Government says it will need R457 billion for NHI by year 14. Where will it come from? Your medical scheme tax credits or more income tax? Does anybody know?
The uncertainty starts right at the top. The minister and the director general of health recently filed affidavits in the NHI-related litigation purporting to set out a 10 to 15-year timeline for the full implementation of the National Health Insurance (NHI) Act.
It projects a budget of about R457 billion by year 15 and says that medical tax credits will be phased out and diverted into the NHI Fund. However, section 57 of the NHI Act “hard‑wires” Phase 1 (2023–2026) and Phase 2 (2026–2028) with what the department has referred to in litigation as “immutable temporal markers”, for the implementation of the Act.
Government has described the implementation of NHI as “gradual,” but the NHI Act’s strict timelines remain operative and binding.
Thoneshan Naidoo, CEO of the Health Funders Association, says this timeline, together with recent parliamentary briefings, provides some further insight into government’s thinking. However, he says it also exposes contradictions and raises fundamental questions about sequencing, affordability and feasibility.
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The R457 billion NHI question
The state’s funding requirements for NHI set a target budget of about R457 billion in year 14 (in 2023 terms), Naidoo points out. “To raise the requisite additional tax revenue would require steep increases in personal income taxes, which are unrealistic and impossible for South Africa’s already narrow tax base of 7.4 million taxpayers. These increases carry serious risks for the whole economy.
“For a project of this scale, citizens must be able to trust the numbers and the facts. The NHI Act is unworkable and unfeasible, and the Health Funders Association calls on the National Treasury to clarify its position, given the severe harms the plan imposes on medical schemes, business confidence and ordinary households.
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Immediate risks and the removal of tax credits to fund NHI
Although the stated timeline in the NHI-related litigation claims that NHI will be implemented over a decade or more, the version recently presented to parliament on 28 October 2025 by Dr Nicholas Crisp suggests that medical scheme tax credits may be phased out from as early as 2026/27, Naidoo says.
“The State’s current stance in litigation is that, during the stay period, only high-income earners will lose their tax credits, but the department’s messaging is inconsistent. The credits are significant and reduce the tax bill for a family of four by around R1 220 per month.
“This is critical for the vast majority (83%) of medical scheme members who earn less than R37 500 a month and for 44% who earn less than R16 500 per month. For the affected households, losing the tax credit would substantially cut disposable income, often making cover unaffordable.
“Removing relief, while government establishes extensive NHI functions, risks significant membership drop-offs, an actuarial death spiral for medical schemes and increased pressure on the public sector,” Naidoo warns.
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Conflicting statements amplify uncertainty about NHI
Just weeks ago, the minister assured the High Court that there was no intention, in the short or medium term, to remove the tax credits of low- and middle-income taxpayers. However, he shifted the threshold in subsequent oral submissions to parliament.
At the same time, the R11 billion reflected in the funding forecast implies that many more people stand to lose their credits than government admits. Inconsistencies like these make it impossible for households, employers and medical schemes to plan with any confidence, Naidoo says.
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Government wants to focus on the vulnerable population with NHI
Government has said that the immediate focus of NHI will be on the “vulnerable” but in South Africa the ambit of vulnerable people is vast. Due to high unemployment and inequality, many people fall into this category.
Section 57(2)(a)(iv) identifies women, children, the elderly, people with disabilities and rural communities as vulnerable. On the State’s own version, this encompasses approximately 70% of the population and section 57(4)(g) also requires expansion to hospital, emergency and pathology services during Phase 1 without express limitation to these groups, Naidoo says.
“The department of health indicated that the initial NHI package will be made available to older people, children, people with disabilities, people in rural areas and the unemployed that constitutes around 70% of the population, or approximately 43 million people.”
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Towards a more workable model
Naidoo emphasises that the Health Funders Association supports the goal of universal health coverage. “Reform is urgently needed, but it must be realistic, inclusive and fiscally sustainable. There are alternate pathways to universal coverage through phased reforms and collaborative models for expanding access to healthcare.”
Reform of the healthcare sector must start now, he says. “We remain committed to working with government and social partners to deliver a health system that works for all 63 million people in South Africa. In doing so, public communications must be consistent, coherent and accurate.”
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