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Mediclinic News : National health insurance costs seriously underestimated

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National health insurance costs seriously underestimated

Date

2016-06-28

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News Description

DAILY DISPATCH The government has underestimated the cost of National Health Insurance (NHI) and could face a shortfall of R200-billion by 2025-26 - almost double the amount it originally anticipated - according to an analysis by economics consultancy Econex. Its assessment throws into question the feasibility of the government's ambitions, which envisage a universal health system to which everyone contributes according to their ability, with services provided free at the point of care. A green paper was published in August 2011, and in December 2015 Health Minister Aaron Motsoaledi released a follow-up white paper for public comment. Interested parties had until May 31 to make submissions. In a research note due to be published this week, Econex has summarised its input, in which it argues the NHI white paper overestimates the strength of the economy and underestimates the pent-up demand for health services. "NHI is the right thing to do, but one should have proper modelling, and think about where the money is going to come from," said Econex managing director Nicola Theron. "The scenario they chose in terms of growth is not going to materialise, and it doesn't help to say it's any-one's guess [what NHI will cost]." The white paper's main scenario assumes 3.5% annual GDP growth up to 2025-26, which produced a funding shortfall of R72-billion, and was used to illustrate potential changes to tax policy. A less optimistic GDP growth scenario of 2% led to a funding shortfall of R108-billion by 2025-26 in the white paper. Econex said more recent GDP da-ta were available and the NHI costings should be updated to reflect these forecasts. "The current South African GDP growth outlook is much weaker than supposed in the NHI white paper. This is evident both when considering external sources, as well as when considering the recent GDP growth forecasts published by National Treasury in the 2016 Bud-get Review," said Econex. It used recent estimates from the World Bank and IMF, which on average range from 0.8% GDP growth in 2015-16 to 2.6% GDP growth in 2019-20 to adjust the white paper scenarios. It also made adjustments to the cost estimates for NHI, arguing that South Africa's large disease burden National health insurance costs seriously underestimated would lead to a greater increase in demand for services than assumed by the white paper. It presented four scenarios under different demand and GDP assumptions, which resulted in a funding shortfall for NHI of between R109-billion and R210-billion by 2025. Funding just the white paper's estimated shortfall of R108-billion would require an increase in tax revenue of about 10%, it said. In addition, while the private sec-tor had more healthcare resources per capita than the state, South Africa as a whole was short of hospital beds and healthcare professionals, Econex said.
Created at 2016/07/06 10:52 AM by Mediclinic
Last modified at 2016/07/06 10:52 AM by Mediclinic