Removing medical aid tax credits could backfire on NHI

WITH legal challenges to the controversial National Health Insurance (NHI) Act wending their way through various courts, there continues to not only be a lack of clarity on rolling out national healthcare but also bankrolling it.

- NICOLA MAWSON

One funding suggestion by Nicholas Crisp, the deputy director-general responsible for NHI in the Department of Health, has caused substantial consternation: slowly withdrawing and then eliminating medical scheme tax credits by 2029.

Medical tax credits operate as a direct reduction in a taxpayer's liability. Current allowances are R364 monthly for the principal member, R364 for the first dependant, and R246 for each additional dependant.

The theory is that eliminating these credits could pull in between R30 billion and R35bn a year towards NHI funding. Universal healthcare is expected to cost anywhere from R300 billion to R1.3 trillion annually, depending on the level of care. However, industry experts say the minister's confidence is misplaced, and that withdrawing tax credits would harm both the funding goal and the healthcare system.

The numbers don't add up

Garth Zietsman, Freedom Foundation analyst, has run the figures and found a critical flaw. If credits are eliminated, as many as 700 000 lower income medical scheme members could be forced to rely on public health.

This will cost the state as much as R6.3bn yearly to treat people who were medical aid members, dropping the net benefit to around R27.7bn.

"Private health care and medical aids relieve the state of the burden. Instead of eliminating tax credits, they should be extended to all forms of health spending," says Zietsman.

The Board of Healthcare Funders (BHF) has already expressed concern at Crisp's proposal. MD Dr Katlego Mothudi says such a policy decision would have "profound public interest implications".