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National Health Act, 2003 (Act No. 61 of 2003)


National Health Insurance Policy towards Universal Health Coverage

Chapter 7 : Financing of NHI

7.6 Changing landscape of Intergovernmental Arrangements


246. NHI will cover personal healthcare services that are delivered through a platform that is organised into three elements of care, namely PHC services, hospital and specialised services; and emergency medical services. The NHI Fund’s purchasing of personal health services will be implemented through a phased approach.


247. Chapter 6 highlighted the importance of reorganising PHC services and hospital services to achieve improved healthcare, responsiveness, financial risk protection and improved efficiency. This will require reforms to existing practices in the delivery of public healthcare services, including moving central hospitals to the national sphere. The implementation of NHI requires that service provision management authority is increasingly delegated to the relevant/appropriate level of facility responsible for service delivery. The Department of Health will play a key role in supporting managers at these levels and monitoring and evaluating service provision.


248. The current system of public health provision, shared between national, provincial and local government, will need to be reconfigured in line with the policies contained in this White Paper and the principles contained in the Constitution. The Constitution, amongst others, requires a balance between the duty on the state to respect, protect, promote and fulfil the rights in the Bill of Rights (section 7) and the principles of cooperative governance (sections 40 and 41). Consequently, the National Health Act will be amended to re-determine functional areas, the role and responsibilities of the three spheres of Government with respect to the delivery of Health Care Services to enable the implementation of NHI. These legislative reforms will clarify the roles of the different spheres as they relate to, amongst others, PHC and level 1 (or district hospital services); secondary (regional), tertiary and specialised hospital services; emergency medical services; and environmental health services. As part of the process of amending the National Health Act, the national Department of Health will collaborate with appropriate stakeholders to finalise proposals in this regard.


249. Any reconfiguration of how public health functions are assigned and regulated amongst the three spheres of government will necessitate the concomitant reforms to intergovernmental fiscal relations in the health sector. NHI will imply some changes to the existing system of intergovernmental funding arrangements as they pertain to the health sector. The degree to which changes in intergovernmental funding arrangements are made will depend on the extent to which the NHI is structured and organised and the central pooling of funds to meet technical and allocative efficiency.


250. Functions determined by the National Health Act to be the responsibility of Provincial and Local Government will be funded through equitable share allocations and any identified conditional grants. Section 214(1) of the Constitution requires that every year a Division of Revenue Act (DoRA) will determine the equitable division of nationally raised revenue between national government, the nine provinces and 257 municipalities. The Intergovernmental Fiscal Relations Act (1997) prescribes the process for determining the equitable sharing and allocation of nationally raised revenue.


251. Any proposed changes on Intergovernmental Relations and Fiscal Arrangements (IGFR) will only be made after consultation with the Health MINMEC, Budget Council and Presidential Coordination Committee (PCC). The Financial and Fiscal Commission will be consulted once the PCC on IGFR have been consulted on the revised role of Provinces to accommodate a more unified and distributive approach to healthcare in the national interest.