The National Department of Health (NDoH) is currently busy with an ambitious project to achieve universal access to health care for all who live in South Africa through a National Health Insurance (NHI).
The implementation, though, could take years. Latest estimates put the implementation date in 2025. But before we even get to the implementation stage, there’ll be loads of white papers and green papers to mull over.
As you can imagine, funding such an ambitious project is going to be expensive. The white paper published earlier this year proposes that tax revenue currently directed towards medical scheme beneficiaries in the form of tax credits be redirected towards funding the NHI.
Stellenbosch-based economic advisory group, Econex ran the numbers and published new research which reveals some staggering sums. According to their paper, in 2014/15 the total amount paid to the principal members of medical schemes in the form of medical scheme tax credits was approximately R18.5 billion.
In the previous financial year, principal members received R270 per month in tax back. There’s also a further R270 per month for the first beneficiary and R181 per month for each of the remaining beneficiaries for whom they paid contributions.
So the annual tax back from medical aid ranges from R3,240 tax return for a single medical aid member, up to R13,000 for a member with four beneficiaries.
It’s simple, affordability. Removing a tax credit will make medical aid more expensive, across all brackets, but lower-income households will be hardest hit. This is based on the percentage of household income spent on medical aid with and without the tax credit as shown in this table.
“The removal of medical scheme tax credits will therefore affect poorer medical scheme beneficiaries disproportionately. In total, 21.86% of medical scheme beneficiaries will move above the affordability threshold with the removal of tax credits, i.e. 1.9 million beneficiaries in 2016,” the group said.
“Removing the rebate will likely have the effect of rendering medical scheme membership unaffordable to 22% of current beneficiaries, with the impact falling largely on poorer medical scheme beneficiaries.”
You can read the full research paper here.