The National Health Insurance (NHI) bill sent shock waves across the Johannesburg Stock Exchange earlier this month, hammering darlings like Discovery and hospital companies. But the damage to your share portfolio was just the start of NHI-induced financial pain. Expect big taxes to cover a government department that will be more expensive to run than Eskom as everyone joins the queues for state medical care. In this personal finance podcast, Johannesburg money expert Dawn Ridler chats to Jackie Cameron about what the NHI law will mean for your savings and medical cover – and what you can do to keep some access to top-notch healthcare.
By Jackie Cameron
The National Health Insurance (NHI) bill paves the way for dramatic changes to the way South Africans access medical treatment. Dawn Ridler, a Certified Financial Planner who heads Kerenga Wealth Ecology in Johannesburg, explains what accessing doctors will look like if this law comes to pass.
___STEADY_PAYWALL___
“At the moment we have complete choice of medical specialist, whether it is a dentist or doctor. In future you will not. A government clinic will decide how you will be treated, if and who you will see, and what type of medication,” says Ridler of the change for medical scheme members.
She also sets out the financial ramifications, warning that tax is likely to skyrocket so that government can find the funds to cover a bill that will be bigger than what it costs to run and prop up embattled power utility, Eskom. Ridler says the NHI plan is “completely unaffordable”.
In addition to the R250bn needed to kickstart the system, expect many more billions to be poured into this. Ridler says this “exercise” is double the size of Eskom in money terms.
The “nonsense behind the NHI” is a straw that is breaking the camel’s back for individuals who are worried about the ailing economy, she reckons.
Here are some of the other points Ridler makes in this BizNews Personal Finance podcast:
- You will not have a choice about which doctors to see or how you are treated;
- Medical aids will only be able to top up what isn’t covered by government – but look at the list that the government will cover, which ranges from gynaecology to organ transplants, and it doesn’t leave much room for “top up”;
- Listed companies in the pharmaceutical, hospital and medical scheme sectors are going to “take a knock”.
Ridler notes that the bill is very thin on the detail of how the system will work and is also “very thin” on how it will be funded. The estimate is that it will cost at least R250bn just to get the scheme started and Ridler predicts that income tax will have to be increased considerably so that the government can pay for the new national health system.
Worrying for hard-working salary earners, Ridler says it is not inconceivable that your personal income tax could double – so the top earners could see their tax bill jump to 90%. “How are they going to find this extra R250bn?” You can get it by increasing VAT to 25% or doubling income tax, says Ridler.
The NHI is “completely unaffordable”, says Ridler.
“Very few of us will be able to afford R6,000 to pay for a medical aid and another R6,000 added to our tax bill to pay for the NHI,” she notes.
Among the personal finance tips Ridler shares in this interview: she suggests that individuals take dread disease cover as a way to safeguard access to private healthcare later.
