South Africa: The ANC’S Health Lesson for Obama

Health care reform is one of the hardest things in politics. If Obama may be heading for defeat or a bloody draw, this is nothing compared to what awaits the ANC as it attempts to force through its National Health Insurance scheme.

Health care reform, as Barack Obama is currently learning, is one of the hardest things in politics. The sums involved are huge, the interests involved are many and powerful, and health is something that voters really care about. 

If, however, Obama may be heading for defeat or a bloody draw, this is as nothing to the colossal train smash which awaits South Africa’s ruling ANC as it attempts to force through its National Health Insurance (NHI) scheme. The scheme is very much the pet project of the South African Communist Party (SACP) and its trade union allies in Cosatu (the Congress of South African Trade Unions), who dominated the ANC committee which has come up with the scheme. The NHI committee knew only one statistic, which was that R56 billion a year (£4.1bn) was spent on the eight million people covered by private medical insurance while the state spent the same sum on the remaining 41 million of the population. This is a pretty average situation for a middle-income developing country like South Africa. But the ANC has already shown that it aspires to Scandinavian standards of welfare: it has created Africa’s only welfare state, in which 27 per cent of the population receive welfare grants and only 11 per cent pay income tax. Accordingly the committee recommends that the whole population should be able to use public or private facilities quite indifferently, that anyone earning less than £4,000 a year should make no contribution and that the rich should pay for everybody — a sum equivalent to an extra R100 billion (£7.5bn) in tax. The SACP leader, Blade Nzimande, has been promising large crowds of the unemployed that they will soon be receiving care in private hospitals and that the Party will “wage war” on anyone who resists NHI.

Alex van der Heever, the only public finance specialist on the committee, was horrified, believing the scheme to be wholly unaffordable and “without any rational connection to South Africa”. But anyone who raised doubts was immediately vilified as an “imperialist” or “anti-transformation”. “The proposals that were discussed were ludicrous,” he says. “There were so many things that were technically wrong that it was difficult to know whether to walk away or try to engage them.” He walked away in disgust. The medical aid societies have all said they would be happy to help devise the scheme, but this is simply a way of getting themselves involved in the discussion process so that they can raise such key points as what terms the private sector will be offered in order to get them to contract in to an NHI. For doctors have a constitutional right to practise their profession and those in private practice will not contract in unless the terms are right-which could well increase health spending to 15-20 per cent of GDP.

The biggest problem is the collapsing state of the public-health sector. The ANC has made many of its political cronies hospital managers, with disastrous results. Doctors and nurses have fled the public sector, many hospitals are in chaos and mortality rates have soared. The reason why 8 million people are willing to pay top dollar for private health, paying taxes to sustain the public health sector, is that many are frankly scared of going to a public hospital. The public hospitals are, inevitably, flooded with Aids victims, at least 1,000 of whom die every week. 

Even many NHI advocates admit that an NHI is unlikely to work unless public hospitals can be brought up to private hospital standard — but research shows that this would take at least 15 years with regular real increases in their budgets. They would also need an extra 170,000 nurses — who do not exist. Thereafter the problems only grow. Already the early propaganda about an NHI has driven yet more doctors to emigrate. Apparently the proponents of NHI believe that the huge extra tax levies needed to make their plan a reality will come by way of a payroll tax, but quite apart from the craziness of taxing employment in a society with 40 per cent unemployment, the overall tax burden could be so heavy as to cause more middle-class emigration, further shrinking the tax base. There are also those within the ANC who speak of setting up a national retirement fund — again to be financed by an extra payroll tax. A vast new bureaucracy would be required to administer the NHI, staffed with the same undereducated ANC cronies who have wrecked the public-health sector.

The SACP has a clearly defined strategy in all this. It is deeply suspicious of the Treasury technocrats who tend to knock holes in such millenarian plans, so it has kept all policy-making within the ANC party structure and then itself packed the key committees — not difficult when one realises that the ANC secretary — general, Gwede Mantashe, is also the chairman of the SACP. In effect a three-line whip was operated within the NHI committee so that the original draft was never amended. Such secrecy was exercised that all documentation had to be handed back to the chairperson at the end of each committee meeting, and there was no consultation with any of the professional interests concerned, let alone the public. Then, having rammed through a proposal which could wreck the budget, the SACP and Cosatu are now trying to impose the NHI by lobbying and mass rallies.

The more vocal communists clearly want to abolish private health altogether and would legislate to compel doctors and nurses to join the NHI, however unconstitutional that may be. The basic assumptions are that the white minority must be made to pay, by wholesale expropriation if need be, and that white capacity to pay is bottomless. In fact, whites now constitute only 9.6 per cent of the population, a proportion which continues to shrink, and they are already quite heavily taxed. But anyone who shows that no amount of redistribution from the top 10 per cent can make the bottom 90 per cent much better off is immediately dismissed as a counter-revolutionary.

The NHI now has to face examination by the government technocrats and the various pressure groups involved. This is already generating a bad press for the NHI but the communists will be even more furious if their plan were to be watered down. Yet the alternative — that they manage to ram the NHI all the way through — beggars the imagination. Not only would this cause further large-scale medical emigration but many of the 8 million who currently enjoy private health would be likely to emigrate too. The tax base on which this whole superstructure of Scandinavian welfare rests would crumble, along with the public health sector and what was left of the private sector after its forced merger. The resultant shambles would make the term “train smash” seem very mild indeed

Underrated: Abroad

The ravenous longing for the infinite possibilities of “otherwhere”

The king of cakes

"Yuletide revels were designed to see you through the dark days — and how dark they seem today"