Current role of private sector in South Africa’s he heal alth th syste stem m an and p d pot oten enti tial al con ontr tribu ibutions tions an and d cha hall llen enges ges David Sanders Emeritus Professor: School of Public Health University of the Western Cape Honorary Professor: Department of Paediatrics and Child Health UCT A WHO Collaborating Centre for Research and Training in Human Resources for Health
Financing of current health system Out-of- pocket: 13% of funds Tax: (16% Private medical uninsured 43% of funds insurance use private 84% of population schemes: GP & for primary care, pharmacy on 44% of funds inpatient & OOP basis) specialist care 16% of population
Size of private insurance South Africa Namibia USA Bahamas Argentina Brazil Chile Zimbabwe Dominican Republic France Slovenia Canada Jamaica Lebanon 0 5 10 15 20 25 30 35 40 Private insurance as % total health care expenditure WHO National Health Accounts database
The private hospital market in metropolitan areas (50%+ of medical scheme population) was concentrated by 1999.. Percentage of total acute beds 100.0% 90.0% 80.0% 70.0% 60.0% Market 50.0% becomes 40.0% concentrated 30.0% 20.0% 10.0% 0.0% 1996 1998 2000 2002 2004 2006 Life Medi-Clinic Netcare Independent Only 12.3% of private hospital beds were outside three main hospital groups by 2006… 5
Private hospital real cost trends (2009 prices) 350.0 ? Coincides with market concentration Real per capita expenditure 300.0 250.0 200.0 150.0 100.0 50.0 0.0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 6
Health workforce Drs per 10 000 population Source: WHO country profile [http://apps.who.int/nutrition/landscape/report.aspx?iso=rwa]
Use of health services, SA 60%� 50%� benefits� 40%� of� 30%� share� %� 20%� 10%� 0%� Public� � Private� Public� &� private� Poorest� 20%� 2nd� poorest� Middle� 2nd� richest� Richest� 20%� Ataguba and McIntyre (Health Economics, Policy and Law, 2012)
PRIVATE HEALTH CARE SUBSCRIBERS ARE PAYING TOO MUCH • E.g, an average household that earns R20 000 a month currently contributes R3 800 per month towards their medical aid. This is 19% of the family’s income. At the current rate of medical aid increase, in 2030, that family will pay 28% of their disposable income; • The scenario adopted is that NHI will be predominantly be funded through general tax revenue allocations, supplemented by – - a payroll tax payable by employers and employees (total 2%). This funding approach has been developed by the National Treasury with a maximum payroll tax of 4% that will be used to fund NHI. This is also much lower than what poor and rich households pay as their contributions to medical scheme premiums. Therefore, the impact on households currently contributing to medical schemes will be much more positive under NHI Fund; and - a surcharge on individuals’ taxable income (2%) to support the social solidarity principle of NHI. 10
Possible universal system Out-of- pocket: No fees at point of Medical service schemes: ? 8%-9% of population Public funds: Tax (general and additional) Whole population entitled to benefit (richest will probably have double cover)
Intent of the NHI • Universal coverage – financial protection When you are sick, you are not and access to needed care for all legal prevented from getting care if you residents do not have the money to pay • “... addresses the inequities of the past and also ensures that there is a unified national A Single-Payer health system that accords our citizens system means Risk: Your likelihood you that there is sufficient financial risk protection from will need health care only ONE body catastrophic health-related expenditures and that controls Risk-sharing: Those who are healthy (and low the funds, not improves the health outcomes of the risk) pay in more than they use from the fund: many population. Late Deputy-Minister of Health The healthy subsidise the sick – because when insurances we are sick, we know we will have services • Address challenges in both the public and private health sectors
Our health facilities Core of reform are more effective, efficient, accessible and improve health in the country • Improve performance of public sector National Core Standards Ideal Clinic Programme Re-engineering primary health care • Draw in human resources currently in private sector Bring into public facilities many health professionals (e.g. GP to serve needs of all South Africans; Contracting) who work mainly in the private sector • No opt out from ‘NHI contributions’; benefit entitlement for all; no tax subsidy on medical scheme contributions Opt-out: I can What you pay to your medical decide to join the aid, you can claim as deduction NHI or not on your income tax
Universal Health Coverage: Different Understandings Universal health coverage (UHC) has the potential to transform the lives of millions of people by bringing life-saving health care to those who need it most. UHC means that all people get the treatment they need without fear of falling into poverty. Unfortunately, in the name of UHC, some donors and developing country governments are promoting health insurance schemes that exclude the majority of people and leave the poor behind. Universal Health Coverage Why health insurance schemes are leaving the poor behind OXFAM, 2013
Healthy life expectancy (HALE) and government expenditure on health as per cent of GDP 2000 HALE 2000 Fitted values 73.8 HALE 2000 50 29.5 .3 2 4 6 8.3 Govt expend on health % GDP Mackintosh and Koivusalo 2005
Log of probability of dying before five years and private expenditure on health as per cent of GDP, 2000 Log (Prob of dying < five years Fitted values 5.69709 Log (Prob of dying < five years) 1.09861 .3 2 4 6 8 10.1 Private expend on health % GDP Mackintosh and Koivusalo 2005
Restructuring of medical scheme environment 30 June 2017 WP gives notice of “Implementation Structures” The Advisory Committee On Consolidation Of Financing Arrangements is tasked in the WP with advising Minister “on strategies to be followed in consolidating current fragmented funding pools in the medical schemes environment .” In the July 7 th gazette the strategies are already defined: • consolidate separate arrangements for civil servants, the formally employed in SMEs, the formally employed in big businesses, the informal sector and the unemployed; • make medical scheme membership mandatory for formal sector workers
Consolidation of Financing Streams • Presently, according to STATSSA, this is how the SA population is divided in terms of income, employment and hence, indirectly medical scheme coverage • In reorganising the population, cognisance will be taken of these various categories, i.e. when we implement NHI, we have to start with those who are not covered Interim Insitutional Structure Formal Sector Civil servants and Formal Sector Individuals in households Employed and their Informal sector and their dependants Employed and their with no income or are not dependants (large their dependants dependants (SMMEs) employed (incl. SoEs) business) 5.5m 12m 6m 8m 24m • • Government Employees • The elderly with no Domestic Workers • State Owned Enterprises • income Hawkers • • Public Entities • Children Taxi industry • • School kids (12m) Casual labourers Only 8.8m of these people have access • Unemployed • to health services via medical schemes Unemployable The central philosophy of Implementation of NHI is to bring into fold those people who are not insured (specifically those who are unable 18 to afford medical scheme cover).
Why? Experience of other countries: • Starting with silos makes integration difficult; • Public servants have resisted (perceived) loss of benefits; obstructed universal access; • Focus on scheme design is wrong starting point – should be whole system design. Mandating coverage boosts privately insured: • More negotiating power to medical schemes; • Money diverted (when public sector should be focus of investment).
• Kutzin : “The unit of analysis for goals and objectives must be the population and health system as a whole . What matters is not how a particular financing scheme affects its individual members , but rather, how it influences progress towards UHC at the population leve l. Concern only with specific schemes is incompatible with a universal coverage approach and may even undermine UHC, particularly in terms of equity . Conversely, if a scheme is fully oriented towards system-level goals and objectives, it can further progress towards UHC. Policy and policy analysis need to shift from the scheme to the system level. ” [Bull World Health Organ 2013; 91: 602 – 611]
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