of the Act). Registered users would be able to access free medical services from registered service providers (section 6(a) of the Act). Additionally, health care providers would decide on treatment and specialist referrals and would then be reimbursed by the NHI Fund. NHI would also decide the applicable payment rates for health care service providers annually.

Problems and Concerns

Despite becoming law, the NHI Act has faced backlash from civil society organisations, advocates and members of the Government of National Unity (“GNU”), such as the Democratic Alliance. This response stems from concerns about the constitutionality of certain sections of the Act, as discussed later in this article. These sections infringe on the health service providers’ rights to freedom of trade, occupation and profession, as well as the right to access to health care services (sections 22 and 27 of the Constitution).

Problems cited within the NHI Act have been numerous. Among them, the Act infringes on the right to access healthcare by limiting the cover offered by private medical schemes. The Act proposes an additional R200 billion in taxes on a shrinking tax base to finance the NHI Fund. There is also a looming threat of health care service providers leaving the country due to the NHI Act.

The NHI Fund will be financed by general tax revenue, the reallocation of funding from medical scheme tax credits, payroll tax and surcharge on personal income tax. Other revenue streams include returns on investment made by the Fund, donations etc. The Fund will be governed by a Board which consists of a maximum of 11 members. These members are accountable to the Minister of Health, in accordance with provisions of the Public Finance Management Act, 1999. A Chief Executive Officer will be the administrative head of the Fund and is accountable to the Board. Selection will be based on experience and technical competence in accordance with a transparent and competitive process. In section 23, the Act empowers the Board to establish a committee to which it may delegate any of its powers or duties as long as one Board member is appointed on the committee. The NHI Act does not limit how many committees can be established which creates vagueness as to how administrative responsibilities will be handled by the committees. The Board’s ability to delegate any of its responsibilities, therefore, raises concerns regarding accountability and transparency.

Analysts have questioned what the role of private medical schemes will become once the NHI Act is in effect. The Act outlines in section 33 that once National Health Insurance is fully implemented, medical schemes can only cover complementary cover to services not reimbursed by the Fund. This effectively limits South Africans from using private medical schemes and infringes on the right to access to healthcare, as set out in section 27 of the Constitution. The merging of public and private healthcare systems would exacerbate the issue of unemployed health workers as the range of service providers would become drastically curtailed. With NHI also determining the payment rates of health care services, the private sector would be weakened as private medical schemes and practitioners faced financial and legal constraints from NHI.

National Health Insurance to be “Phased-in”

While the Act was signed into law, the President is yet to announce the date that it will go into effect. The state plans to phase in the NHI Act gradually, using a progressive approach based on financial resource availability from 2024 to 2028. Implementation will occur in two phases: Phase 1 will be carried out from 2023 to 2026 and will include the development of National Health Insurance legislation and amendments to other legislation, implementation of health system strengthening initiatives, such as human resources, and the purchasing of personal healthcare services for vulnerable groups such as children, women, people with disabilities and the elderly. The Act empowers the Minister to establish interim committees to advise on the implementation of the National Health Insurance. Phase 1 also includes the establishment of the Health Insurance Fund and its governance structures.

Phase 2 will be carried out from 2026 to 2028 and will include the continuation of health system strengthening initiatives on an on-going basis, mobilisation of additional resources when necessary and the selective contracting of healthcare services from private providers. Phase 2 will also include the establishment and operationalisation of the Fund as a purchaser of health care services through a system of mandatory prepayment.

Prior to the State of the Nation Address, Finance Minister Enoch Godongwana refused to budget for the National Health Insurance Fund until Health Minister Aaron Motsoaledi provided a price tag. Motsoaledi’s reluctance to provide an estimate for the cost of NHI has raised concern as the NHI Fund is almost entirely financed by revenue from taxpayers. As time wears on, it becomes clear that how NHI will be funded and implemented has not been properly thought through and requires further deliberation with relevant stakeholders.

Conclusion

On 6 March 2025, Health Minister Motsoaledi gazetted the proposed Governance Regulations to the NHI Fund for public comment. Amongst the regulations, the Minister specified the roles of the ad hoc advisory panel and advisory committee, as well as procedures for appointment and removal of members of the Fund’s Board and committees. The FW de Klerk Foundation submitted its formal comments warning that the Minister would be acting ultra vires should he issue the regulations.