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Shisana: NHI will reduce spending

Sep 22 2011 18:46 I-Net Bridge

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Cape Town - Once the National Health Insurance (NHI) is in place it would help reduce health spending from 8.3% of GDP to 6.2% as the overall population would become healthier and more productive said Human Sciences Research Council CEO Olive Shisana on Thursday.

Addressing the Cape Town Press Club, Shisana said the bulk of the money, about R120bn, needed to establish the NHI was already in place and that it was only the next R5bn that was required.

"There are big challenges on health expenditure. These relate to the question of health care expenditure that makes up 8.3% of the country's GDP, but surprisingly 4.1% is spent in the private sector, which only covers 16% of the population," Shisana said.

She said that research had shown that for each extra year of life expectancy a country's GDP grew by about 4% in the long run. Poor health and reductions in adult mortality explained low economic growth in 52% of countries between 1960 and 1990.

Shisana also made the claim that once NHI came into effect individuals and small businesses would not have to set aside monies for healthcare costs and these would be available for reinvesting in the economy.

Piloting of the NHI was due to begin in 2012 and the department of health was currently auditing state-owned facilities to determine what the issues were and if they met set norms and standards for delivering quality healthcare.

She said that the NHI Fund would be run as a state-owned enterprise, similar to the structure of the SA Revenue Service with a CEO who would report directly the minister of health.

Shisana, who has been investigating health insurance schemes since 1995 said that SA had been trying to implement an NHI for about 80-years with the first attempt being in 1942.

"However, it is only the post-apartheid government that has been able to implement it," she said.

Care for citizens only

A principle of the NHI would be that it would only treat South African citizens and permanent residents and that tourists, temporary residents and students would have to prove they had adequate health insurance before entering the country.

She said that the size of the NHI would mean a lowering of overall medical costs because it would be able to buy drugs and services in bulk and leverage economies of scale.

According to the proposals the NHI would be a singly payer model meaning that it would pay accredited providers.

The NHI would be funded out of the general revenue fund, but Shisana said government would not be able to carry the total cost and therefore individuals and companies would also have to make contributions.

The payment of doctors and other health professionals would be based on the capitation model. This meant that the amounts paid would be uniform across providers and linked to an appropriate index such as the inflation measure CPI-X. It would be based on risk adjustments such a population size within the area allocated to a healthcare provider, and the average age, gender makeup and disease profile.

Services rendered that were not in accordance with the NHI treatment protocols would require co-payments, and so would services rendered by providers who were not accredited and contracted by the NHI.

Shisana asserted that the current private medical aid model was unsustainable, as the number of the schemes had been reduced from about 180 in 2001 to 102 in 2009.

"They are not financially viable and premiums continue to increase at a rate that the individual employers struggle to pay. Wage inflation adds to the high premiums of medical aid and then there is the phenomena of brokers, the middle men, who take away some of the money going into the pocket of the medical aids," she said.

Shisana said the consequences were that the benefits were exhausted before the end of the year and drove the costs of healthcare up.

"Compounding the problem are the high administrative fees; in most cases administration costs are much higher as big bonuses are paid to those administering the schemes," she said.
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