National health insurance (NHI) is a health policy aimed at improving universal health coverage and ensuring that everyone in the country has access to quality healthcare in line with their needs and not their ability to pay for health care.
The aim of introducing NHI is to ensure every South African has access to quality health care in line with their healthcare needs.
The NHI service will be pre-funded by all taxpayers, so that no one pays the costs of what they need when they go to hospital, see a doctor, get medicine, have a diagnostic test or access any other healthcare service.
There are many different models of NHI around the world, but generally it is defined as health insurance provided by a government entity and funded by taxes. Public and private sector providers are typically contracted to provide the services that the government entity funds.
NHI was initially the targeted health policy of the democratic government elected in 1994. It chose to pursue this policy by initially implementing social health insurance. Social health insurance means those who could afford to pay for private healthcare would do so through medical schemes, while those who could not afford it would access state healthcare facilities and only pay according to their means.
Regulation of medical schemes was revised to prohibit discrimination on health status 
and ensure minimum benefits were provided to all members. In order to strengthen cross subsidisation, civil servants were obligated to belong to a scheme, the amalgamation of schemes was encouraged and plans were made to equalise the cost of providing benefits to all members through risk equalisation. It was envisaged that over time, NHI would be introduced with multiple funders, but a single risk equalisation fund.
State healthcare facilities, however, remained overburdened and private healthcare became increasingly expensive. South Africa’s healthcare spend, relative to other countries, does not match healthcare outcomes, as measured by life expectancy, burden of disease and other leading indicators, that other countries achieve.
The ANC-led government revised its plans for implementing NHI in 2007.
A green paper (draft policy) was produced in 2011 and a white paper (NHI policy) in 2015.
In 2018 the first draft of the NHI Bill was published and it was tabled in parliament in 2019.
The NHI bill was passed by parliament in late 2023 and President Cyril Ramaphosa signed the Act into law in May 2024 without specifying an implementation date.
The Act has since then been challenged in at least six court cases, two of which were combined for hearing and resulted in a High Court ruling in May 2025, compelling the president to release the full record of how he decided to sign the Act into law despite numerous objections to it. This case is now being appealed.
The argument for choosing a single funder NHI system is that the government will become a powerful single purchaser able to bulk purchase healthcare services, drive prices down and ultimately pay for more benefits.
There are, however, counter arguments that when there are multiple purchasers of healthcare services, as is the case when there are many medical schemes, there is more competition and innovation by providers. This aspect of the NHI Act is being challenged in court.
Some of the legal challenges also point out that even with these efficiencies, NHI may be unaffordable in South Africa given the small tax base and recent lack of economic growth.
The NHI Act provides for an NHI Fund to be established to pay for healthcare services for all South Africans and certain foreign nationals.
The fund will be governed by a board which reports to parliament.
The NHI Fund and the board account to the Minister of Health, who is also required to approve many aspects of the fund’s work, including the approval of the benefit design.
The fund will co-ordinate the work of a number of committees and units, including:
The fund will also report on how NHI is impacting the health of the country.
The NHI Act states that the NHI Fund will obtain funding from a number of sources including:
The removal of medical scheme fees tax credits;The Act also provides for funding of medical expenses paid out by the Road Accident Fund, Compensation Fund for Occupational Diseases and Injury and the fund managed by the Compensation Commissioner for Occupational Diseases in Mines and Works to be redirected to the NHI fund.
The removal of subsidies paid to government medical schemes (Goverment Employees Medical Scheme (GEMS), Polmed, Parmed, and so on) has also been included in the NHI White Paper, but is not explicitly mentioned in the NHI Act.
Estimates on the cost of NHI were produced with the Green Paper in 2011, adjusted in the White Paper in 2015 and have not been updated since.
The estimate in the White paper was that NHI would require an additional R256 billion 
for the healthcare budget by 2025. This was based on an economic growth rate of four percent which has not been achieved. The estimate apparently also does not take into account any deterioration in public health facilities since 2010, the failure to implement aspects of the National Health Act and the reforms that started with GEMS and the Medical Schemes Act in 1998.
The cost estimate was done without any decisions on the benefits for which the fund would pay and this could have a material impact on the cost.
The Act states that the NHI Board must advise the Minister of Health on the NHI fund’s budget. The amount of revenue required will be determined based on the size of the population and the extent and cost of the health benefits to be provided.
In order to direct funding to the NHI fund, parliament needs to pass what is known as a money bill.
The fund will be governed by a board and a chief executive officer who will be appointed by the Minister of Health in consultation with the cabinet.
The board will be made up of up to 11 publicly nominated people with relevant expertise and recommended by an advisory committee. They will serve a five-year term.
The NHI Act gives the Minister of Health the power to make regulations, to issue directives and make technical decisions relating to the operation of the NHI Fund.
The fund must be run in accordance with the Public Finance Management Act and the expenditure and reporting of the fund will be audited by the Auditor General.
The President signed the NHI Act in 2024 without specifying when it would be implemented. The government and the healthcare industry have indicated that realistically it will take 10 to 15 years from signing, without considering any legal challenges.
A set of draft regulations that have been published are expected to bring at least 20 of the NHI Act’s 58 sections into effect, setting up the NHI Fund’s Board and Committees, and appointing the chief executive officer.
The Act provides for its implementation in two phases. In phase one, for a period of four years from 2023 to 2026, the fund must:
In phase two, between 2026 and 2028:
The fund has begun contracting with providers in some pilot studies but is only set to start purchasing services for vulnerable groups such as children, women, people with disabilities and the elderly in 2028.
