The liberation of South Africa (SA) into an independent and democratic nation in 1994 was accompanied by drastic measures to amend persistent disparities especially those among different races. In this notion, many areas, healthcare were prioritised as one such important sector. Currently under the rule of the African National Congress (ANC) party, the South African government has recently published the National Health Insurance (NHI) Green Paper. This essay will discuss the economic incidence of implementing the NHI. Analyses of the financing and benefit incidences will be made for both the current health system and the newly proposed NHI. Finally, a ...view middle of the document...
According to the A& M paper, it was discovered that personal income tax is remarkably progressive, excise taxes and fuel levies are regressive ad VAT is almost proportional. Another key finding was that out-of-pocket payments and medical scheme contributions are slightly regressive and highly progressive respectively Mils et al (2012:p.3) (Mills, et al., 2012). A summary of the financing incidence of out-of-pocket payments and medical scheme contributions is shown in Figure 1 and 2. In figure 1, the burden of the corporate tax is presumably shifted to consumers, an outcome that is contrary to Figure 3 which assumes shareholders to be liable for the full burden of corporate tax. Placing the scenarios shown in figures 1 and 3 into equilibrium is figure 3. What is more, almost exclusively due to medical aid scheme subscription, the overall financing of healthcare in South Africa is very progressive. The results in the A&M Paper support this further by illustrating that the current financing mechanism is in favour of the poor in that it progressive (Figure 3).
The information shown (See Figures 5 and 6 ) indicates that given different income groups in the South African economy, those in the higher quintile are paying more for healthcare funding than those in the lower quintile. However, the authors acknowledged that the most complex incidence analysis relates to corporate income tax and thus it is inconclusive as to whom between the shareholders and consumers, ultimately bears the tax burden.
2.2. Analysis of the benefit incidence of the current health system
Congruent to the financing incidence is the benefit incidence. Black & Calitz (2009; p. 167) (Black, et al., 2012) outline the benefit principle as a precept which entails that the tax burden of government expenditure should be apportioned to taxpayers according to the benefit each receives. In this regard, the benefit incidence analysis also referred to as BIA according to the A&M Paper, involves estimating the monetary value of health benefits received by individuals in various socio-economic groups. This involves estimating the corresponding utilisation rates of public and private health services to individuals’ socio-economic status or ranking.
To sum up on the current economic incidences, authors of the A&M Paper (2012) stated the following as their conclusion: ‘you get what you pay for.’ (p.20) this is a summary of the fact that the current allocation of funding grants across socio-economic groups is remarkably comparable to the apportionment of healthcare benefits (Ataguba & McIntyre, 2012). However, a research paper written by Econex authors Theron & Van Eeden (2009:P. 4) indicate an alternative conclusion whereas their results show a more considerable cross-subsidisation between the rich and the poor. Figure 1 and 2 illustrate the contrasting ideas presented by the two research papers (Appendix A; Appendix B).
3. Overview of the NHI Proposal
Central to government’s health and...