Discovery believes the NHI needs private sector collaboration

Discovery CEO Adrian Gore. File photo: Simphiwe Mbokazi (ANA)

Discovery CEO Adrian Gore. File photo: Simphiwe Mbokazi (ANA)

Published Sep 22, 2023


The National Health Insurance (NHI) scheme planned by the government is not workable without the collaboration of the private sector, the country’s biggest medical aid scheme and wellness and financial services group, Discovery, said yesterday as it presented its annual results.

The current status quo of the health system was unsustainable. Universal healthcare was crucial, and the NHI could be a remedy, the group said at the release of its annual financial results yesterday. The group’s Discovery Health subsidiary has about 3.8 million members under administration.

Two weeks ago, the government tried to allay mounting criticism of the NHI, saying the passing of the NHI Bill would not result in an immediate overhaul of the healthcare system and it would be implemented in phases.

The Bill seeks to create one government fund that will be able to pay for both private and public health facilities. The extended closing date for submissions on the Bill was September 15.

Discovery said yesterday that no other country had ever implemented a regulation to limit the scope of private healthcare.

In addition, only 17 countries in the world do not have private healthcare insurance, while 169 countries do. In all countries listed that do not have, the absence is attributed to market dynamics, not a legislative ban.

It said while universal access to healthcare was necessary to ensure all South Africans had access to acceptable levels of healthcare, the current NHI model had proposed that the medical scheme population pay 31% more tax and get 71% less healthcare, including for a significant number of pensioners with higher healthcare needs.

The group said a change to the Section 33 regulation was required to allow better collaboration between the government and private sector - the regulation states that once NHI has been fully implemented, medical schemes may only offer complementary cover to services not reimbursable by the Fund.

Discovery said trying to fund the NHI through increases in tax was not sustainable on South Africa’s small tax base - the Department of Health estimates at least R200 billion per year would be required to fund the NHI.

Discovery said the R200bn was equivalent to a 31% increase in the personal income tax, or a 6.5% increase in VAT, or a ten times increase in payroll taxes.

But even if the R200bn was funded through taxes, it still would not be sufficient on a per capita basis to fund the NHI, Discovery said.

It said the private healthcare sector had significant scale and was a strong asset, offering world class outcomes that covered some 8.8 million lives via 838 private facilities, 42 000 hospital beds, 7 300 GP’s, 47 000 nurses, 7000 specialists and 3 500 dentists.

Presenting at the insurer’s financials, Discovery’s CEO, Adrian Gore, said for the year ended June 30, 2023, the group had resumed dividend payouts with a final gross cash dividend of 110 cents per ordinary share.

This was after Discovery’s three business composites – South Africa, UK and Vitality Global – delivered strong performances in line with the group’s strategy and ambition, and leaving the group with strong cash and balance sheet.

Normalised profit from operations increased 24% to R11.66 billion. Normalised headline earnings increased by 32% to R7.68bn, and core new business annual premium income (API) rose 12% to R22.79bn.