In his speech before Parliament passed the National Health Insurance Bill, health minister Joe Phaahla revealed a lot more than just an idealistic healthcare scheme.
On 13 June 2023, before MPs passed the bill, Phaahla likened the public and private healthcare systems to two trains on parallel tracks, ‘both surely going toward crashing while if they can be pooled together there is good chance of complementing each other’.
There is no reason to expect public and private healthcare to conflict, or to anticipate private healthcare will crash – despite the heavy-handed control government exercises over it.
The only train smash in the offing used to be the public healthcare system, which, like well-nigh every other government-run enterprise, has been grossly mismanaged and hijacked for private profit by organised crime syndicates.
Now, the ANC wants to drag private sector healthcare into that train smash, by pushing through a law that literally everyone says is a bad idea.
Competition and monopoly
‘The NHI seeks to pool resources of those who can only contribute to the fiscus through indirect means such as VAT and other collections and those of us who are able and are already making fragmented contributions into 81 different schemes into one pool which can purchase services from both the public health system and private providers from lowest level of care up to the highest,’ Phaahla said.
‘In doing so we can achieve access, equity and quality but also drive down costs. I know that there are those of you in this House and outside who say that NHI is unaffordable but you are basing this on the highly inflated costs amongst some of the private providers who are under pressure to keep delivering super profits even higher than gold and platinum mines,’ he added.
Let’s unpack this a little.
South Africa has a Competition Act that aims to promote and maintain competition in the country’s economy, and prevent monopoly power and cartel collusion. For all its faults, it acknowledges that ‘an efficient, competitive economic environment, balancing the interests of workers, owners and consumers and focused on development, will benefit all South Africans’.
It seeks to ‘provide for markets in which consumers have access to, and can freely select, the quality and variety of goods and services they desire’.
Yet here is Phaahla complaining about ‘fragmented contributions into 81 different schemes’.
That, minister Phaahla, is called competition. Admittedly, it is competition that has been blunted substantially by the imposition of Minimum Prescribed Benefits and other restrictions and obligations, but competition cannot be improved by proposing a state-run monopoly in its stead.
Profit motive
Phaahla then suggests that prices in this competitive market are ‘inflated’, purely for the purpose of sustaining high profits. He provides no evidence for this claim.
In reality, the profit motive does not lead to exorbitant prices. Provided a market is competitive, you’ll find producers vigorously competing to offer products and services at the lowest possible price, to increase profits by attracting more customers.
If one company charges too much, another can offer a lower price and take business away from them. The profit motive also rewards innovation, cost-saving measures and improved efficiency, which can further reduce prices.
If, therefore, prices are ‘inflated’ in the private healthcare sector, it isn’t because of the profit motive, but because of government intervention in the market that has reduced effective competition.
Phaahla speculates that pooling all medical insurance funds and placing it at the disposal of a single buyer of healthcare will increase that single buyer’s negotiating power, and therefore drive down prices. In reality, that buyer has no incentive to seek lower prices, because it doesn’t operate under a profit motive. It also has no benchmark against which to compare prices to determine whether they are ‘competitive’ or not.
It is always wise to remember that someone who spends their own money on something for themselves, will take into account both price and quality. Someone who spends their own money on something for someone else, will take into account only price. Someone who spends someone else’s money on something for themselves, will take into account only quality. And finally, someone who spends someone else’s money on something for someone else – as a single-payer NHI fund would do – will consider neither price nor quality to be very important.
Single-payer
Phaahla compares the NHI to the single-payer universal healthcare systems of ‘major developed countries’, singling out specifically the UK’s National Health Service (NHS).
In fact, the NHS is in its worst crisis since it was established, shortly after the war. Queues and waiting lists are at record highs, and many people are dying waiting for care. A staggering 10.8% of the UK’s entire population was waiting for treatment at last count in April 2023 – some of them for over a year.
It is, to borrow Phaahla’s metaphor, a train smash.
The British media is recommending that patients ‘go private’ for hip and knee replacements, hernia repair, cataract surgery and endo- and colonoscopies. They even recommend going private for urgent appointments with a general practitioner (GP), since millions cannot get to see an NHS GP within a month.
The only problem with these proposals is that going private usually requires a referral from the NHS, for which it has a waiting list.
In South Africa, ‘going private’ would be illegal altogether. It wouldn’t be an option.
Rich countries
What Phaahla and his ANC comrades also neglect to mention is that the single-payer universal healthcare model that the NHI seeks to emulate operates in only 17 countries around the world. Only five of them – Japan, the UK, Italy, Spain and Canada – serve populations over 20 million, and only two – Japan and the UK – serve populations larger than South Africa’s 61 million people.
The poorest of these seventeen is Portugal, ranked 42 in the world with a GDP per capita (at purchasing power parity) of $44 707. It is almost three times richer than South Africa, which ranks 97th, with per capita GDP (PPP) of $16 091.
The UK spends over £180 billion per year on its NHS. Scaled to South Africa’s population, that works out to R3.4 trillion, or about three-quarters of this country’s entire GDP.
The ANC has revealed alarmingly little detail about the proposed funding of the NHI, but we can suppose that it would be about 8.5% of GDP – the equivalent of today’s public and private healthcare spend combined. That adds up to R395 billion, which is about one eighth of what the UK spends on the crisis-stricken NHS.
Subtract a massive ‘corruption tax’, and there will be precious little left over for actual healthcare.
Phaahla is trying to buy us a healthcare system that only rich countries can afford, and is failing, even there.
Revolutionary motive
The obvious question, then, is why the ANC is driving the healthcare train headlong to the scene of the accident.
Joe Phaahla indicated the answer to that question, too, when he elaborately referenced the Freedom Charter, and called the NHI Bill ‘one of the most revolutionary pieces of legislation presented to this House since the dawn of democracy’.
In her upcoming book about the National Democratic Revolution (NDR), Anthea Jeffrey, the head of policy research at the Institute of Race Relations, explains that virtually all ANC action and inaction, including deliberate destruction of the private sector economy, can be rationalised in the context of advancing the NDR.
The drive for a universal healthcare system is consistent with the South African Communist Party programme, The Road to South African Freedom, in which it first outlined the NDR ‘within the framework of the Freedom Charter’ in 1962.
Drawing from the Marxist-Leninist intellectual traditions of the Soviet Union, the ANC adopted the NDR as the ‘most direct route to socialism’, and continues to recommit itself to the NDR at every national policy conference. In 2022, the ANC said: ‘The ANC remains, by definition, the vanguard of the National Democratic Revolution’.
The SACP programme the ANC adopted calls for the introduction of ‘a state medical service providing free preventative and curative medical and health services to all, including hospitals, medicines, spectacles, dentures, and all other aspects of a comprehensive health service’.
Jeffrey writes: ‘According to NDR ideology, it is vital to remove the profit motive which supposedly distorts the private practice of medicine and allows healthcare to be treated as just another “commodity”. South Africa’s thriving private healthcare sector is thus to be nationalised over time, so that the provision of healthcare can be turned into a state monopoly. Only then, according to the NDR’s perspective, will healthcare become efficient, caring, and equitably available to all.’
This is, of course, absurd. Have we ever seen a state monopoly that is ‘efficient and caring’, or even ‘equitably available to all’?
Government dependency
She continues: ‘Underlying these NDR goals is, as ever, a determination to expand state power and control in an area of vital concern to all citizens. Related, but unacknowledged, aims are to increase dependency on the government, harness substantial private sector resources to revolutionary ends, and impose additional taxes on the middle class. These taxes will ostensibly be levied for healthcare purposes, but the revenue they yield will in practice be available for all other needs too – including the oiling of the ANC’s extensive patronage machine.’
The National Democratic Revolution has as its ultimate objective the achievement of a fully socialist country in which the state owns or controls all the means of production, and plans and directs the entire economy. Viewed in this light, the NHI is an obvious and necessary step for the ANC.
Unfortunately, that it is ideologically understandable doesn’t make the NHI any less of a train smash. Even under the best of circumstances, it is unlikely to lead to improved public healthcare outcomes, and the circumstances will certainly not be good.
Train smash
A large proportion of doctors and nurses have left, are leaving, or will leave the country, motivated directly by their unwillingness to work under an NHI.
Drug shortages will become more widespread. Healthcare will be strictly rationed, and expensive treatments will be curtailed, even at the cost of lives.
Queues and waiting lists will become longer, as all the people who now pay for their own healthcare will be dumped onto the government system.
The cost of healthcare will rise instead of decline, since it is easy to manipulate a government-run single-payer system. Remember the R200 000 mop and the R80 000 knee-pads?
Those costs will be shifted onto taxpayers, however, so the ANC won’t care. In fact, poorer taxpayers and capital flight make for a less capable private sector, which makes dependency upon the state look attractive by comparison with the ever-more crippled and anaemic free-market capitalism of the private sector.
The NHI is exactly what the ‘most direct route to socialism’ looks like: a train smash.
[Image: Incorporating https://commons.wikimedia.org/w/index.php?curid=6176742]
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