(Bloomberg) -- Discovery Ltd., South Africa’s biggest health-insurance provider, is cautiously optimistic that the government and business can find solutions to implement a contentious health law that could cut coverage by private insurers.
The plan seeks to provide universal access to health care through a centrally managed government fund that buys services from public and private providers. President Cyril Ramaphosa signed the National Health Insurance bill into law two weeks before the May 29 election after years of wrangling.
Companies have criticized the law, claiming it will ban them from providing health insurance to anyone covered by the NHI. The bill doesn’t spell out minimum benefits, show how much the revamped system will cost or indicate how it will be funded, they have said.
Ramaphosa on Tuesday met the leadership of Business Unity South Africa to discuss the matter, with the nation’s biggest business-lobby group saying it would suggest solutions to address its concerns with the law it previously called unaffordable and unconstitutional.
“I got a good-faith feeling from that meeting that there’s a desire to find solutions — that’s a much better road than conflict and litigation,” Discovery Chief Executive Officer Adrian Gore, who is also BUSA’s vice president, said in an interview.
If implemented, private health insurers like Discovery could lose market share because the law allows them to only pay for products and services not covered by the fund.
“The new system would be an equalizer between the rich and the poor,” Health Minister Aaron Motsoaledi said in an address to lawmakers in July.
While the country’s overburdened public facilities currently serve about 84% of the population, the remaining 16% that can afford private insurance have access to world-class treatment.
“I don’t think anyone believes the status quo is acceptable.” Gore said. “I think everyone’s saying, ‘how do you make this thing operate so that it helps all South Africans?’”
Discovery’s modeling shows that South Africa will need 200 billion rand ($11.4 billion) a year in additional funding to make the law’s aim of achieving universal access workable. That would result in a 30% increase in income taxes, and a 70% cut to the benefits private-sector members typically enjoy.
“We do not believe NHI is workable without private-sector inclusion,” Gore said at an earlier investor briefing. “We need more funding, we need more doctors, we need more resources, and that’s a key issue.”
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In the meantime, the insurer says it does not expect the new law to impact its operations in the short term because it has yet to be fully implemented.
According to the NHI Act, the first implementation phase is supposed to run from 2023 to 2026, during which time the government will establish the related fund and complete other groundwork.
The second phase, which would see the mobilization of resources and operationalization of the NHI fund as a purchaser of health-care services through a system of mandatory prepayment, is slated to run from 2026 to 2028.
“I don’t think people should be concerned about in the short term, but in the medium to long term, we’ve got find solutions,” Gore said.
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--With assistance from Janice Kew and Ana Monteiro.
(Updates with implementation timeline for the NHI in penultimate paragraph.)
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