National Health Insurance, can SA afford it?

According to the World Health Organization (WHO), the USA has the highest per capita spend on health care, at a staggering $US6,719, and second behind the USA is the Principality of Monaco at $US5,585. Interestingly, the US spends an equivalent of 15.3% of GDP on health care, while Monaco spends only 4,5% of GDP on health care. According to the WHO, South Africa ranks number 67, in terms of absolute expenditure on health care, at $US715, behind countries such as The Seychelles, Mexico, Botswana  and The Bahamas. South Africa's expenditure on health care as a percentage of GDP is 8%, higher than Monaco.  

Wealthier countries such as the US and Monaco can afford to spend more in absolute terms, on health care than poorer countries, simply because individuals in wealthier countries have more disposable income. At 8% of health care spend as a percentage of GDP and at the current rate of economic growth, South Africa can not afford to spend much more on health care without severely affecting expenditure in other critical areas, such as housing, food and transportation. The soon to be promulgated National Health Insurance (NHI) will certainly require increased expenditure in health care. A national health tax has been proposed to fund the expected additional costs related to the NHI. South Africa already has among the highest personal taxes in world, which means that either the overall tax rate, as envisaged in the NHI, will increase or other areas which are currently subject to taxation may have to be traded off, so as to keep the effective tax rate at current levels, rather than increasing it.

Government may want to consider diverting a portion of the taxes levied on petroleum products, liquor, cigarettes and a slice of Value Added Tax, towards a fund for the national health programme. More taxes to fund the health requirements of the country, are simply going to make the country poorer.