Funding of National Health Insurance (NHI) has grown concerns from doctor associations and medical experts.
Image: Paballo Thekiso
The funding of South Africa's ambitious National Health Insurance (NHI) initiative has recently sparked significant concern among medical professionals and civil society, as government proposals indicate a potential 0.5% rise in the Value Added Tax (VAT) to support this landmark health reform.
Dr Mvuyisi Mzukwa, Chairperson of the SA Media Association (SAMA), on Wednesday said that they noted with growing concern the recent indications that the government is considering increases to VAT as a means to fund the NHI.
“While SAMA supports the objective of achieving universal health coverage; we must be unequivocal in our assessment: relying heavily on VAT to finance NHI is both economically regressive and socially unjust,” Mzukwa said.
“VAT is an inherently blunt instrument. It applies equally to all consumers, regardless of income level, disproportionately affecting lower-income households who already spend a larger share of their income on basic goods and services.”
Mzukwa added that increasing VAT to fund the NHI risked deepening inequality, the very issue the NHI purported to address.
“SAMA urges the government to adopt a more progressive and diversified approach to funding universal health coverage,” he said.
“Options such as targeted health levies, closing tax loopholes, improving efficiency in existing public healthcare expenditure, and fostering economic growth to broaden the tax base must be prioritised.”
Dr Avashri Harrichandparsad, Public Health Medicine Specialist from UKZN, said that NHI as a financing mechanism for healthcare was well established in many countries.
However, Harrichandparsad said while issues of affordability tended to come to the fore, there were broader concerns around healthcare quality and efficiency in both the public and private sectors that must be addressed concurrently.
“In accordance with the principles of social solidarity, our current tax contributions are partly used to fund healthcare in South Africa. Whatever decisions the National Treasury makes will take into account the fiscal and economic environment and will have to first be approved by the Cabinet,” he said.
“Given the current challenges in the public healthcare sector as well as the private healthcare sector, it is natural to have reservations about the proposed changes. Transparency and accountability in the design and implementation are paramount.”
The government has recently published proposed Governance Regulations for the NHI Fund for public comment. The deadline for comments is 6 June 2025.
Dr Cedric Sihlangu, the general secretary of South African Medical Association Trade Union (SAMATU), said that funding the NHI was a significant undertaking, which required careful consideration.
Sihlangu said the successful implementation of the NHI would require a number of infrastructural developments at most of public healthcare facilities.
“Increasing VAT could indeed be one potential avenue for generating additional revenue to fund the NHI. However, this approach also presents challenges, particularly concerning its regressive nature,” he said.
“An increase in VAT may affect lower-income households, potentially leading to increased financial strain on vulnerable communities. This would essentially mean that their quality of life would be affected.”
Sihlangu added that the government would need to ensure that any adjustments aligned with the broader goals of equity, efficiency, and sustainability; otherwise, it would be pointless to strive for equity in healthcare access while diminishing people’s quality of life.
“The increase in VAT cannot be the only solution to generate funding for the NHI. It is essential for policymakers to engage in comprehensive consultations with all stakeholders.”
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