NHI Bill: briefing with Minister, Deputy Minister & legal opinion; Council for Medical Schemes Mandate & Annual Performance Plan

Meeting report

Opening remarks  
The Chairperson welcomed the Members, the Minister and Deputy Minister as well as the delegation from the Department of Health, staff from Parliament and all others who were there to listen to the proceedings. He would be listening to Dr Zweli Mkhize and asking what his expectation was of the Committee in respect of the National Health Insurance (NHI) Bill. He noted that it was a very important meeting. There was an expectation that the NHI would become the Committee’s product going forward.

The Chairperson noted that several Members from the smaller parties were starting the day at the Women’s Parliament and would join the Committee later. Members, the Minister and his entourage were requested to introduce themselves. He added a welcome to members of the media.

Briefing by the Minister
The Minister of Health, Dr Zweli Mkhize, said that when Parliament called, everyone had to move and so most of the senior officials in the Department of Health (DoH) were in attendance.

The Minister read the objective of the Bill:
To achieve universal access to quality health care services in the Republic in accordance with section 27 of the Constitution; to establish a National Health Insurance Fund and to set out its powers, functions and governance structures; to provide a framework for the strategic purchasing of health care services by the Fund on behalf of users; to create mechanisms for the equitable, effective and efficient utilisation of the resources of the Fund to meet the health needs of the population; to preclude or limit undesirable, unethical and unlawful practices in relation to the Fund and its users; and to provide for matters connected herewith.

He also read the entire Preamble, beginning with:
Recognising—
● the socio-economic injustices, imbalances and inequities of the past; ● the need to heal the divisions of the past and to establish a society based on democratic values, social justice and fundamental human rights; and ● the need to improve the quality of life of all citizens and to free the potential of each person;

The Minister continued reading the Preamble to the Bill, noting a range of constitutional and international imperatives for the Bill.

The Minister made the point that the Bill was anchored on the basis of human rights and that was the approach that the team had taken in the management of the Bill. It was also about resolving some of the problems of inequalities in the country. It was based on the principle of social solidarity wherein the resources were pulled together from various sources by the government and the funds were then available to ensure equitable access to all South Africans to the health services. Therefore, it was about social solidarity where those who were employed were able to subsidise those who were not employed; those who were healthy subsidising those who were not healthy; those who were younger subsidising those who were older. It was the principle of social solidarity where South Africans assist each to have access to good health.

He explained that the Bill provided for a number of structures that would constitute the management of the Fund and those structures were what would actually run the purchasing and the payment for the delivery of the services. The presentation would detail the Bill chapter by chapter, clause by clause but he wished to highlight that the Bill was premised on the rights of people to have a say in how services were rendered. In the first instance, the issue of people having an ability to choose their service providers was in the Bill; it allowed for portability in case one moved from one centre to another; and the issue of who was covered by the Bill in terms of South Africans and those foreigners who had residential permits. Those who were refugees, as well as other undocumented immigrants, qualified for emergency care.

In response to concerns raised around the constitutionality of the Bill, the Minister stated that the State Law Advisor had provided several records of certification of the Bill being in alignment with the constitutional principles. He hoped that the State Law Advisor would be given the opportunity to confirm that.

At the back of the Bill was a memorandum that addressed the issues of financial implications that were associated with the Bill. There had been continuous engagement between National Treasury and the Department of Health, and the financial issues had been taken care of but there would be ongoing interaction.

The Minister stated that, as the Bill stood, it was ready to be tabled. Cabinet had passed the Bill after it had requested that the possible sources of funding be factored in, as a principle. It was, therefore, not a Money Bill as that was the sphere of the Minister of Finance.

The Minister requested that the DDG: NHI be permitted to make the presentation.

The Chairperson thanked Minister. He added that the Chief Whip had taken him through the process of Bills and how things should be done so that they were done properly.

Presentation of the National Health Insurance Bill
Dr Anban Pillay, Deputy Director-General: NHI, DoH, made the presentation. He was accompanied by the DG of the Department of Health, Dr Precious Matsoso, and the consultant to the Minister of Health, Dr Nicholas Crisp, as well as the Presidential Advisor on Health, Prof Olive Shisana.

Dr Pillay began his presentation by addressing the purpose of the Bill and gave details of the NHI Board and the appointment process, as well as who would be provided for. Population coverage was an important point as the fund would purchase services on behalf of SA citizens, permanent residents, refugees, inmates and specific categories of foreign nationals. Basic health coverage would be made available to asylum seekers. Every eligible person would be obliged to register with an accredited healthcare provider or establishment. Ultimately, each new-born would be registered. He indicated the rights of users of healthcare services and the coverage of health care services. Health services would be free at the point of care.

Dr Pillay provided details of the establishment of the NHIF in respect of section 3A as a public entity and describing the functions of the Fund Board and the powers of the Fund. The Minister would establish the board and appoint the Chairperson.  The Minister may also dismiss a board member or dissolve the Board under certain conditions. The Minister would be required to establish Advisory Committees with experts in medicine, public health, health economic, epidemiology and the rights of patients. These would include a Benefits Advisory Committee, Health Care Benefits Pricing Committee. The Bill also provided for the role of the Minister and the Role of the National Department of Health.

Dr Pillay explained the role of medical schemes. Once the NHI was fully implemented the Minister would introduce regulations limiting benefits offered by medical schemes to services not reimbursable by the Fund. The Bill also established an Office of Health Products Procurement to address centralised facilitation and coordinations of procurement of healthcare goods.

Regarding provinces, Dr Pillay explained that DoH would delegate functions to provinces, which would be the management agents, for the purposes of provision of health care services, and in those cases the Fund would contract with sections within the province such as provincial tertiary, regional and emergency medical services.

Briefing by the Acting Chief State Law Advisor
Ms Ayesha Johaar, Acting Chief State Law Advisor, Office of the State Law Advisor (OSLA), informed the Committee that in accordance with the National Assembly rules, rule 279(2), the OSLA had certified that the Bill was constitutionally sound on 29 July 2019.  In checking the draft Bill, OSLA had ensured that it was in compliance with the Constitution, the Rule of Law and that government policy was properly reflected in the Bill.
 
Ms Johaar explained how the Bill was aligned to the Constitution. In terms of section 27 of the Constitution, everyone had the right to healthcare services and the state had to determine how to fulfil that requirement. The National Health Insurance Bill gave effect to that right. She also referred to international obligations on the country: Article 12 of the United Nations Covenant on Economic, Social and Cultural Rights, 1966, provides for the right of everyone to the enjoyment of the highest attainable standard of physical and mental health; Article 16 of the African Charter on Human and People’s Rights, 1981, provides for the right to enjoy the best attainable state of physical and mental health, and requires State parties to take the necessary measures to protect the health of their people and to ensure that they receive medical attention when they are sick.

In the judgement of Glennister versus the President, the court stated that when entering into an international instrument and duties were flowing from that instrument, it is then the duty of the country itself that undertook the obligations that then became binding on the Republic when the National Assembly and National Council of Provinces adopted it. As her Office understood it, the intention of the NHI Bill was firstly to further comply with section 27 of the Constitution, and secondly to comply with its international obligations.

According to the Constitutional Court in the Affordable Medicines Trust matter, the state had two constraints: there had to be a rational relationship between the scheme that it adopted and the achievement of a legitimate governmental purpose. The absence of such a rational connection would result in the measure being unconstitutional. Secondly, the instrument could not infringe on any human rights in the Bill of Rights, unless an infringement was brought about by a Bill of General Application, as per section 36 of the Constitution. All legislation must lie with the principle of legality. In the matter of the Minister of Justice versus the Insolvency Practitioners Association, the Court had said that the means chosen to achieve a particular purpose should be reasonably capable of achieving that purpose. Those means might not be the best means or the only means of attaining the purpose.

In the view of the Office of the State Law Advisor, the means of the Bill was rationally connected to the objective of providing sustainable and affordable universal access to quality health care services for all in the Republic. The combined obligations of section 27 of the Constitution and the binding international obligations motivated sufficiently the rationality of the Bill.

The concurrent national and provincial legislative competencies referred to in the Constitution meant that both Parliament and provincial legislatures were equally competent and could legislate on the matter listed in Schedule 4 of the Constitution. The drafters of the Constitution had addressed a situation where there could be a conflict between the national and provincial legislatures regarding Schedule 4. Section 146 of the Constitution provided a mechanism to resolve any dispute of matters in legislation. Her Office held the view that the Bill fell within the ambit of Health Services which was a functional area listed in Schedule 4 to the Constitution since the Bill dealt with the types and manner of services of medical practitioners generally, that might be accessed and applied.

In ex-parte versus the Speaker of the KwaZulu-Natal provincial Legislature, the Constitutional Court explained that a law passed in one sphere would be inconsistent with another when those laws could not stand at the same time or could not stand together or could not both be obeyed at the same time. They were not inconsistent when it was possible to obey each without disobeying the other.

In the view of the OSLA, section 146 was the more apposite section from which the national government forced its authority to pass legislation which fell within the purview of Schedule 4 to the Constitution. In terms of that section, legislation that applied uniformly to the country as a whole could be passed and would prevail if certain conditions were met, as per section 146(2) of the Constitution.

Based on the cited judgements and section 146 of the Constitution, it appeared to the OSLA that
legislation that empowered a Minister to formulate policy, establish frameworks and determine norms and standards should inform the binding nature of the framework of those norms and standards in a legislative instrument. The legislative instrument that codified the authority to determine national policy and the framework within which governments had to perform their functions was the National Health Act.

Section 3 of the National Health Act stipulates that the Minister must determine the policies and measures necessary to protect, promote, improve and maintain the health and well-being of the population; ensure the provision of essential health services which had to, at least, include primary health care services to the population of the Republic; and to equitably prioritise the health services that the state would provide. It went on to state that every relevant MEC had to ensure the implementation of national health policy and establish norms and standards in the province. Notwithstanding schedule 4 to the Constitution, the National Health Act was the law that determined the roles, responsibilities and functions of the spheres of government in accordance with the national health policy determined by the Minister of Health. The roles and responsibilities were not determined by the Constitution itself. Rather, the Constitution authorised that both the national and the provincial governments were empowered to enact legislation relating to health services.

The OSLA interpreted that to mean that in the context of the National Health Act, provinces might enact provincial law to deal with health services authorised and contemplated by the national framework and to give effect to the national health policy. That was evidenced by sections 3 and 25 of the National Health Act.
Any amendment to the above provisions, did not in and of itself offend the Constitution.

When considering the Bill for certifying it as constitutionally in order, clause 3(4) of the Bill was particularly important. The clause provided that the envisaged National Health Insurance Act did not in any way amend, change or affect the funding and functions of any organs of state in respect of health care services until legislation contemplated in section 77, 214, read with 227, of the Constitution and any other relevant legislation had been enacted or amended. It was an important provision which related to the ultimate implementation of the Bill when enacted. The effect of the clause sustained in the Bill as an express substantive provision would be that the existing laws required to be amended and new laws required to be enacted, had to be enacted before the NHI framework law was put into operation. Until such time as that process was complete, the status quo as reflected in the National Health Act and other applicable and relevant laws remained intact.

Chapter 3 of the Bill provided for the Fund as a national public entity as contemplated in the Public Finance Management Act (PFMA). The principle function of the Fund was to take all steps reasonably necessary to take universal health coverage. That OSLA accepted that all people and communities could use the promotive, preventative, restorative, rehabilitative and palliative health services they needed of sufficient quality to be effective, while also ensuring that the use of those services did not expose the user to financial hardship. The definition of universal health coverage embodied the three related objectives of equality, quality and financial risk protection. Schemes registered in terms of the Medical Schemes Act or any other voluntary private health insurance scheme in accordance with the National Health Insurance Policy for South Africa would provide only complementary cover for health care service benefits that were not purchased by the NHI Fund on behalf of users.

Chapter 10 made provision for sources of funding and provided that the South African Revenue Service would undertake all revenue collection related to the Fund. National Treasury, in consultation with the Minister of Finance, the Minister of Health and the Fund would determine the budget and allocation of revenue to the Fund on an annual basis. It also provided for the chief sources of income of the fund and would require auditing by the Auditor-General. Those provisions contained in the Bill regarding financing had been employed in law previously. Examples were the National Road Accident Fund Act, the Skills Development Act and the Skills Development Levies Act. The OSLA was satisfied that the provisions relating to funding in the Bill were administrative provisions which would, at a later stage, require the introduction of a Money Bill by the Minister of Finance.

The OSLA had considered the Bill to ensure that it was aligned with the Constitution, with applicable case law and other relevant legislation and was satisfied that it did not unlawfully infringe any fundamental rights contained in the Bill of Rights. The OSLA was also of the opinion that a rational connection existed between the proposed legislation and the scheme which it sought to adopt and the achievement of a legitimate government purpose. The policy adopted and the legislative instrument produced purported to ensure sustainability of funding for health care services and OSLA was, therefore, satisfied that Parliament, in passing the proposed legislation, would not be acting capriciously and arbitrarily or in violation of the Rule of Law or in violation of any provision of the Constitution should it enact the Bill.

Discussion
The Chairperson stated that the matter of the processing of the Bill was out of the hands of the Minister of Health because he had referred it to the Speaker who had delegated it to the Committee. Therefore, it was incumbent upon Committee Members to understand it well because there was an expectation that it would have to reach and get comments from the citizens of SA. It was at that level that the Committee was expected to own the Bill, understand it thoroughly and process it as parliamentarians.

The Chairperson suggested that Members should ask questions in relation to particular chapters as they had been well outlined. Members should also ask all the questions that they had as he would not take a second round of questioning.

Mr P van Staden (FF+) stated that he was seeking clarity on many matters and he hoped for some clear answers. Clauses 4(1)(c) and 4(2) and 4(3) spoke about refugees, asylum seekers and illegal foreigners and children of asylum seekers or illegal migrants that were entitled to basic health care services but section 28(1)(c) of the Constitution did not address asylum seekers, refugees, illegal foreigners and their children but addressed only SA citizens.  He asked for an explanation of clause 4(3) of the Bill. Health care services to those people would be financed by the hardworking SA taxpayers. Would it not be fair that the hard-working SA taxpayers received the medical care that they deserved instead of the people who were fleeing and migrating to SA in the hope of a better future?

Mr van Staden noted that clauses 4 and 5 of the Bill meant, in his and the public’s view, that a person could not see a doctor or specialist of his or her choice without registering at an NHI accredited primary health facility and the facility referred a patient to a specialist or a doctor. Was that provision of the Bill not in contradiction of section 27 of the Constitution which stated that everyone in the country had a right to healthcare services?

He enquired about how the NHI registration process would work. How would the database function at current state hospitals and how long would it take the institutions to introduce the database at state hospitals? What was the total cost involved in getting NHI up and running by 2026 and could SA afford it? Economists suggested it would cost R25 billion in 2026 at 2010 prices.  Was SA in a financial position to afford the NHI and roll-out and what would the role and function of the Medical Aid doctors and specialists be? Members needed clarity around the issue as there were many stories in the public about that issue. Would the NHI not have such a negative impact on healthcare as doctors would be paid a “salary” and so would not have to work 24/7? Currently they had to work to provide their own income. Would they not be undermined by the NHI and simply become 8-to-5 workers?

Mr van Staden referred to section 12 of Medical Schemes Act of 1998. What effect would the NHI have on that legislation, what would happen with the members’ contributions that were in the Medical Aid’s bank accounts and what would happen to the assets of the Medical Aids under the NHI? Had a full assessment of the impact on the economy been done, and, if so, by whom and over what period of time? Was the NHI system sustainable? With 29% of the population unemployed, the public was concerned that the NHI would seriously affect the functioning and survival of the 80 medical aid companies in SA and would lead to higher unemployment since the companies would have to retrench people. How would those people working for medical aids be employed? What was the government going to do to ensure that they did not become part of the unemployment rate in the country? What would the role of the current pharmaceutical companies, distributors and private chemists be under the NHI? What was going to happen regarding the current shortage of state medicine and would state hospitals and clinics be upgraded and made functional? Should the hospitals not first be made functional before the NHI was launched?

Mr van Staden noted that there had been pilot projects across the country, but it was not clear what the outcome of those pilot projects were. Could, or would, the Department make the reports available for people to see if the NHI would function and could work? And would the evaluation report on the outcome of the pilot projects be made available and, if so, when could the reports be expected?

He referred to clause 11(1)(d): in the prescribed manner and subject to national legislation, invest any money not immediately required for the conduct of its business and realise, alter or reinvest such investments or otherwise manage such funds or investments;
The concerns of the broad public were that NHI would soon follow Eskom, Transnet, Denel, SABC and others. Could the Minister please explain how it would be ensured that the NHI would not suffer great financial losses like Eskom and others? How did the government intend to manage the fund to prevent it from being looted? The public had a great concern about the matter. Corruption had occurred in PolMed, the government-run Police Services Medical Aid – what assurance was there that it would not happen in NHI?

Mr van Staden referred to clauses 5, 6, 7 of the Bill. What were the financial costs of the NHI Board and all the committees? What effect would all of those highly paid people have on the taxpayer’s money? Surely there had to be an estimate cost of the remuneration of all those people. The Bill was not clear on the number of members to serve on the Technical Committee, the Benefits Advisory Committee and so on. The Bill stipulated 16 to 24 members would serve on the Pricing Committee. How many Members would there be in total on the committees?

He read Chapter 10 of the Bill, clause 49 (1) The Fund is entitled to money appropriated annually by Parliament in order to achieve the purpose of the Act. (2) The money referred to in subsection (1) must be— (a) appropriated from money collected and in accordance with social solidarity in respect of— (i) general tax revenue, including the shifting funds from the provincial equitable share and conditional grants into the Fund;  (ii) reallocation of funding for medical scheme tax credits paid to various medical schemes towards the funding of National Health Insurance; (iii) payroll tax (employer and employee); and (iv) surcharge on personal income tax, introduced through a money Bill by the Minister of Finance and earmarked for use by the Fund, subject to section 57; and – general tax revenue; reallocating from MA fund, personal income tax.

How would the NHI be funded in future if the tax base kept declining? Was the tax base not too small for the number of people to be served? If had not worked in Britain, USA and Ireland, what assurances were there that it would be sustainable in SA?

Mr van Staden opined that public participation had to be rolled across the country according to the letter of the law. He asked whether the communication would be in all languages, when it would start and what timeframe would be given for submissions. He knew what the law said but he wanted to hear from the team.

The Chairperson informed the Minister and his team that they did not have to answer the last question posed by Mr van Staden.  When the session was over, only Committee Members would remain in the room to discuss the process going forward. The part about public comments would be discussed in-house, in a closed meeting.

Ms S Gwarube (DA) thanked the Minister and his team for a comprehensive presentation and noted that the Committee was fully committed to rolling out health care and was fully aware of the need for reforms as there were deep inequalities in the country which played themselves out painfully within the system. The fact that over 85% of the population relied on the public health system called for reforms and so, in that respect, she was in complete agreement with the intention, but there were concerns, and that was what she was going to go through.

Ms Gwarube had some concerns about generic provisions and then she would ask some specific questions. She had noted the establishment of a public entity.  She knew that the Minister had gone to great pains stating that it was not another state-owned enterprise and that it was governed by the PFMA, but it was a public entity which sought to pool funds into a single fund which was going to be managed and administered by a Board. If there was going to be independence of a Board, the nomination and appointment of the board members had to be done independently. In the NHI legislation, it was not the case. The board members would nominate a deputy but the Minister appointed the Chairperson and the Minister administered the shortlist and was basically the sole appointer of the board that would be entrusted with billions of Rand of public money and that was going to be in the hands of a public office bearer. She did not have to remind Members how state-owned enterprises had been handled and managed in the country and it was not an unfair concern of the public that the NHI might go that way. However, SA did not have the luxury of the Fund failing or being misappropriated. It would take down the entire health system of the country. Checks and balances were not independent of the board or the Minister, and, in addition, the committee to oversee the Fund, was a part of the same office. The country could not have billions of Rand administered by a board which was appointed by a Minister while the investigation of improper behaviour was done in the same office.

Ms Gwarube’s second concern was around the personal income tax referred to in the Bill. There had been public murmurs that the Department of Health and National Treasury were not on same wavelength about the matter. The State Law Advisor had spoken at length about concurrence and the OSLA was sure that there were no issues of constitutionality, but ultimately, issues around income tax funds should be dealt with squarely by the Minister of Finance and yet it was in the Bill. That element should be separated from the Bill. The Committee could deal with the substance of the Bill but not the funding sources of the NHI. That was a Money Bill issue. It brought into question the conversations between DoH and Treasury if such an oversight, in her view, could happen. Concerning personal income tax, she noted that South Africans were under strain and the Bill was imposing additional taxes on people. What had been the considerations about funding the Bill out of taxpayers’ money? One could not be blind to the fact that SAs were already stretched.

Ms Gwarube asked Dr Pillay for clarity on some technical issues. The Bill spoke to additional structures, such as NHI offices in the provinces. Was that not bloating the system further? Did it not require additional management on the part of provinces? Already provinces managed primary health care at a local and district level and there was a set of parallel processes. She understood the desire to have the national Department as the single purchaser but surely there was an argument to be made around independent purchase and looking at local circumstances. What were the powers of the provinces to make financial decisions in that regard and also to improve service delivery? It could not be that provinces had to wait for a cumbersome national process to meet the needs of people on the ground. She was concerned that it was a complicated process that would not only bloat the system, but also delay it.

Ms Gwarube understood that the pilot projects were across 11 districts and that, by any objective measure, they had failed. Some of the anecdotal evidence from the pilot district was that service providers had not been paid. If the Department could not pay service providers in 11 districts, how was it going to pay everyone in the country? The pilot projects had not tested the funding model of the Bill as they had tested other elements. How had the learnings from the projects influenced the final version of the Bill? To her, it did not seem that the learnings had been incorporated but she had not been privy to such discussions and Dr Pillay could perhaps shed light on that. No financing model had been tested, so how had the Department satisfied itself that the financing model would work?

Ms E Wilson (DA) referred to clauses 2(a) and (c) and the comment in the presentation that quality health services would be free at the point of care. Clause 2(a): serving as the single purchaser and single payer of health care services in order to ensure the equitable and fair distribution and use of health care services; and (c) providing for equity and efficiency in funding by pooling of funds and strategic purchasing of health care services, medicines, health goods and health related products from accredited and contracted health care service providers.

She asked the Minister to advise. In the current situation, what were patients paying at public health services and who was currently contracted to provide health care services? Was it not the Department of Health?

Ms Wilson noted that there had been a lot of talk about accreditation of facilities and providers, and as the State Law Advisor had said that morning, if SA entered into international contractual agreements, it should fulfil the agreements. She had a problem with that. Firstly, she had been across the country to hospitals and clinics and had visited the pilot projects and she would like to see what the standards were and why SA had signed the agreements when there was no chance in hell that the country could meet the agreements. SA’s health system was shocking. The hospitals were shocking; the clinics were shocking. She asked the Minister how he classified an ideal clinic. She had visited 30 clinics in the past six weeks and those clinics were far from ideal, so what was SA doing? Why sign international agreements when there were no facilities that met international standards? When the issue had been raised with the President in the Question and Answer session, he had said that only those facilities that met international standards would be accredited. She had been unable to find one clinic that met international standards. The NHI Bill was a long way off the mark as far as that was concerned, and that had been out of the mouth of the President.

Ms Wilson asked the Minister how he envisaged bringing in the private healthcare system. Could he explain how the NHI affected private hospitals, private doctors and private healthcare in general? Private hospitals had built and owned the facilities and, in fact, they had right of admission reserved.  They were entitled to reserve admission as they owned the facility, except that a doctor who had taken the oath should attend to anyone in an emergency. How did the Minister foresee it was going to happen? There was a lot of talk of committees that would sit and decide on all these things and the benefits but what would happen if he was going to pay doctors a salary that the doctors did not accept? She knew that every doctor in Cuba earned $50 a month. What if a doctor said he was not doing for the state what he was currently doing at twice the salary in the private system? A doctor who had studied, set up a practice, provided good health care and had his clientele might choose not to accept the state’s rate of pay? Did such a doctor not become accredited? If he was not accredited, for whatever reason, what happened?

Ms Wilson noted that her colleague had alluded to non-payment by the Department of Health. The Minister kept saying that it was not an SoE and corruption and maladministration was not going to happen, but SoEs were bailed out regularly to astronomical proportions. What happened if the NHI ran out of money? Those doctors had to be paid. She told the Minister that public participation was going to play a very critical role. The Committee had to speak to all service providers because it was a serious issue. The Bill stated that every person, including children, had to register with an accredited service provider. And if they did not? Were they left at the doorstep to die?

She had many problems. She agreed with her colleague that the fact that the Minister appointed the board in the same way as was done in the SoE’s meant that it was going to become a nightmare and she expected that it would blow up in everyone’s face.

Ms Wilson asked about the legal opinion. The Bill could not be enacted until the other 11 Acts had been amended. Were they putting the egg before the chicken or the chicken before egg? if 11 Acts had to be amended before the Bill could be passed, there was no chance of it happening before 2026; it would be more like 2046.

Ms H Ismail (DA) thanked the team for the presentation. Her colleagues had largely covered her, but she was worried that, since the Department could not get the basics right, how was it going to ensure that NHI would be sustainable? The Department could not provide citizens with effective health care as stated in the Constitution so how was the Minister going to ensure that the NHI would provide effective health care to citizens and residents? As her colleague had said, the country was not meeting the required standards of healthcare. There were already long lines at hospitals and patients being turned away and told to come another day. How was the registration going to be done effectively and cost effectively so that by the time the NHI was rolled out, everyone would be on that register?

Ms Ismail referred to the fact that certain healthcare services would not be covered, and citizens could purchase voluntary healthcare through a medical scheme. She asked on what basis the decision would be made about what was to be covered and what would not be covered? Was not covering certain conditions not denying the right of healthcare? The NHI was suggesting that patients would have to go to private doctors for certain conditions, but was the state not chasing doctors away? Had there been any input from the private healthcare sector?

Ms Ismail referred to slide 7: where provider or establishment unable to provide a registered service then facility or provider must transfer the user to another provider/establishment

That was a matter of concern. She was already seeing at hospitals and clinics where patients were transferred from one point to another. Were they not opening a can of worms? It was already a major issue and she did not see how NHI would make it any easier. Government was biting off more than it could chew. NHI would not be getting it right when it had to deal with the whole country.

Ms Ismail was concerned about taxpayers’ money and what means would be used to determine the rates payable? What about the gaps in the appointment of service providers every five years? How would they ensure all service providers were appointed timeously? Currently there was sometimes an extensive time lapse in appointing new service providers. What would happen to the patient in the meantime?
Regarding the surcharge on Income tax, Ms Ismail referred to the current rate of unemployment and asked how the NHI was going to be sustained in the future? Was the NHI not putting an extra burden on the citizens who did pay income tax?

Ms N Chirwa (EFF) thanked DoH for the presentation and the Minister and Deputy Minister for joining them. She was concerned about the independence of the NHI board since it was appointed by and accounted to the Minister. How could Parliament and the public hold both the Minister and the board accountable? How was the Minister holding the board accountable? Most of the things in the NHI were about feelings and putting one’s trust in God and that was not how the country should be run. Secondly, concerning the other committees referred to in the Bill, she was unhappy that they were entirely dependent on the board and there were no set standards for them. What should happen in the establishment of committees and how would the board be able to add and amend committee membership? How could the Board be held accountable if it was not clear exactly what committees they had to establish?

Ms Chirwa had questions about the registration of all citizens. What did it mean if people did not register? Which state organ would be involved? Where there was no supervision of children by an adult, where did that leave the children? In reality, the process would not happen as envisioned.

On the compilation of the performance profile, she asked what the standard would be in the interim before the five-year review was ready. What was the standard for paying service providers or were they going to wait five years and then see how bad it had been? There would be cost and service implications. According to the Bill, the process needed ongoing evaluation as payment would be performance-based. What did the performance look like and who was in charge of evaluating the performance? She noted that the Minister acknowledged the opportunities for abuse of power and asked how abuse was going to be prevented or corruption rooted out? The Act provided for an investigating unit on claims but how was it to be monitored to prevent corruption? Attorneys and lawyers had been in a corrupt relationship with the DoH over claims. How was the same problem going to be prevented in the NHI? Were the top three law firms going to make a large profit out of the NHI? What did it mean for each of the pieces of legislation that would have to be amended or repealed?

Ms Chirwa noted that there were still infrastructural issues in the health care environment.  In Taung, three villages would have one clinic whether the Bill was passed or not. She expressed concern about the ad hoc advising panel concerning shortlisting for appointments. What were the requirements for the panel members? The pilot projects had not been successful and how was that to be addressed? Issues that had emerged there would inevitably escalate.

Ms Chirwa was particularly concerned about whether there would be space for indigenous or traditional healthcare in the NHI.

Dr K Jacobs (ANC) thanked the team for the presentation. He said that everyone needed to understand that the Members were lawmakers and they were sitting there to advance a Bill that had been set before them. That was their task. The country was in an unequal state and people were suffering. As lawmakers, they wanted to achieve quality healthcare for all. When one looked at the difficulties in the Bill, one should also look at the outcome of the Bill and what the benefits would be for the people. Why were they not looking at the benefits for people, even as they raised their questions?

Dr Jacobs noticed that 12 Acts had to be amended or enacted at the same time as the NHI was before them. Did the Committee address all the affected legislation concurrently which it could do? The NHI indicated exactly where the issues lay in each piece of legislation. He understood that the NHI would take a phased approach, but how? Could that be answered in the questions? He had also noted that enhanced management authority would be given to the district management authorities and CEOs of hospitals. As a medical specialist who had worked in the field, he knew that there was a difficulty for those in authority to make or process urgent decisions because of regulations. Section 27 gave the Minister the authority to make those decisions, but could the Minister explain how it would help management capacity at those levels?

Dr Jacobs added that people were already challenging the Bill, but a Bill could not be challenged until it had been enacted.  He wanted to make that very clear. The Committee had to deal with the challenges around the Bill and take it forward.

Ms A Gela (ANC) said that, as a person coming from local government who understood the role of health services in the community, she appreciated the Bill. What would be the role of local government in the implementation of the NHI? What about other facilities that were still under municipalities, especially the metros? Most clinics had been transferred to the province but what about those that had not been transferred?

Ms Gela understood that every person had the right to health care and the Bill was trying to implement that. She had seen good things coming from the Department of Health. She thought that Parliament should support the NHI to make sure that everyone was treated equally. Where she came from, the ideal clinic had been built so it was a good move.  If you had a medical aid and it was exhausted, you were still chased away.

Dr P Dyantyi (ANC) appreciated the comprehensive presentations. What came out of the debate was that everyone was in agreement that there was a need for more effective use of healthcare for all. She agreed with the Minister that the young should subsidise the old, etc. Amongst the concerns of her colleagues were that health would be nationalised and national government would take over everything and provinces would be left doing nothing. That was not what was envisaged by the NHI. All the spheres of government would be involved.

Dr Dyantyi asked Dr Pillay to explain how the district office would work so that the Members could understand the role of the people in the district. She said everyone wanted standardised health system and she would get the same services in any part of the country. It would be standardised like a MacDonald’s meal with the same service offered throughout the country. It would be a mammoth task to get people to share their resources but it was long overdue, and it was time to do it.

The Chairperson stated that one person who had really inspired him about the idea of universal coverage, was the former head of WHO, Dr Margaret Chang, who had not only been focusing on health in SA, but in the whole world. The Department should focus on the issue of how long countries were going to wait to offer universal healthcare. Dr Chang suggested that countries should start with what they had and fix things as they went along. Had the Department considered the observations of departments in other countries? One question that he had noted was: Can we afford to have NHI? He believed that it was necessary to ask: Can we afford not to have NHI?

The Chairperson stated that the Committee would love to see the report of the pilot sites. In KwaZulu-Natal, he had been privileged to have three pilot sites, three out of the 11 and he had seen the report. If one had to see what the NHI pilot had done, one could look to the quick wins in Majuba because it was a small district. Lessons learnt there had been shared. The Committee could not talk collectively about the report if Members had not seen it, and they could not read the Bill without the report on the pilots.

Minister’s response
The Minister thanked the Members for indicating support for national health, but he could see that not all views were aligned. He was not surprised. Sometimes the questions Members suggested that it was fine to have universal coverage, but not now, not in SA yet. That statement delayed the whole implementation.  Members had raised an interesting question about economics because all the countries that instituted an NHI were in a better place now than they had been before. The example of those countries suggested that SA could not wait for a better economic situation. Japan, just a few years after WWII when the economy was in ruins, had started an NHI in that economy that had been far worse than the current SA economy. Japan now had the longest life expectancy in the world. One had to count the lost opportunities of not instituting the NHI and also the impact on the lives of people.

A study done in Nairobi showed how the concern about the economy had delayed the institution of the NHI in the rest of the continent. He would share that report with the Committee as it had been shared with his team by the new Regional Director of WHO. It was a relevant point. SA was going through a difficult time in the economy and each time the government hesitated to implement the NHI, it did not mean the economy would improve. It had been proven that good health services would mean that more people would be healthy and able to contribute to the economy. An NHI contributed to a healthier economy and a healthier population and those were the reasons for moving forward with the NHI. It was a deliverable for all countries in the continent. At the G20 summit in Japan, there was a question about why the 20 countries had delayed. The Ministers of Health and Ministers of Finance for the 20 countries had been told to work together to fund healthcare. Ministers of Finance were told to prioritise funding for health. The country was moving along with an international movement and could not afford not to implement the NHI. The concern about the economy would be taken into account.

The report on the pilot sites would be made available to the Committee and he and DoH would come and discuss the report. He wanted to contextualise the report. The pilots were one of the first attempts to find the levels of disparities and what it would take to remove the disparities and to move districts closer to instituting NHI. The pilot was not meant to decide whether there would be an NHI or not. The decision regarding an NHI predated the pilot. The approach had been to find the weaknesses and to correct them. The approach was not: if there were weaknesses, abandon the NHI. He did not think everyone appreciated that position.

The team would respond to questions and he would round off. He had the DG, DDGs, Dr Crisp, and others and they would all take turns so that the Members did not hear just one voice. The issues were relevant and important. It was a general discussion, not just for the Members, but for the people out there. There was space for communities to use the information to debate and examine their own standpoint.

The Minister’s position was that the Bill needed to be passed and then issues could be dealt with. He added that salaries could not be dealt with that day.

Response by DoH and Advisors
Ms Precious Matsoso, DG, DoH, responded to the question on multiple Acts that had to be amended. The legal team at DoH had undertaken an examination of all pieces of legislation, including provincial ordinances, following the Law Reform Commission’s report because there were a number of pieces of legislation that were obsolete. Some legislation had been amended repeatedly so their shape and form was no longer visible. All the amendments would be done, and the legal team had worked on all the drafts.

The DG indicated which questions each member of the team would respond to.

Prof Olive Shisana, Advisor in the Presidency, responded to the question about the role of local government. Local government would continue to provide a service as the NHI would contract directly with local clinics that were delivering primary health care services. The team had worked closely with National Treasury to work out costs. The cost of the administration of the entire NHI would be about 1% but, to be on safe side, she would say it could take 2%. That cost included the board, the committees, the branches that would manage the NHI and the cost of regional offices. Costing had been done for the first year when there would be fewer people in the organisation and that would increase until by 2025, everyone would be in position and there would be 382 people to be paid. The number of staff was incremental, starting with 50 in the first year, 201 in the second year, 280, 360 and eventually 382.  The total cost of managing the NHI would be R266 million.

Prof Shisana noted that people confused the NHI with medical schemes. Claims were made entirely differently. With medical aids, people submitted detailed, separate claims. In NHI, the doctor would submit one claim for all patients for a month, give the diagnosis for each patient and the total cost. The administration would not be inundated with claims. It would simplify the process. National Treasury had brought in a specialist from another country that had been running an NHI for 30 years to show how it should be done. SA would not be re-inventing the wheel.

The NHI did not need a large amount of new money as it would be using the same money as previously used for health but restructuring it and then finding the gap. The NHI would be using the same money as the government was already paying for drugs medical care, etc. As things stood so far, there would not be a gap until 2025 when there would be gap of R30 million in the funds required. Additional things could be done if there was more money. Things could change. At the moment they were doing it in a fiscally responsible manner. The message from the presidency was that the country would not be destroyed in implementing the NHI.

Prof Shisana addressed the issue of repealing the laws. Her understanding from reading clause 58, was that eleven pieces of legislation needed to be amended or repealed and this provision indicated that the Bill itself amended these legislations by indicating the number of each Act and what was to be amended or if it were to be repealed, so the repeals and amendments would occur as the Bill was passed. NHI could not be implemented without repealing and amending the Acts.

She addressed the question of corruption. She referred to a document signed by the President, the Minister of Health and everyone interested in improving the system of health. That document would be supplied to the Committee. Everyone knew that the Minister had recently held a residential health summit to inform the quality improvement of the health system. All key stakeholders had laid out the problems with medical services and the problem with corruption and the document indicated specifications to address the corruption. All the questions being raised had been raised at the summit and were addressed in the document. She was convinced that the country could manage the introduction of the NHI. In addition, there was also a national quality system improvement programme and every facility had to be at a standard that had been accepted internationally before it could be labelled NHI-ready. DoH had to improve all facilities. It had to be like MacDonald’s where one knew what one wanted and what one was getting.

Prof Shisana said that the medical-legal issue had been addressed in the plan, starting with training the health professionals so that they did not make mistakes and, secondly, the team was working on finding a different model of addressing medical-legal services. The current model was creating problems and was not affordable. The model had to ensure that people’s rights were respected without bankrupting the health care system.

Dr Nicholas Crisp, Advisor to the Minister of Health, responded to the question of how the actual structure was created and how the structure was to be operationalised. Dr Shisana had presented the figures and indicated that a lot of preparatory work had been done and advice had already been obtained. To create the physical infrastructure, DoH was not starting from a zero base. The DoH had been busy with elements of the structure for many years. A lot of work had been done around the benefit design, the IT system and registering users had been under development for some time and some components were in an advanced stage. It was a journey, not an event. It was not about passing a Bill and immediately starting the NHI. There were parts of the country where it would be easier to implement than in other parts of the country. Because of the good and bad lessons learnt from the pilot, DoH knew which elements could be operationalised early and which went on the back burner.

Dr Crisp stated that work had been done to get the details for the costing and now the team was going down into the minutia of every function so that it was clear what each sub-component required, and looking at each point in the Bill so that they knew what skills were needed. The current staff of 80 were mostly in employment in the health services at national or provincial level and they had been working on the interaction between the different levels and had developed administrative procedures, etc. The immediate task was to split the National Department of Health so that the people and functions that were currently provided in the Department that were purely NHI related could be isolated and taken away to work directly on the NHI. Those who were performing DoH work would be strengthened and trained to be able to implement the service required for the NHI. There were temporary mechanisms for them to set up such an administrative office in the Minister’s office without having to wait for Schedule 3 in the Bill to be passed to set up an entity as that would cause a delay. That Office would be transferred to the entity when it had been set up. PFMA and PSA provided ways of doing that rather than setting up an independent body. The team had been in consultation with National Treasury and the Department of Public Enterprises to determine the best way to set up that Office. It might take a few months to a year to split the structure. It would be quicker to split at national level than at provincial level but the mechanisms were in place.

Dr Pillay stated that the pilot in 11 districts had identified successes. The authors of the report did not say that the pilot had been a failure. On the contrary, they recommended that the programmes be implemented. Where there were challenges, DoH would have to adapt. From the project on dispensing of medicines, they had worked out how to manage prescriptions where there was no doctor by using the various measures that currently existed. Where there were no pharmacies or doctors, medicines were delivered to places of worship as collection points. The team had worked out how to contract general practitioners to work in the facilities. There were some challenges with the way that claims happened and the team needed to work out how claims would be addressed.

He added that norms and standards had been developed so that everyone knew what an ideal model clinic looked like. IT systems had given stock visibility at all levels, including local level. He noted that very few countries were able to view stock levels at local level. The patient registration system had been piloted. Patients had been registered on the electronic system where there was no file available and that would be expanded to a full electronic record. A number of lessons had been learnt.

Regarding medical schemes, Dr Pillay stated that the Bill made it clear that the medical schemes would provide services that the NHI would not fund or reimburse. The Minister would declare in Regulations which services would be provided, but that depended on the advice of the Benefit Advisory Committee.

Ms Gail Andrews, Chief Operating Officer, Department of Health, stated that the report on the pilot projects would be provided but reports had been written every year over the five years of the phase 1 pilots and those external reports had been given to Members of the Committee and were available on the Department’s website. At the end of the five years of the first phase, an external evaluation of the entire five years had been undertaken and was also available on the DoH website. When the printed version was available, that would be submitted to the Committee.

Dr Yogan Pillay, DDG: Communicable and Non-Communicable Diseases, Prevention, Treatment and Rehabilitation, Department of Health, explained to Members that the methodology for the pilot reports was largely qualitative. The report had implications for the NHI going forward in that there needed to be a robust Monitoring and Evaluation System to monitor the system. That was far more important than the report itself. The report was highly nuanced because it had been a qualitative study.

Dr Aquina Thulare, Technical Advisor, NHI, responded to the question on the district health office. NHI was based on a primary health care approach and the NHI had to ensure that there was a mechanism that would organise services closest to communities. District Health offices were currently underutilised and had to be adequately capacitated so that the district offices could  be used for planning for disease, and for looking at epidemiological profiles based on needs existing in communities. It was essential and important to de-centralise services to the district level.

Dr Thulare responded to the role of medical schemes in an NHI environment. Chapter 8 of the White Paper had articulated various options adopted in various countries in relation to medical schemes but in SA, the intention was to create a single service across the country where there was no duplication of coverage of services. In 2010/11 National Treasury had done an economic impact study of NHI and it was shown that for economic sustainability, it had to be a complementary approach with medical schemes, not a parallel, duplicative scheme. If NHI was not to impact on the economy negatively, there had to be a complementary approach to medical schemes. If one looked at what NHI wanted to achieve, i.e. to improve health outcomes of the entire population, then economies of scale were imperative. The NHI was intended to improve life expectancy and reduce the amount that people were currently paying into medical schemes. The population would be paying much less as was also shown in other countries.

She added that a single NHI would create certainty about what a wage earner took home. Companies would be certain about how much to contribute to health. There would be a healthy, productive workforce which would encourage investors. It would be an instrument to ensure increased social cohesion and if society knew that citizens cared for one another, it would create a more equitable society.

Dr Thulare stated that migrants had been classified in the Bill as refugees, asylum seekers etc.  The Refugees Act (1998), particularly section 27(g), compelled government to provide refugees with the same healthcare as SA citizens. In terms of undocumented migrants, section 27 of the Bill of Rights stated that no one could be denied emergency health care services. The Constitution was unequivocal on that point and one could not choose what to accept in the Constitution and what not to accept. That had been translated into the Bill. The Bill also demanded that migrants with notifiable diseases be given health care.

A State Law Advisor responded to the constitutional issues raised. Clause 3(4) the Bill mentioned sections 77, 214 and 227 of the Constitution and said that the envisaged Act would not amend, change or affect the funding of functions of any organ of state in respect of healthcare.

He added that the Act was not a Money Bill because it did not allocate monies or taxes or add surcharges or levies. That contribution rests with the Minister of Finance and the National Treasury. Parliament could pass the Bill but when it came to the actual allocation of funds to implement the NHI, National Treasury would have to present a Bill related to the allocation of monies.

Dr Thulare said that the NHI would provide cover for a comprehensive set of healthcare services that would be categorised according to the level of care at which a user wanted to access the service. There would be services at a primary healthcare, services at district level, regional level, a tertiary level and at a quaternary level. The services would be defined by the Benefits Advisory Committee and they would be defined by the population, taking into account the needs, the epidemiological profiles and the demographic profile of the population. The experts would define the types of services to those levels. Services would be evidence-based and prioritised in terms of what would benefit the largest part of the population and also certain critical services. It would also take into account the referral system.

Dr Thulare said that she had already responded to the question of NHI as a single payer. Other systems in the world that were single payers spent less than 3% on administration. Currently health care administration in SA was at 15%. She advised Members to think of how much further money could go with costs of between 1% and 3%.

She added that the registration of population of users was already being undertaken in NHI accredited facilities. DoH had already initiated a process of registering patients. 46 million patients were currently in the system. 40 million of those records had been verified with the Department of Home Affairs. When the Bill is passed, the population would have to register at accredited centres. Children would be registered at birth. Responsible adults had to register children and, if there was no supervising adult, officials would register them. Registration would happen on an ongoing basis. Permanent residents coming into the country would also have to register.

Prof Shisana said that committees would be established by the board and others by the Minister. The board had been given the capacity to develop terms of reference for the committees and to ensure that the committees addressed issues as required. As far as the Board was concerned, the Minister appointed only one Member, the Chairperson. The rest of the members were the ones that would be engaging. The rest of the advisory committees appointed by the Minister would advise the Minister on specific issues relating to decisions that he had to take as a Minister. For example, if someone wanted to offer a service developed following new research, the advisory committee would advise the Minister whether to include the service in the NHI system. There was nothing controversial about that. The Healthcare Pricing Committee would advise the Minister of Health on the prices that should be charged so that healthcare could be affordable. He would also consult the Minister on the Finances on pricing. That was a critical committee. The Stakeholders Committee would be a diverse group of stakeholders who would be able to share their own thinking with the Minister.

Prof Shisana spoke about the economic benefits of universal health coverage.  It was a global issue and SA was not alone in the matter of creating universal health coverage. The President, the Minister and she would be going to an international conference on universal healthcare in September 2019.  She read a statement by Ban Ki-moon, the eighth Secretary-General of the United Nations. A healthier population attracted investors and grew the economy. Investments in health could improve an economy six-fold.

Single payer systems operated in Canada, Taiwan, Australia, UK, Spain and Nordic countries so what SA was doing was not unique. The current plan was to offer comprehensive services under the NHI. The NHI would be sustainable because it was tax funded. It would not be sustainable if it was not tax funded. People would pay less than they were currently paying for medical aid so people would have more money that they could invest and grow the economy.

The DG informed the Committee that Cabinet had determined that every Bill brought to Parliament had to be preceded by a socio-economic impact assessment study so that study had been conducted and was available on the DoH website. She also responded to the question on quality assurance. The National Lancet Commission had been appointed to look at quality issues in the country. A number of experts had been appointed, including officials, union representatives and representatives from civil society. A report had been produced plus a road map on how best to deal with the situation. The Commission had conducted quality research in a number of countries which had embraced the idea of the ideal clinic, contrary to the SA view. Nepal had done a copy and paste of the ideal clinic although those officials were advised to see whether it was suited to their conditions. Tanzania had taken elements from the ideal clinic plan and perfected the processes. SA had looked at a number of countries in terms of quality because the Minister had recognised that quality was essential to the NHI. There was both a global and a national report on quality. All issue s that had been raised by the Members had previously been considered by the team.

Response by the Deputy Minister of Health
Dr Joe Phaahla, Deputy Minister of Health, explained that the intention was to move from the premise that the national health system, as it currently existed, was unsustainable. However, he accepted the fact that no matter how difficult and unsustainable a situation was, it was in the nature of people to adapt and to be comfortable with the situation one was in. For example, people who were living in a deplorable situation resisted being moved to a situation where they could get better services. The fear of the unknown was very dangerous because people could get stuck in bad situations. It was clearly a disruptive intervention, especially for those on the upper side of society. Members, their families and friends were in the 15% who could afford private health care so, to them, it would be disruptive.

The Deputy Minister said that Members had raised issues regarding the cost of NHI. It was something that was emphasised over and over again. Currently the budget for the Department of Health was R230 billion to service 85% of the population. Private healthcare for 15% of the population cost R250 billion in 2019/20. That was an outlier even compared to the United States, which was the most capitalist country. In the USA, 49% of the expenditure was prepayment and 51% in state and compulsory contributions. In other countries, the ratio of compulsory expenditure was 70% to 80% and private expenditure was 20% to 30%. That was why there was such disparity in the SA healthcare system. Members were concerned about where the money would come from, but it was not new money. If half of R250 billion were re-structured, one did not need any new money. In fact, people would save. Members knew how much they were paying for their medical schemes. He was sure that everyone would be happy to pay half of that and receive the same service.

The cost of administering the current medical schemes was enormous: R20 billion went to administrators of the medical schemes, which was 10 to 15% of the total amount. If one could reduce administrative costs to between 1% and 3%, there would be a large saving.

The Deputy Minister responded to the question of what would happen to private providers. What was envisioned was the purchase of services from privately owned facilities as well as state facilities. Private hospitals could choose to participate but unlike the current system where, for example, a private hospital was charging upwards of R5 000 for a circumcision whereas a General Practitioner charged R500 for circumcision, the NHI would offer a payment based on the benefit costing. If it were decided that R700 was the cost of circumcision, that was what would be paid for a circumcision. That was what the countries mentioned were doing. A medical scheme had reduced its interest in the UK because in the UK the price was fixed. Practitioners would be told, for example, that they could do a cataract operation for R1000 per patient and that was what the NHI paid any doctor who agreed to do it.

The Deputy Minister accepted the concerns around corruption because he was not in denial and he knew what had happened in many SA institutions. That was something that would have to be addressed in the process of implementation. There had to be an executive authority but Members knew that both Minister and the board had to account to Parliament.

Response by the Minister of Health
The Minister noted that the Chairperson had raised a question about cost. He recommended that the Committee read the document: A heavy burden: the indirect cost of illness in Africa – WHO (World Health Organisation) Regional Office in Africa. The report had been presented at the WHO Regional Office in Africa conference in 2017 on Strengthening health systems towards universal health coverage and the sustainable development goals in Africa: a framework for action.

The document dealt with the burden of disease in Africa and the cost of not doing anything. He read an extract from the document which referred to a loss of 700 million disability adjusted life years in 2015 alone.  That was how one measured the burden of ill-health in the community. The loss of health was measured by the loss of life.  59% came from communicable diseases and maternal and nutritional conditions and so on and 41% from non-communicable diseases. Five countries in the region accounted for 50% of the total loss: Democratic Republic of Congo, Ethiopia, Nigeria, South Africa and the United Republic of Tanzania. The study had quantified the impact of those losses on the GDP of the countries. Would SA improve or worsen the situation by not acting? It was very clear that not acting would make the GDP worse. The Committee had to have access to that document so that Members could see that the team was not just picking things up from Europe but that it was a global movement. The thinking was based on proper research. It was not SA moving on its own.

He noted the concerns about the Minister’s powers and the committees. He opined that State Capture had messed things up. It had made SAs very nervous of many things. Even things that sounded procedurally correct seemed suspicious. It was unfortunate in that case. The structure had been benchmarked against many other successful jurisdictions. The NHI would have to prove in action that what people feared would not happen. He had to commit to ensuring proper administration and proper governance in all the structures because the government owed that to the people. The corruption had affected the NHI. He accepted that there was a real concern about corruption, but he thought that the team had adequately addressed the concerns.

The Minister noted that Ms Wilson had asked what patients paid. He explained that there were four grades for charging patients at public facilities which meant that on grade H4 people earning less than R70 000 pa did not pay. H3 was for those earning R70 000 to R100 000; H2 was for those earning R100 000 to R350 000; H1 was for those earning above R350 000. Fees were based on a means test. DoH collected R1.8 billion a year from central hospital payments, which went to Treasury.

The quality improvement plan would be sent to the Committee. The Office of Health Standards and Compliance had already started to go around and inspect. He had a report presented at the last National Health Council meeting. The methodology had to be improved but whilst the Council was doing inspections, the plan had to be implemented for upping the standard and quality was necessary. He agreed with Ms Wilson that the aspect of quality had been neglected but the facilities now had to meet the standards. People had to want to choose a state clinic. It would be a tough call but clinics, staff, etc had to be pushed to providing quality service. The facilities had to be checked so that a good clinic was not an exception but could be found everywhere. The neglect in the health system had to be remedied. He was not disagreeing but stating that what Ms Wilson had pointed out was the reason that there was an improvement plan and the Office of Health was inspecting facilities.

The report was shocking. He wanted to make it clear that the report did not come from the pilots but from the Office of Health Standards and Compliance. The level of quality was at a very low level. The message was that NHI had to be a point of vision. Part of the problem that had created a difficulty was the lack of investment in public health over the years. The country needed to get back to the good hospitals that were in existence when people like him grew up. Then there would be good competition between private and public hospitals and people would choose to go to a public facility even if they were on medical aid. NHI provided the possibility to up the game. Everyone was expected to up the game immediately. He did not disagree with the weaknesses raised by the Members and probably he had more evidence of how very bad the situation was than any of the Members.

The Minister added that there was going to be a separation between the NHI purchaser and the policy side. However, some of the posts were already filled and the people would just have to be shifted and sent for training. The posts were already in the system and paid for so the structure would not be a completely new structure.

The Minister addressed the concern about the powers of the provinces. At a recent meeting with provincial DGs from Health, the team had assigned Dr Crisp to deal with the concerns of the HODs. The intention was for two or three of the HoDs to join that group but all the HODs had insisted on being involved in the discussion about how the powers would be allocated and delegated to provinces. He asked the HoDs to make proposals about how to deal with the powers of HoDs in the provinces. The mechanism would be changed so that the Minister would not say that that had to be done by the provinces but there would be proper lines of accountability and matters would be dealt with appropriately.

He added that a team would explore innovative ways of improving infrastructure without using government money. The improvement of structures should be done with private money because R73 billion was needed and the fiscus could not afford that. He accepted that the cost of building would never be lower than R73 billion so creative ways of funding had to be found. There had to be a mechanism for engaging private funders. Being afraid to start because there was no money was the original story of sharpening the spear until there was nothing left.

Regarding National Treasury, the Minister had seen articles in the media that stated that National Treasury was not happy with NHI. Media created news by creating antagonism, pitting one against another. There had been several consultations that had included National Treasury and he had chaired one of the meetings with Treasury and the Presidency. For the benefit of the House, he stated that the calculations in the Bill had come from National Treasury. They came from the initial proposals in 2010 when they were looking at a 14-year term for introducing the NHI. DoH had R230 billion and a similar amount would come from the private sector. It was necessary to take into account the economic growth rate and how to structure packages and so on, so National Treasury was working on a paper projecting the NHI beyond 2025, taking certain assumptions into account.

The Minister explained that National Treasury had raised three things. Firstly, he was asked how far he wanted to go in the Bill about the sources of funding. The agreement was that saying what the sources of funding were, did not constitute a Money Bill. The Money Bill would be the purview of the Minister of Finance who would say where the money was coming from. He had been very cautious in dealing with the Bill so that it gave information but was not a Money Bill and that was why he had only put in generic sources of where funding would come from. Cabinet had raised all the issues Members were raising, including whether or not it was a Money Bill. In fact, the Bill was presented to cabinet several times, sometimes with the monetary sources included and others without the source of funding.

Secondly, he noted, National Treasury was not comfortable with earmarking funds. It was not unconstitutional, but Treasury had explained that sometimes there were constraints because if there was a surplus, the money could not be used elsewhere because it had been earmarked. However, Treasury was not saying ring-fencing could not be done.

Thirdly, National Treasury wanted to know about the package. Treasury had met the team which had been able to clarify a number of things, such as how the roles and functions would be determined. The team would engage further with National Treasury but Treasury had no difficulty with NHI. The only difference was the earmarked funds and that was simply a difference of approach.

The Minister explained that non-accreditation of service providers could be appealed but he did not know what was meant by nationalisation. Giving powers to the national Ministers to render services and then re-distributing to provinces was not nationalisation. Nationalisation was taking ownership. That was not what was happening. That seemed to be politicking. He believed that SA could be developed into a huge pharmaceutical producer of affordable, good quality medicine that would ensure affordable good quality medicine to the NHI. The Deputy Minister had raised the issue about the distortions. The distortion in the SA healthcare market was unbelievable.  Healthcare in SA was more expensive than in the USA. How had that happened? Healthcare could not cost more in SA than in the US and yet people had been saying there was no distortion. Private hospitals had 25% of beds but 65% percent of the specialists. He was not criticising private health care, but it had not been managed and now the state and the private sector had to do it together. He added that government was not biting off more than it could chew; it was taking a phased-in approach.

The Minister said that he had met with Business Unity SA which had raised a number of issues. He would continue to engage with medical practitioners, physiotherapists, etc. and he would be meeting traditional healers because the NHI would be absorbing traditional healers and people in complementary healthcare like physiotherapists, etc. He would be sitting down with all of those types of practitioners to discuss how they would be accommodated. The issue of referrals had to be managed. Most people went to someone else before they got to a medically trained practitioner and that was primary healthcare, so all of that had to be managed.

The Minister stated that where questions had been raised and the team had not been able to respond, team members would go back and get new information and re-examine the model as the process moved forward. He assured the Members that the Bill was sound in terms of equity and mitigating the balance between public and private healthcare and would deal with the issue of SA being one of the outliers in medical expenditure. That was why there had to be a re-adjustment and while there would be different positions, but he was convinced that the framework would see the resolution of the concerns. President Ramaphosa would be answering questions at the international health convention about how far SA was with its NHI. SA was being overtaken by other countries in Africa and he pleaded with the Committee to consider the need for the Bill. He understood the concerns about corruption and gave his assurance that government would not allow that to happen.

The Chairperson thanked the Minister. He noted that the Committee had received a very important document from the DoH. The CEO of the Medical Schemes Council had been listening to the presentation and he would give the Committee his views when he made his presentation. The following week, the Committee would be meeting with the Office of Health Standards and Compliance.

The Chairperson asked everyone to leave the room while he had a private engagement with the Committee.

When the presenters and visitors were recalled, the Chairperson welcomed the Council for Medical Schemes.

Briefing by Council for Medical Schemes (CMS)
Dr Clarence Mini, Chairperson, CMS, congratulated the new Committee and invited Members to visit the Council in Centurion. He announced that the Council had, at last, appointed a permanent Registrar. He also informed the Committee that the Council had visited each and every medical scheme in the country.

The Registrar of the Council, Dr Sipho Kabane, made the presentation. He indicated that he had a good presentation but would present only the key slides.  The Council presentation had 107 slides and the presentation continued for well over an hour. (The later version of the presentation had additional slides and the slide number identified by Members depended on which version the Member was referring to.)

Medical Aid Schemes
The presentation detailed the historical background to medical schemes noting that the first medical scheme in South African was the De Beers Mines Benefit Society which was established in 1889.

The Medical Schemes Act of 1993 removed guaranteed minimum benefits and allowed schemes to limit and/or exclude cover and, at that time, the concern about racial profiling emerged. The Medical Schemes Act was promulgated in 1998 and re-introduced minimum benefits and so on. That was the Act under which the Council operated.

The Medical Schemes Amendment Bill would pay attention to the problem of brokers whose income went up annually even though the number of members did not increase. The Council was also concerned that the brokers did not add much value despite the amount of money that flowed to brokers.

The Registrar and CEO position was filled by Dr Kabande in February 2019.

Mr Dan Lehutjo, CFO, CMS, presented the budget of R163 million but the Council was regulating a giant of R192 billion. The grant of R6 million from the Department of Health was intended to fund directives given by the Minister of Health. Cost containment strategies had been implemented but, generally, the CFO stated that the Council was underfunded, especially when one looked at the high levels of qualifications required by those who were involved in investigations.

The proposed budget for 2019/20 was R164.9 million but the Council was attempting to regulate a R192 billion industry, which was quick to litigate. The Council was charging a levy of R38.67 per member per annum in 2019/20, which was up from R36.13 in the previous year.

Immediate challenges for the Council included the investigation into allegations of corruption at CMS. A call to the fraud and corruption hotline in February 2019 had alleged that the General Manager was engaged in corrupt relationships with industry stakeholders. The General Manager had been suspended on full pay and an investigation had taken place. A disciplinary hearing had been scheduled for 27 August 2019 but he was not aware of the outcome. The Council had invited the Special Investigation Unit to look at the wider industry fraud and corruptions allegations that had been uncovered. An investigation was underway.

The section 59 investigations followed allegations of racial profiling, blocked payments, blacklisting, bullying, coercion and hidden cameras. An independent investigation panel had been established. Open sittings had started in July 2019 and were ongoing. The final report with recommendations was expected at the end of November 2019.

The budgetary constraints had been exacerbated by the cost of the Section 59 investigation at R10 million and the SIU investigation at R4.6 million.

The Council had 120 staff members who had to deal with 8.9 million beneficiaries. The mandate of the Council was widening and included Fraud, Waste and Abuse (FWA), Coding, Competition, NHI and policy. The Council was restructuring the organisation to ensure that it was fit for purpose.

The key priorities for 2019/2020 was further investigations into allegations of racial profiling. The Council would be engaged in several Bills in the course of the year, including a Financial Services Regulation Bill, a Conduct of Financial Institutions Bill, the Medical Schemes Amendment Bill and the National Health Insurance Bill.

Discussion
The Chairperson asked the Secretary when the CMS presentation had been sent.

The Secretary replied that the first version had been sent out the previous Friday and an updated version the previous day.

The Chairperson stated that he had not read the presentation - perhaps he had focused on the NHI documentation. He knew that there were Members who had challenges and had to be at the buses at 5pm. He had not read the report and would not be able to engage, although he had read the Annual Performance Plan.

Dr Jacobs said that he had only received the presentation at 16:40 the previous evening and he could see that it was very long and quite intensive, so he had not been able to go through it. But he thanked the Council for the presentation. Would the Members get another opportunity to engage with the Council? If not, he could ask some questions.

Ms Wilson stated that it was an easy to follow presentation. It was not complicated or technical and nothing should have gone over Members’ heads. If the Council could come back it would be fine, but if not, she had some questions.

The Chairperson determined that those Members who had questions would put those questions to the presenters.

Ms Wilson thanked the Council for the presentation. She noted that the presentation was clear and she fully understood the challenges and how difficult it was to go up against the medical schemes and so on. Her question was not on the presentation. Could someone from the Council explain how the NHI was going to affect the medical aids? Her party was being asked that question a thousand times a day. Could patients go to their local doctors and would the Medical Aid Schemes pay?

Ms Gwarube thanked the CMS for the presentation. She noted that the Registrar had spoken about engagements with DoH and how the Council was trying to get medical aid schemes NHI ready. How far was the Council with that process? Had it engaged with the schemes, as one of its functions was to protect the schemes? The model of medical schemes would have to change. What did that mean for the Council’s business model as 80% of its revenue came from medical schemes? Had the Council considered the future? If medical schemes were to become a top-up service, was there a need for the Council?

Ms Gwarube said that one of the things in the debate about NHI was the lack of or inadequate regulation that had happened in the private medical sector. Government’s role, through councils was to protect consumers but it was a known fact through research and commissions that that there had been a clear over-costing of medical aid clients. What had the Council’s role been in regulating the cost of medical schemes? Had the Council exercised its regulatory powers? There had been a great deal of talk about the overcharging by medical aid schemes and the disparity in costs but what had government done about it? There was a lot of scapegoating around the money that was being spent on private healthcare versus public healthcare.

The Chairperson announced that the document had been received at 16:50 the previous day. He had to correct himself.

Dr Jacobs spoke as someone who had worked in private practice for a long time. He had seen, since the time that black people had been allowed to become doctors, and he was one of the first few in Stellenbosch, how easy it had been to open a practice and to compete with established doctors. His brother said things had been fine until, under the stewardship of Dr Nkosazana Dlamini-Zuma, the Medical Schemes became the payer in the 1990’s. Since then, it had been a complete disaster for the general practitioners who struggled to make a living because the medical aids made a large profit at the cost of those who had to provide the service. That was what the CMS had shown. It was a small organisation in relation to the hugely profitable medical schemes.  Medical schemes had built up a reserve of R64 billion.

Dr Jacobs informed the Council that his copy of the presentation was missing the slide before the funding challenges.  He moved on to speak about a slide that referred to investigations by the Council into corruption on many levels. His colleagues had called him to say how difficult it had been to find that Discovery Health had sent people with a hidden camera who had made videos of the doctors’ consultations. The Council needed to speed up the investigations and really address the medical aids where they did those things. It was not morally or ethically correct. Those videos of consultations also had to do with the racial profiling. How did the Registrar think that he could get the additional funding of R10 million to expedite the investigations? How could the Committee assist?

Dr Jacobs also asked for comment on the progress that Council had made with regards to the section 59 investigations, although the presentation had stated that it should be complete by November 2019. What role could the Committee play in expediting that investigation? He then referred to the staffing profile of the Council and was shocked to see that the Council reported on the people employed in the organisation in terms of black, white, coloured etc. That racial profiling was not good in the current South Africa. However, the totals of people from the various races in the organisation was not good and the Council had to get the staffing more equitable.

Dr Jacobs was interested in the audit findings of the Auditor-General. If it was a good report, the Committee could take up the issue of additional funding. The income of the Council was a problem and the Committee should support the Council.

Ms G Tseke (ANC) asked what the Council had done, because they were regulators, when they had seen the cost benefits? Had the Council been aware of the irregularities that were happening within the medical schemes before the whistle blowers had alerted authorities?

Ms Chirwa believed that the organisational environment performance analysis could be misleading, considering that there were already challenges regarding the workforce and the targets addressing the cases launched had not been indicated. What were they measuring performance against if there was no target? Without targets, the performance of the Council would be judged on a personal basis. It seemed to exemplify the incapacity of the Council. The Council should not exaggerate its achievement because it had a big challenge.

Ms Chirwa enquired about the public participation rate in the public engagement roadshow. In how many areas was it done and how was it done? Which areas had they covered? What sort of engagement was there with the communities? She was worried about the advertising and the marketing and did not think that it had been adequate.

She asked about the restrictive schemes. What role did the Council play in ensuring that employees had agency in deciding which medical schemes they wanted to use?  What role did CMS play in schemes that failed to maintain solvency? Regarding racial profiling, she asked if the Council was engaging with the complainants or was it relying on the investigations? Were people being charged different prices because of the racial profiling and was there gender profiling? What were the consequences for schemes that used racial profiling?

Dr Hlengwa asked how a medical aid could be exhausted in June of a year. GEMS was a government medical aid so how could a patient’s funding be exhausted in June?

Ms Wilson raised a point of order. She felt that the meeting was being rushed. Members had received notification of the meetings and been told to be prepared to sit late the previous day and up until 20:00 that evening. That was what parliamentarians did. She objected to the rushing of the agenda because some people wanted to go home by 15:30 or 17:00.

The Chairperson noted her comment but stated that certain things did change that were beyond the powers of the Committee Members. Some Members had had other pressures that morning and had arrived late and the Committee had accepted that. During the course of the meeting, he had received other notices and people had to leave the meeting because of other pressures and Members had to respect that.

The Chairperson asked the Council whether the Committee could meet the Council when it went to Gauteng. He was interested in the issue of the medical schemes and what would happen in the light of the NHI. It was a concern of many Members and so he asked for a response to that that question. He would see how the Committee could meet the Council to hear the answers to the other questions.

Response by CMS
The Registrar responded to the question on the effect of the NHI on medical schemes. The relevant section was clause 33 of the NHI Bill that stated that once the NHI had been fully implemented as determined by the Minister through the gazette, medical schemes could only services not offered by the NHI. His understanding was that as the NHI built up its benefits package, took on members and started to provide services that had been approved through the Benefits Committee, those would be communicated to the Council and only what was not covered by the NHI could be offered by the medical schemes. However, the Council had been informed that the full implementation, i.e. when the schemes could only offer complementary services, would only take place after the Minister had issued a gazette indicating that. Until that time, medical aid schemes could continue to operate.

He noted that the Bill also talked about private health insurance that would be also be available so there might be other products that would be brought under the regulatory arm of the CMS.

The Registrar suggested that what might not be covered by the NHI would be medically accepted procedures that were not essential, like plastic and reconstructive surgery. Schemes and private health insurance would cover those, as would medical procedures that it was not cost effective for the NHI to cover. He also understood that the benefit package of what sat in the NHI would not be constant as services would be added and subtracted, depending on the committee, robust engagement and medical advances. The schemes would remain until there was a change in the legislation. Medical schemes would be there but some of the services from their benefit packages would be removed. When there was legislation that said medical schemes had to cease to exist, then they would come to an end. How would it be done? It would not be fair if a member had paid for a medical aid and then, overnight, the services were not covered. Members of schemes and NHI had to be clear about the entitlements and members would have to be given sufficient warning of changes. The Council still had to have discussions with the NHI administrators.

The Chairperson stated that the Registrar’s response helped and gave Members comfort in knowing what would happen. He was stopping there for the day, and he did not know where they would meet again but some arrangement would be made as the presentation was not complete. It was the first day that the Committee had received a full presentation from an entity. There was a day where the Committee would be briefed by three different entities and he did not know if one of those presentations would be moved and re-grouped with the Council for another day. He thanked the Council for the presentation. Some of the other Members of the Committee might look through the presentation and have some other questions for the CMS next time.

Ms Chirwa raised a point of order. There had to be a specified date when the next meeting would take place and when the Members would receive answers to their questions. Members were exiting a process that they had been expecting for over a week and had come prepared to leave at 20:30. It would be an injustice if the questions were not answered. The only time when anyone was entitled to leave was at 20:30. A Member could exit if he or she were inconvenienced by a process that he or she knew about and did not lodge complaints about beforehand. However, the Committee could not just stop the proceedings. If people were concerned about time, they should have said so. It was not fair. Members were just doing their job.

Ms Tseke made a comment (without the microphone).

The Chairperson responded to Ms Tseke saying that the notes he had received said that he actually had to stop the meeting for the sake of the people who would not have transport. He could not say when the Committee would have a follow-up meeting, but he had called the meeting because the Committee was concerned about the Council and there would be a follow-up as soon as possible. He had prioritised the engagement with the CMS.

The meeting was adjourned.