IRR wary government might loot private pensions to fund NHI

The announcement that the National Health Insurance (NHI) could be funded through the use of funds from the Public Investment Corporation (PIC) shows that the government still has no idea how the scheme will be funded, says the Institute of Race Relations (IRR). 

The institute was reacting to a response by health minister Aaron Motsoaledi’s to a parliamentary question revealing that his department and the National Treasury were discussing the possibility of accessing PIC funds to pay for public health infrastructure. 

Business Day reported that in a written reply to a parliamentary question by DA MP Michéle Clarke, Motsoaledi said there was “work in progress” regarding tapping into the national savings pool. 

“The fact that the health department is now looking to the assets of the PIC to potentially fund NHI shows that the government still has no idea how it’s going to fund it. It is only through raids like these or through large, unsustainable tax increases that NHI can be funded and neither is a good solution,” said IRR analyst and writer Marius Roodt. 

He said if PIC assets were being considered, it would not be surprising if the government started looking at other pension funds to help pay for the national health scheme.  

“The issue of prescribed assets — where pension funds are forced to put money into certain assets — is something that the ANC perennially raises. Do not be surprised if the ANC starts looking to private pensions as a possible funding source for NHI,” Roodt said. 

Roodt said nobody was opposed to ensuring that all South Africans had quality healthcare, but NHI would not ensure that.

“It will destroy that which works and not fix that which is broken.” 

Roodt said the IRR had proposed a number of solutions to the problems in South African healthcare.

He said it should be made compulsory for everyone in formal employment to join a medical aid, as recently proposed by the Hospital Association of South Africa. The cost of doing so for low-income earners should be funded by employers by obliging them to issue a monthly healthcare voucher to each employee earning below a certain threshold, enabling them to buy obligatory medical cover of their choice. 

Another intervention would see reforms which supported medical insurance companies in creating and rolling out low-cost plans, instead of opposing them.

He said allowing more low-cost options in the market would dramatically increase the number of people benefiting from private healthcare, further alleviating the strain on the public healthcare system. 

Roodt said the government must adopt policies that facilitate rapid economic growth.

“It is only through a growing economy that we will see a sustainable reduction in poverty and unemployment. 

“With greater economic activity and more people employed, we will see more tax revenue, giving the fiscus the necessary additional resources it needs to ensure that public healthcare in South Africa is of an acceptable standard,” said Roodt.

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