(Bloomberg) -- Legislation aimed at reforming South Africa’s health system through a controversial national insurance plan was approved by a second parliamentary chamber, which ignored pleas from opposition parties, doctors and business groups to change it.

The National Council of Provinces passed the National Health Insurance Bill at a sitting in Cape Town on Wednesday, with backing from eight of the nine provinces. It seeks to ensure all South Africans have access to quality health-care services and provides for the establishment of a fund that will be used to pay for almost all treatment from accredited providers, with rates to be set by the state. Private insurers will only be able to pay for products and services that aren’t covered by the fund. 

“This is indeed a very historic day and a very historic achievement,” Health Minister Joe Phaahla told the legislature. A framework is being put in place to “transform the health services, create equity and make sure the perpetual divisions of South Africans, at least in the area of health care, can come to an end,” he said. 

The bill, which was approved by the National Assembly in June, will now be referred to President Cyril Ramaphosa, who can either sign it into law or request lawmakers to amend it. In any event, its passing without modifications sets the stage for a court challenge on the grounds that it erodes the constitutional rights of both patients and health-care professionals — and that input from interested groups wasn’t given adequate consideration. 

“We will proceed with legal action against the furtherance and implementation of the bill,” which contains “glaring deficiencies,” labor union Solidarity said in a Dec. 5 letter to Ramaphosa, Phaahla and other government officials, in which it called for further engagement before the legislation was enacted.   

Critics of the measure say the government hasn’t spelled out how it will raise the required funding, estimated to be as much as 500 billion rand ($27 billion). The bill states that money will come from general tax revenue, payroll taxes, surcharges on personal income tax and the reallocation of funding for tax credits that are currently paid to private insurers, but provides no details.

“There is no picture of how holistic treatment can be achieved. There is no indication of which services would be covered by the NHI, or how the poor and vulnerable will afford services that are not covered by it,” said Dennis Ryder, a lawmaker for the main opposition Democratic Alliance. “This bill has not been properly thought through and its implementation will result in a half-baked mess that we cannot afford to fix.”

About 16% of the population have private medical insurance and account for just over half of national expenditure on treatment. The remainder of the money is spent on the other 84% of the population who rely solely on an overburdened public health system — a spending mismatch health officials say NHI will address. 

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