Will NHI Become the Eskom of Healthcare?

In his interview in 2023, University of Johannesburg’s Dr. Oscar van Heerden, warned that Eskom failures present a significant threat to the country’s economy.

“The utility is so big, and the economy is so reliant on Eskom and the provision of energy – not only big industry, the mining houses, the service sector – everyone is dependent on not only an economy that is effective and efficient but on electricity that is uninterrupted.”?

“Without electricity, the economy can collapse,”

Dr. Van Heerden was expressing the fears of many South Africans. They know that Eskom is like the weather to them—it affects them even if they have nothing to do with it. The challenge, then, is that there is no real alternative to Eskom. It is a monopoly, and all attempts to reduce our dependence on it have yielded limited results. Our entire lives, sometimes literally, depend on whatever decisions are taken at Megawatt Park. There truly is no real alternative to Eskom!

This is exactly what National Health Insurance(NHI) is going to be: a massive agency with all the money for the entire healthcare system in the hands of a Minister—a politician, a mere mortal. The powers of the Health Minister under NHI are truly unprecedented. The biggest danger of NHI is the centralization of its most critical function: finance—the lifeblood of any organization. If the organization runs out of funds, it simply dies.

The centralized nature of NHI means literally placing our lives in the hands of whoever the Minister of Health is. The effective elimination of medical aid schemes concentrates power in one office. Like Eskom, there will be no alternative because with the demise of medical aids, private healthcare will effectively cease to exist.

The current system, despite its challenges, does offer real choice. You can choose among 71 medical aids. You can select your doctor and decide which hospital to go to. This means that if one hospital group or medical aid scheme fails, only its members are affected; the system itself remains intact. In fact, natural selection is beneficial for the system. Failures are localized and contained.

However, failures in NHI will be systematic and could jeopardize the entire health system.

This is already happening in many instances. Non-profit organizations (NPOs) in Gauteng that care for people with disabilities are at risk of closure due to delayed grant payments. The Gauteng Care Crisis Committee reports that 15 of its member organizations have not received responses regarding their funding applications from the department. Additionally, at least two organizations have lost their business plans. This situation serves as a warning of what is to come.

In his book "Antifragile," Dr. Nassib Taleb, renowned for his work on risk and uncertainty, explores the perils of centralization across different contexts, especially concerning systems and decision-making. Dr. Taleb frequently promotes decentralized systems or approaches that spread risk and decision-making authority more widely. According to him, this decentralization strengthens robustness and resilience against diverse types of risks and uncertainties.

Here are some key points he raises:

Vulnerability to Shocks

Taleb argues that centralized systems are more vulnerable to unexpected events or shocks. This is because failures or disruptions in a centralized system can have widespread and severe consequences, affecting a large number of people or entities dependent on that system.

Many will recall the crisis when social grants for the elderly and children were on the brink of collapse after SASSA failed to renew its contract with the distributing bank. Only a last-minute intervention by the courts prevented a near catastrophe that would have affected 26 million people, including the poor and the elderly.

Lack of Redundancy

Centralized systems often lack redundancy and fallback options. If a critical node or component fails, there may be limited alternative pathways or backups available to maintain functionality.

Under National Health Insurance as an effective monopoly, there will be no redundancy. If a government official decides not to sign off on certain approvals, people could potentially lose their lives as a result.

Inefficiencies

Centralization can result in inefficiencies caused by bureaucratic processes, lack of competition, or diminished incentives for innovation. Decision-making may become sluggish and unresponsive to changing conditions.

The Department of Health has demonstrated neglect in the past. For instance, Carltonville Hospital, which underwent refurbishment costing hundreds of millions of rand to serve as a Covid-19 facility, now sits abandoned. Vandals have stripped it of electrical cables and equipment. The tender process for its refurbishment has been flagged, with the Special Tribunal investigating allegations of corruption during the Covid pandemic.

Loss of Diversity

Centralized systems often standardize practices and diminish diversity, which can be detrimental in dynamic environments where a variety of approaches and ideas are essential for adaptation and resilience.

Both public and private healthcare sectors offer unique strengths and diversity. I see no compelling reason why we cannot have a dual system to serve all people. These sectors complement each other, and with significant reforms, both systems can significantly improve healthcare services for South Africans.

Risk Concentration

Risk becomes concentrated in centralized systems, as failures or errors can propagate widely. This concentration amplifies the potential impact of any adverse events.

In political and economic contexts, centralization can lead to concentration of power and wealth. This concentration can create inequalities and vulnerabilities that may destabilize societies or economies.

I firmly believe that NHI is a fragile system that will risk jeopardizes everyone's health.

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