NHI Financially Unsustainable, Warns Health Funders Association

The Health Funders Association (HFA) has officially joined the growing list of organisations challenging the recently signed National Health Insurance (NHI) Act in court. Representing a large segment of South Africa’s private healthcare industry, the HFA argues that the NHI, in its current form, is both financially unsustainable and constitutionally problematic.

The move follows mounting concerns from medical schemes, healthcare providers, and economists, who believe that the Act threatens the stability of the private health sector and imposes an unmanageable financial burden on taxpayers. With over 4 million beneficiaries under its umbrella, the Health Funders Association says the proposed system could drastically reduce the quality of care while raising taxes to unaffordable levels.

This legal challenge reflects a deepening rift between government policy and the realities of healthcare economics. As public debate intensifies, the case brought forward by the Health Funders Association could play a pivotal role in shaping the future of healthcare delivery in South Africa.

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Who Are the Funders?

The Health Funders Association represents 20 medical schemes and three administrators. They cover about 4.1 million beneficiaries, roughly 46% of South Africa’s private healthcare market. Their members span income levels and racial groups. Over 68% are black, Indian, or coloured, and 83% earn less than R37 500 per month.  

Why Go to Court?

The Health Funders Association supports universal healthcare. Yet, in its current form, they say the NHI Act centralises all healthcare funding. It removes the right to buy private medical coverage for services the NHI covers.   They view this as an attack on citizens’ constitutional rights.

They also warn that the Act is fiscally impossible. It would need steep tax hikes and massive state spending. These changes could wreck the existing private healthcare system.  

Key Findings from Genesis Analytics Study

HFA commissioned Genesis Analytics to model the NHI’s economic impact. The results are stark:

• To match current private care, total taxation would need to jump 115% from an average 21% to 46%.  

• Marginal tax rates on low-income earners would rise from 18% to 41%. On high-income earners, from 45% to 68%.  

• VAT may have to surge from 15% to 36% a scenario the HFA calls “completely unrealistic.”  

Even with pooling private and public funds, taxes would still need to rise by 47% (from 21% to 31%). Yet, private scheme members would get 43% less care. “Pay 1.5 times more tax for 43% less healthcare,” Genesis summarises.  

Impact on the Economy and Health System

The Health Funders Association argues that the tax increases would shrink consumer spending and disposable income. They warn of high-income earners leaving South Africa. This would hinder economic growth. The private healthcare sector could collapse. Jobs could be lost and GDP growth would stall. Contributions from the private sector currently add over 4.3% to GDP.  

Their analysis also highlights potential shortages. More than 286 000 additional healthcare workers would be needed. South Africa does not have those human resources in place. 

Proposed Solution: A Hybrid Model

Rather than scrapping the Act entirely, the Health Funders Association proposes a hybrid multi-fund model. This would:

1. Keep the NHI Fund for public healthcare.

2. Allow private medical schemes to offer supplementary cover.

3. Maintain patient choice and competition.

4. Use cross-subsidisation to help vulnerable groups.  

HFA CEO Thoneshan Naidoo says the hybrid model aligns with global best practices. He believes it presents a faster, affordable path toward universal health coverage.  

What Happens Next?

The legal action joins at least five other challenges against the Act. These include suits from the South African Medical Association, Board of Healthcare Funders, Private Practitioners Forum, Hospital Association, Solidarity, and others.  

The Gauteng High Court will hear the case in the coming weeks. The outcome could shape the future of South Africa’s healthcare system.

What This Means for You

• Tax impact: Be prepared for potential large tax hikes.

• Healthcare access: The availability and quality of private care may change.

• Public vs private role: The future structure of South African healthcare lies in balance.