The NHI Dream Comes With a Tax Nightmare — Who Will Pick Up the Tab?
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Access to decent healthcare should be a right, not a privilege. No one disputes that. But South Africa’s proposed National Health Insurance (NHI) system raises some very real questions: Who's going to pay for it? And can government deliver without wasting our hard-earned taxes?
A Tax Bill to Make Your Eyes Water
New research from Efficient Group economist Dawie Roodt shows just how steep the NHI price tag could be. If government wants to match the level of service currently offered by private medical aids, they would need to raise an eye-popping R295 billion. The only way to get there? An estimated 115% hike in personal income tax.
That’s not a typo. The average income tax rate could go from 21% to 45.7%. For many South Africans, that would mean handing nearly half their paycheck over to SARS.
Paying More, Getting Less?
Here's the kicker: taxpayers are already footing a massive government salary bill. Public sector wages have gone up 84% in the past decade, but actual infrastructure spending has gone down 31%. So we’re already spending more, but getting less.
Is it really a good idea to pour billions more into a system that struggles to deliver?
Medical Aids Fight Back
It’s not just economists who are worried. Major medical aids are taking the NHI to the Constitutional Court, arguing that the Act is vague, potentially harmful, and may strip millions of their current benefits.
The SA Health Funders Association (SAHFA) says the Act doesn't explain which services will be covered, how much doctors will get paid, or what role private providers will have. The fear? Chaos, delays, and a healthcare system that collapses under its own weight.
A Noble Goal With a Flawed Plan
We all want better, fairer healthcare. But intentions aren’t enough. We need transparency, a clear funding model, and accountability mechanisms that stop taxpayer money from vanishing into inefficiency or mismanagement. Until government can answer these basic questions, accountants, business owners, and everyday South Africans have every reason to be skeptical.
What About Full Privatisation?
Dawie Roodt has also proposed an alternative: ditch the NHI altogether and fully privatise healthcare, while making medical aid compulsory for all South Africans. His model would use the government’s current healthcare budget to fund three default medical aid schemes, ensuring basic coverage for everyone. More serious treatments would be referred to academic hospitals.
Pros of Privatisation: Privatising healthcare and mandating medical aid could reduce the need for major tax hikes and allow the private sector to drive efficiency and innovation. It also offers citizens a more transparent and structured understanding of what they pay for and what they receive.
Cons of Privatisation: However, privatisation may increase financial strain on low-income earners and risks deepening inequality if minimum coverage isn’t well regulated. Without careful oversight, the system could become fragmented and difficult to manage.
The privatisation model is not without risk, but it opens a conversation about alternatives that may deliver better outcomes without wrecking the economy.
Until government can answer these basic questions, accountants, business owners, and everyday South Africans have every reason to be skeptical.
What do you think? Is the NHI a bold step toward justice or a fast-track to financial disaster?
🔗 Join the conversation. Tag @CIBA and share your thoughts.
Source: BusinessTech
