The Health Funders Association (HFA) has launched a legal challenge against key aspects of the National Health Insurance (NHI) Act, citing the Act as “unaffordable, unworkable and unconstitutional”.

The Act was signed into law by President Cyril Ramaphosa last year in May.

The association noted on Thursday that while it supported the goal of universal health coverage, it believed that, in its current form and without private-sector collaboration, the NHI Act was “fiscally impossible and operationally unworkable, and threatened the stability of the economy and health system impacting everyone in South Africa”.

HFA CEO Thoneshan Naidoo said the organisation was taking the legal step not to delay progress, but to help ensure that national health reform was grounded in constitutional principles, financial realism, and patient choice.

“We continue to advocate for a more inclusive, hybrid funding model that incorporates medical schemes in NHI. We believe such a model would expand access to care while protecting the rights of all South Africans,” he said.

Naidoo pointed out that the NHI Act centralised control of all healthcare financing in a single, State-run fund, and removed the ability of medical schemes to offer cover for healthcare services reimbursable by the NHI.

He said this effectively outlawed the constitutional right of citizens to choose how to access or fund healthcare beyond what the State provided and added that analysis showed that this prohibition was not necessary to achieve the equity objectives of the NHI Act.

“However, the prohibition will channel public resources into higher income population segments and could deliver worse outcomes for the currently uninsured. The analysis further shows that allowing medical schemes to continue funding a wide range of services as part of NHI is in keeping with international best practice and would deliver better outcomes for South Africa’s uninsured population,” he explained.

Naidoo said while the healthcare system unquestionably needed overall improvements, the NHI Act was unconstitutional as it reduced existing healthcare access for part of the population. 

He said government needed to collaborate to sustainably address health system challenges and improve healthcare access for everyone.

He pointed to the independent economic modelling, which showed that funding the intended benefits in the current NHI framework, as set out by government, would require unprecedented increases in tax – at levels far beyond South Africa’s fiscal capacity.

“Critically, the Genesis analysis also reveals the diverse profile of South Africa’s medical scheme membership - more than 68% of members are Black, Indian, or Coloured, and up to 83% earn less than R37 500 per month. The proposed NHI would therefore disproportionately impact working-class households who currently rely on medical schemes for quality care,” he added.

He noted further that the proposed NHI model offered no guarantee of improved outcomes, while restricting the mechanisms that currently drove quality and innovation in healthcare.