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If National Health Insurance in South Africa goes ahead, expect to pay R1 500 per month. Image Credit: Afriforum

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All employed South Africans will have to pay R1500 pm towards National Health Insurance

If the NHI in South Africa is given the go ahead in tomorrow’s budget speech, economists are expecting the worst.

By Ray Leathern
20-02-24 16:27
in Health
nhi bill
If National Health Insurance in South Africa goes ahead, expect to pay R1 500 per month. Image Credit: Afriforum

The controversial introduction of National Health Insurance in South Africa could very well go ahead tomorrow (21 February) in the National Treasury budget speech. Economists have looked into the affordability of the much-maligned bill, and they anticipate that every employed South African will have to pay R1 500 per month to fund it.

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In a Business Tech report, finance experts from FTI Consulting said they believe National Health Insurance in South Africa will be funded in one of three ways …

NATIONAL HEALTH INSURANCE IN SOUTH AFRICA

President Ramaphosa outlines his vision on the National Health Insurance(NHI), at the National Health Insurance and Medical Schemes Amendment Bill Stakeholder Consultative Meeting, at the CSIR in Pretoria. Photo: Flickr/GCIS
President Ramaphosa outlines his vision for the National Health Insurance at the CSIR in Pretoria. Photo: Flickr/GCIS

The first is a flat R1 500 payroll tax that is taken off every single salaried employee’s pay slip every month as mentioned. Failing that, a massive 21.5% hike in Value Added Tax (VAT) or 30% increase in income tax could also bridge the divide.

FTI Consulting says: “While everybody agrees that the National Health Insurance Bill requires reform and should provide access to universal health coverage, the NHI Bill, in its current form, is not economically viable.”

R200 BILLION PER YEAR

Economists ask where the R200 billion will come from. Image: File

The Department of Health said it would need to raise an additional R200 billion per year to fund the scheme. Worse still, R200 billion is only an estimation and a conservative one at that. Therefore, FTI Consulting believes any funding of this sort of magnitude would have to be sourced from taxes. Here are the only options:

  • VAT increased from 15% to 21.5%.
  • Personal income tax increase by 31%.
  • A flat payroll tax for an estimated R1 565 per month.

Furthermore, in an election year, will the African National Congress be brave enough to introduce NHI in South Africa? Tax hikes in a time when household budgets are tight, and people are getting poorer each year seem risky. Perhaps that’s why many economists believe National Health Insurance in South Africa is simply unimplementable.

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