Dropping medical tax credits, introducing payroll taxes among Health Dept's proposals for NHI

Scrapping medical tax credits, redirecting subsidies to civil servants for medical aid - and the introduction of payroll taxes - are among the health department’s proposals to establish a National Health Insurance (NHI).

Health Minister Aaron Motsoaledi has moved to dispel what he said was misinformation about where the money will come from, saying existing grants from the fiscus will be redirected to get the fund off the ground.

Parliament’s appropriations committee has on Tuesday been probing the funding sources for the fund amid criticism that Parliament has not been circumspect enough about how universal health care will be funded.

While the Department of Health (DoH) is not putting a single price tag to the implementation of the NHI, Motsoaledi said it’s not an overnight event.

EXPLAINER: What you need to know about NHI

He’s pointed fingers at members of Parliament (MPs) and government employees who are subsidised to the tune of R70 billion a year to belong to a private medical scheme, saying there’s already money in the system that can be redirected to the fund.

“If you bring the money back to the poor we will leave you to your own devices. Why are you being given tax credits for joining a medical aid, when an ordinary person on the street cannot? We are talking about fairness.”

The Deputy Director-General Nicholas Crisp said instead of rebates of around R34 billion a year for belonging to a medical aid, redirecting existing grants for health services to the NHI fund - and even introducing surcharges - are options under consideration.

“We are aware that surcharges are not popular, and we’ve heard many complaints about various surcharges.”

But MPs have expressed reservations about introducing new taxes and surcharges – and whether the National Treasury will agree to ringfence these to specifically fund the NHI.

The DoH said it will be up to the National Treasury to introduce money bills to fund the scheme.