Godongwana says NHI unlikely to receive substantial budget allocations soon

Godongwana says NHI unlikely to receive substantial budget allocations soon

Finance Minister Enoch Godongwana says the 2023 Budget to be tabled in February is unlikely to have a substantial focus on the National Health Insurance (NHI) and will focus on overcoming service delivery backlogs in the present system.

The NHI Bill is being processed by the National Assembly, which hopes to complete deliberations before Parliament rises next week. The NHI emerged as an ANC conference resolution more than a decade ago. But while there is a Bill in Parliament, the Treasury has yet to provide details on how the NHI will be financed.

In reply to a parliamentary question from DA MPs Michele Clarke and Lindy Wilson, Godongwana was frank that little work had been done on the financing but stressed that full implementation was still some way off. A more likely scenario was a gradual phasing in of some benefits over time. He said: 

The need for and timing of further updates to the NHI costing model will be determined by practical progress with NHI, spending patterns, and the timing of the legislative process. Further cost modelling will need to be informed by further development of the NHI benefit package, healthcare utilisation trends and projections, and unit costs.

Godongwana also cautioned that « the cost model will not automatically translate into budget allocations as these would have to be made as part of the budget process which will take into account the macro-economic environment and fiscal space. »

Since 2020, Treasury has been shifting funds allocated to the NHI to other uses, citing slow spending. In the February budget, the NHI was hardly mentioned. The NHI Bill states broadly that the system will be funded by taxes such as personal income tax and VAT. Treasury has been wary of raising taxes in the current circumstances, which include a weak economy and high personal tax rates. Increases in VAT are particularly politically unpalatable.

While the DA has been pushing for a commitment that the NHI will not be implemented, even partially, before the financing issues are sorted out, Godongwana said he could not give such an undertaking. 

« It is difficult to give a blanket commitment that any implementation of NHI will not come into operation without further detailed modeling. However, it is likely that a set of gradual, transitional reforms will require more detailed costing in order to assess budget requirements, as opposed to the full national implications of NHI as envisaged in the NHI Bill, which will almost certainly require a major updating of the existing and other cost models, » he said.