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Debate heats up over NHI and medical aid schemes

Feb 08 2017 07:11
Susan Erasmus

Cape Town - Private medical schemes stand in the way of the government’s proposed National Health Insurance (NHI) scheme and should be abolished, said SA Health Professions Council president Dr Kgosi Letlape during a public discussion on the NHI at the University of KwaZulu-Natal on Friday.

This is in direct contradiction to Health Minister Aaron Motsoaledi’s regular reassurances that the purpose of the NHI is not to destroy the private healthcare sector, but to make it possible for more South Africans to access quality healthcare.

“There is no plan, secret or otherwise, to destroy private healthcare providers in the country. What we are saying is that private healthcare has a lot of resources which are not available to everyone.

“We are not saying it must be destroyed [but it should] make it possible for [them] to be utilised by all South Africans,” Motsoaledi said six months ago at a briefing of reporters held by the Board of Healthcare Funders.

While nobody can deny the desirability of universal quality healthcare for all South Africans, the funding of the proposed NHI has been a major issue for years, with the government proposing several possibilities on how to raise the R375bn needed by 2025 to get the NHI off the ground. They would be seeking to raise up to 5% of the GDP in additional taxes in order to do this.

“These proposals are not implementable as proposed," says Professor Alex van den Heever, who holds the chair of Social Security Systems Administration and Management Studies at Wits University.

Here’s more about some of the main issues at stake in this ongoing debate:

Inequality of access to healthcare

The statistics on healthcare access in South Africa do not paint a pretty picture, with roughly 50% of doctors servicing the 16% of patients who can afford to pay the costs either from their own pocket, or because they are members of a private medical scheme.

When it comes to specialist healthcare the picture is even more dire, as 80% of medical specialists in South Africa are in the private healthcare sector and only 20% in the public healthcare sector, servicing 84% of the population. Access to quality public healthcare is even more problematic in rural areas.

The high costs of private healthcare put it out of reach of the average South African, a situation the NHI seeks to resolve in one way or another. Many people, such as Letlape, feel that cost and the ability to pay should not limit anyone’s access to healthcare. He called the way healthcare is funded "a crime against humanity’ and said that funding for the NHI should be based on a system of social solidarity.

The poor state of many state healthcare services

The health minister is the first to admit that there is a “lot of work to be done in public healthcare, which, while it is affordable, there are problems with quality and efficiency”.

Many medical scheme members, who are faced with spiralling above-inflation annual contribution increases, are afraid to resign from their schemes and to rely on state medical care because of the long lines of patients waiting to be seen, and the inconsistency of the quality of care they are likely to receive if they are hospitalised. But for many in the country, there is no alternative.

According to the Hospital Association of South Africa Africa, there are only 25 state doctors and 92 private doctors per 100 000 people – the world average is 152 per 100 000. So even in the private sector, the numbers of healthcare practitioners are insufficient.

It must be said that while horror stories emerge in the press every now and then about  public hospitals, there are also facilities where the care is excellent. Many people feel they would support the proposed NHI if the state could prove that it is capable of revamping the existing state healthcare system.

The drivers of private health costs

While medical schemes themselves are not run for profit, private healthcare facilities are. Private hospitals have shareholders and are profit-driven. There is also no limit to what private healthcare practitioners may charge.

These two things, together with medicine and equipment costs and the falling rand, contribute to spiralling medical scheme contributions, as schemes are obliged to pay at cost for treatment of 270 Prescribed Minimum Benefits, regardless of where it is obtained.

High private healthcare costs are not a particularly South African phenomenon, but a worldwide occurrence. The health minister has, on several occasions, criticised the high costs of private hospitals and practitioners, calling it a ‘sick situation’ which has contributed to ‘overservicing of the rich and gross underservicing of the poor’. But whether this is a cause of the public healthcare crisis or a symptom of it, can be debated.

The other side of this argument is that doctors are free to choose where they want to work, and what they want to charge in a free-market system. If they were forced into salaried positions in an ailing public healthcare system they might just take their skills out of the country, as thousands of them have done already. There is a dire shortage of trained medical staff in the country – especially in the public system where the working conditions are poor and there is a lack of equipment and medical provisions.

The high costs of medical scheme membership

With many of the schemes announcing double-digit contribution increases for 2017, medical scheme membership is becoming increasingly unattainable for the average South African, already burdened by the sharp increase in the cost of living.

With the spiralling cost of private healthcare, medical scheme contributions are unlikely to become lower. For low-cost benefit options to become a reality, fundamental changes need to be made to the Medical Schemes Act of 1998 with regards to the payments for the 270 PMBs, the treatment of which all schemes have to cover. This contributes to large contribution increases.

If people resign from medical schemes because of the high cost, they become reliant on state healthcare, adding to the burden of the already overloaded and understaffed public health service.

The funding of the NHI

Where will the money come from? The cost estimates for the NHI by the year 2015 is R375bn. South Africa already has a high per capita expenditure on health (8.8% of GDP in 2014 according to the World Health Organisation) considering that the average income of South Africans is fairly low. But it spends more on health per capita than many other African countries, where more positive health outcomes have been achieved.

Several proposals have been made over the years for funding of the NHI: the introduction of a payroll tax, a surcharge on taxable income, and increases in VAT. This money would go into a pooled fund which will be publicly administered. Fears exist that this money might not be used as it is intended to be.

The idea is to raise 5% of GDP in additional taxes to achieve a total public spend of 8% of GDP, according to Van den Heever. But he also states that there is no precedent elsewhere for such a proposal and doubts whether this can be implemented, or whether it will address the weaknesses in the current health system.

South Africans already pay high personal taxes and fund matters such as healthcare and education from their own pockets, so additional taxes may be met with resistance.

When taking a look at what South Africa spends on healthcare, the amount also includes the amount people spend on medical schemes. In practice this money is not state-controlled, as it is currently a private transaction between individuals and healthcare providers and/or medical schemes. Medical scheme members are unlikely to hand over these high contributions to the state to fund the NHI.

(Sources: World Health Organisation; SA Health Professions Council; Board of Healthcare Funders; Hospital Association of South Africa; Medical Schemes Council; South African Health Review)

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