South Africa approves national health insurance scheme

South Africa announced Thursday it has approved plans for a national health insurance scheme that will generate billions of dollars in funding for the beleaguered public medical system.

The ambitious scheme aims to provide universal coverage by 2015 and close the gap between expensive private care and the weak public facilities on which eight in 10 citizens depend.

“These first steps towards establishing National Health Insurance or NHI are truly historic,” Health Minister Aaron Motsoaledi said.

“We are building a health system that will offer decent health care for all our people. It’s the right that large numbers of South Africans, over many generations, have never known.”

Details of the scheme, which will be rolled out over 14 years and piloted in 10 areas next year, will be published on Friday.

The ruling African National Congress last year estimated the fund would cost 128 billion rand ($18 billion, 12.5 billion euros) in 2012, rising to 267 billion rand in 2020.

Finance Minister Pravin Gordhan told a press briefing it would be funded through various sources including tax revenue, mandatory contributions from employers, payments from individuals for services not covered by the scheme, and potential partnerships with the private sector.

“We don’t want to burden anybody in this process more than … in the normal taxation processes,” Gordhan said.

The NHI aims to offer all South Africans comprehensive health services in one of the world’s most unequal societies, where quality health care is heavily skewed toward the private sector.

Only 17.6 percent of people have private health insurance, which reaches 71 percent of whites but just 10.3 percent of blacks, according to the national statistics agency.

Some 84 percent of the country’s 50 million people depend on public hospitals and clinics, which are greatly overburdened despite the state’s health spending accounting for 8.5 percent of gross domestic product.

“It is true that the quality of care in public health institutions is often totally unacceptable and that radical measures are needed to put matters in order,” Motsoaledi said.

But despite high standards in the private sector, prices were not justified, he said.

“This is not only a burden to people using private health services, but a disservice to our country as a whole because it distorts pricing across the board,” he said.

“And there are clear signs that this might in the long term be simply unsustainable.”

The long-awaited proposal has sparked controversy over fears about costs and threats to the private health care industry.

Motsoaledi said the fund’s success would depend on improving standards in public hospitals and tackling the costs of private care.

But he said the scheme was not a war between the public and private sectors and that the government did not aim to abolish private health insurance.

Individuals would still be able to enroll in private medical aid schemes, but would also have to pay NHI contributions.

The proposal was approved by the cabinet on Wednesday and will be gazetted for public comment on Friday before draft legislation is developed.