NHI plan remains intact despite medical tax relief – Godongwana

Finance Minister Enoch Godongwana says the decision to adjust medical tax credits for inflation in the 2026 Budget is a “pragmatic response” to legal uncertainty surrounding the National Health Insurance (NHI), which is currently legally challenged.

Speaking at a post-budget event in Cape Town hosted by RMB, Godongwana acknowledged that ongoing court challenges are stalling progress with the NHI.

Listen/read:
Medical tax credit increase offers limited relief to households
Slight relief for overburdened individual taxpayers

Asked by a member of the audience what the reason for adjusting the tax credits was, Godongwana responded: “We are in court. There are 14 cases … These cases will take us a while. And we won’t be able to continue with the NHI,” he said, adding that government and the private healthcare sector need time “to find each other on these issues”.

In the 2026 Budget, National Treasury announced an inflationary increase in the medical tax credit and rebates — the first in two years.

Read: Scrapping medical tax credits not on the cards – Godongwana

The adjustment to medical tax credits comes despite repeated assertions by Health Minister Aaron Motsoaledi and health department officials that the credits will be phased out and the savings redirected to fund the NHI.

Legal limbo

Godongwana stressed that the medical tax adjustment should not be interpreted as a retreat from universal health coverage.

“For now, it’s difficult for me to not allow the growth of [medical] credits while we are waiting for an outcome [on the NHI]. That’s why there’s the marginal increase in the tax brackets for now. But it does not negate the NHI.”

Godongwana said a lot of the design and planning of the NHI still need to be ironed out.

“We need to say – how will we roll it out? What is going to be covered by it – that will determine its cost.”

Only once the benefits package is clear can government decide how to fund it and how services will be delivered.

“I made the point yesterday [in the budget speech] that we will be upgrading certain facilities in preparation for the NHI,” he added.

Private sector seen as partners

Godongwana also signalled a more conciliatory stance toward the private healthcare industry, which has led many of the legal challenges.

“There’s a willingness on the part of government now … that we need to find one another on some of these issues so that we can move with speed,” he said.

He suggests that negotiations outside the courtroom will be essential to defining the eventual system.

He also says talk about the NHI’s high costs is premature. “There’s a rumour that it’s a monster; that it’s too expensive. But I don’t have a number.”

Listen/read: Court-ordered NHI pause opens door to policy rethink

Meanwhile, the NHI’s rollout plans have been halted after President Cyril Ramaphosa and Motsoaledi undertook not to proclaim any provisions in the legislation pending the court hearings.

During a recent interview with Jeremy Maggs on Moneyweb@Midday, Health Funders Association CEO Thoneshan Naidoo said the pause creates space to “reset this framework” and explore collaborative solutions between public and private sectors.

Fiscal framework and policy credibility

Godongwana was also pressed on the absence of a formal fiscal anchor in the budget – an omission that elicited criticism from economists and rating agencies.

He responded that any anchor would only be credible if future administrations commit to a clear fiscal path and parliament enforces compliance.

“On the monetary side we now have an inflation anchor, which is at 3%. That determines where monetary policy is going. A similar exercise is necessary on the fiscal side to provide credibility for our fiscal path.”

Read: Government wants a ‘credible and principle-led’ fiscal anchor

He said it would, however, elicit a “major debate”.

“We intend to have intensive engagements with all political parties. We also need some regulatory framework for that,” he said, adding that detailed proposals could be finalised by October as part of the Medium-Term Budget Policy Statement.

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