The cost of the proposed national health insurance scheme has been vastly underestimated, could cripple the economy and would be an added burden on the taxpayer. This is according to Jasson Urbach, an economist and a director of the Free Market Foundation.The NHI, according to a government policy document - a "white paper" - would be a state-administered fund that paid for all healthcare, leading to the demise of most medical aid schemes.It estimates that R108-billion a year, on top of the existing health budget of about R146-billion, would be needed from 2026.This is based on a projected 2% growth of the economy.But Urbach's calculations suggest that national health insurance would cost at least R367.4-billion a year. This estimate is based on medical aids spending a minimum of R567 per member per month on the healthcare services they are legally required to provide, covering about 300 medical conditions."That is more than the income tax paid by 6million people last year."[Considering these figures] we start to [understand] the futility of the proposal," said Urbach.To cover the NHI's costs increased taxes - higher VAT or an employee tax have been suggested - would be necessary."A VAT increase creates inequality because the poor spend a greater proportion of their income on purchases that attract VAT," Urbach said.An employee tax would be a disincentive to job creation."The government must avoid inflicting further pain on South Africans by increasing taxes."According to the Free Market Foundation, the implementation of NHI would drive healthcare workers from the country, and create a huge and expensive new government bureaucracy.Urbach, citing the British National Health Service, which is in the red by about R184-billion, said even developed countries were struggling to fund free healthcare.The foundation suggests that the state purchase health services for the poor from the private sector."The government could act as financier and let people decide for themselves where to spend their money [in either the public or the private sector]."Competition will improve services."Helen Suzman Foundation legal researcher Arvitha Doodnath said: "The NHI is viewed as a progressive piece of legislation regarding access to healthcare but whether it is practicable is up for debate."She said access to, and quality of, healthcare should be improved instead of making it free to everyone...