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The National Health Insurance System and you

By Rob Cooper, payroll tax expert at Softline VIP.


Johannesburg, 27 Sep 2011
Read time 3min 50sec

The National Health Insurance (NHI) System that has been proposed by the South African government is set to be implemented in 2013, and will span a 12-year implementation period, says Rob Cooper, a payroll tax expert at Softline VIP, part of the Sage Group.

According to a policy paper that was released by the Health Department, the rationale for introducing National Health Insurance is to eliminate the current tiered system, where those with the greatest need have the least access and have poor health outcomes.

National Health Insurance will improve access to quality healthcare services and provide financial risk protection against health-related catastrophic expenditures for the entire population.

Such a system will provide a mechanism for improving cross-subsidisation in the overall health system, whereby funding contributions would be linked to an individual`s ability to pay, and benefits from health services would be in line with an individual`s need for care. Moreover, by significantly reducing direct costs for healthcare, families and households under National Health Insurance are less likely to face impoverishing healthcare costs.

NHI will ensure that everyone has access to a defined comprehensive package of healthcare services. The covered healthcare services will be provided through appropriately accredited and contracted public and private providers, and there will be a strong and sustained focus on the provision of health promotion and prevention services at the community and household level.

The system has quite steep ambitions and will most likely serve as a method to curb ever-increasing medical costs, one of the major advantages of the project. "The funding of the scheme is, however, proving to be quite a contentious issue," says Cooper. "There are potentially three methods that government can use to fund the project. One is to increase the VAT percentage that South Africans pay, another is to implement a super tax on higher income earners, or lastly, to implement a levy that is raised on payroll systems.

In addition, government proposes a monthly contribution to NHI, starting not earlier than 2013. The value has not been specified directly, with speculation placing contributions between 1% and 8% of an employee`s remuneration that will scale according to income," explains Cooper, saying that government is being vague about it.

"No matter which way you look at it, though, the National Health Insurance Scheme will boil down to the employed workforce subsidising the unemployed, which presents itself as quite a political hot potato at the moment," says Cooper.

Cooper does, however, question the consequences the NHI system will have on existing medical aid schemes. "The public at large will start to vote with their wallets once they are obligated to pay the NHI contribution. It poses a very real threat to the sustainability of medical aid schemes in the next few years, which will necessitate the need for companies to reinvent themselves through top-up medical cover above the minimum health benefits from the public service, for example."

According to reports, the NHI will utilise R120 billion to upgrade the public healthcare system. "It begs the questions whether this will be enough to upgrade the ailing and neglected public healthcare facilities across the country. Another question is how the NHI system plans to address the level of service and prevailing skills shortages in the industry that is a major cause for concern," says Cooper.

As far as private healthcare is concerned, government has stated that the changes are not intended to close down private healthcare facilities and systems, but to make them more affordable. "There is, however, no question that the NHI system will place pressure on both the private healthcare industry as well as medical aid schemes," says Cooper.

Cooper says at present, employees who contribute towards a medical aid, receive some tax relief on their tax return. Government, however, envisions this tax relief to fall away in time, which will make the NHI contribution more expensive in the long run. "We can expect medical services and benefits to go through a number of dramatic changes in the next 10 years. The question to ask is whether South Africa will be able to afford it. This is a well-intentioned project, but expensive," concludes Cooper.

Softline VIP

Softline VIP is a leading supplier of payroll and human resource management solutions in South Africa, Namibia and Botswana. Coupled with an extensive service offering, Softline VIP is the only payroll and HR solution geared to meet the challenges of the modern payroll office. The VIP products are synonymous with ease of use, stability and reliability, with the flexibility to cater to the unique needs of every client. VIP promises long-term sustainability over and above legislative compliance. VIP understands the human resources and payroll environment and offers the client peace of mind by providing a total solution.

Softline VIP achieved an overall fourth place in the top 10 for medium businesses in the Deloitte Best Company to Work For Survey 2009, and a second place in the industry category "business and professional services". Softline VIP also emerged one of 48 participants out of an overall 98 to score above the standard of excellence threshold of more than 75%.

Softline VIP products include:

VIP Premier - Softline VIP also supplies leading technology to service large and corporate clients. VIP Premier is geared towards increasing the functionality of payroll systems and provides an uncomplicated solution for medium to large organisations. One of the key features of this product is that it is quick to implement in comparison to similar solutions. Meeting the needs of any payroll office and supplying the most suitable solution is important for Softline VIP as it strives to ensure practical solutions for all users. Our products are easy to use and reliable and the information produced is accurate and complies with all statutory requirements.

VIP Classic - VIP Classic is the perfect solution for clients with bigger operations than the one-man business. VIP Classic provides the same flexibility as larger systems but is aimed at the small to medium sector. This software offers a total solution to users.

VIP Essentials - VIP Essentials is geared to small businesses and contains the same ease of use and stability of all VIP`s products. VIP Essentials is an affordable product making it an ideal solution for the small business paying less than 30 employees.

Softline has a solid track record of profitability and cash generation. The group delivers quality accounting, payroll and CRM software solutions that improve the efficiencies of businesses around the world.

Softline

Softline is a leading provider of business software and related services. Founded in 1988 by Ivan Epstein, Alan Osrin and Steven Cohen, Softline was established during the formative years of the business software industry. Whilst Softline`s heritage is in the SME market the group also offers expertise and solutions that meet the needs of specific industries and larger organisations. In 2003 Softline was acquired by The Sage Group, a FTSE 100 company. Softline has a solid track record offering customers local expertise backed by the global Sage brand. The group delivers quality software solutions to make customers` business lives easier.

The Sage Group

The Sage Group is a leading global supplier of business management software and related products and services, principally for small to medium-sized enterprises. Formed in 1981, Sage was floated on the London Stock Exchange in 1989. Sage has 6.3 million customers and 13 600 employees worldwide. It operates in over 24 countries covering the UK, Europe, North America, South Africa, Australia, India and China. For further information, please visit http://www.sage.com.

Editorial contacts
Watt Communications Deidre Beylis (011) 425 6290 Deidre@wattcommunications.co.za
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