South African President Signs Controversial Health Law Before Pivotal Vote

(Bloomberg) -- South African President Cyril Ramaphosa signed a controversial health-insurance bill into law, weeks before his party faces what’s set to be its toughest election since it came to power three decades ago.

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The legislation aims to fix a dysfunctional system and make access to treatment more equitable, while banning the private sector from insuring treatment covered under the National Health Insurance plan. Opposition parties and business lobby groups argue the plan is unconstitutional and have vowed to challenge it in court.

“The inequities and inequalities that characterize our health systems are unjustified and require fundamental overhauling to ensure equity and sustainability,” Health Minister Joe Phaahla said at a ceremony in the capital, Pretoria on Wednesday, before Ramaphosa signed the legislation.

South Africa’s ruling African National Congress is under pressure to win over voters before elections on May 29. Opinion polls show the party risks losing its parliamentary majority for the first time since 1994 because of voter dissatisfaction over anemic economic growth, high unemployment and rampant crime and corruption.

The government plans to use the NHI to reform a system in which a multibillion-rand private industry services about 16% of the population, with the balance relying on overburdened public facilities. Ramaphosa vowed on the campaign trail to use the legislation to end “health-care apartheid.”

Underinvestment, corruption and neglect by the state of public-health facilities has meant that many don’t meet the required service delivery standards. In its most recent report, covering 781 primary health facilities, the Office of Health Standards Compliance found that only 65% of them were up to scratch.

The signing of the bill has irked the business community for not taking into account their recommendations on NHI, even as Ramaphosa has enlisted the private sector to help fix the nation’s ailing infrastructure, address energy constraints and help combat crime.

Shares in Discovery Ltd., the nation’s biggest health-insurance provider, and peers including Momentum Metropolitan Holdings Ltd. and Sanlam Ltd. sank on Tuesday after Ramaphosa announced that he would sign the bill. Discovery Chief Executive Officer Adrian Gore said the NHI legislation enacted by Ramaphosa is unworkable.

“We see no scenario in which there is sufficient funding for a workable and comprehensive NHI in its current form — hence our conviction that private sector collaboration is vital, and that full implementation of the bill remains a long way off — likely decades,” Gore said in an emailed response to questions sent by Bloomberg.

Rampaphosa has had since December to consider whether to assent to the NHI Bill or request that lawmakers amend it on the basis of any legal or technical flaws. He criticized opposition to the legislation at a meeting of business leaders outside Pretoria on Tuesday.

“The haves don’t want the have-nots to benefit from what they have been having,” he said. “Healthcare, which is the most important area for the life of anyone, is the one area where we need equality. And believe you me, we are going to have equality whether people like it or not.”

--With assistance from Adelaide Changole and Mpho Hlakudi.

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