with beneficiaries interest? Yes, but. HMI seminar: Funders market - PowerPoint PPT Presentation

Will the proposed regulatory interventions realign funders interest with beneficiaries interest? Yes, but…. HMI seminar: Funders market concentration and countervailing power 10 April 2019 1

Trends in health expenditure and life expectancy for selected countries Eric Topol https://twitter.com/EricTopol/status/109971977061 2453377?s=19 https://ourworldindata.org/ 2

Life expectancy by health expenditure (For countries spending <$2,000 PPP) 85 Life expectancy at birth, total (years) 80 75 70 65 60 $1 121 ; 57 55 50 South Africa 45 y = 5,0383ln(x) + 38,453 R² = 0,5227 40 $- $500 $1 000 $1 500 $2 000 Health expenditure per capita, PPP (constant 2011 international $) 3 Based on data downloaded from www. http://data.worldbank.org/

Total health expenditure is higher than expected for SA’s GDP per capita 18,0% Health expenditure, total (% of GDP) USA y = 0,0136ln(x) - 0,0562 16,0% R² = 0,3307 14,0% 12,0% South Africa 10,0% 8,0% United Kingdom 6,0% 4,0% 2,0% 0,0% $- $20 000 $40 000 $60 000 $80 000 $100 000 $120 000 GDP per capita (current US$) 4 Based on data downloaded from www. http://data.worldbank.org/

5 Kya Sands vs Bloubosrand, Johnny Miller https://www.businessinsider.com/drone-photos-show-inequality-in-south-africa-2016-6

https://www.businesslive.co.za/bd/economy/2019-02-28-how-sas-fiscal-position-may-be-worse-than- 6 treasury-says/

Debt service costs is the fastest growing expenditure item… (2019/20 — 2021/22) Debt-service costs 10,7 Community development 9,3 Learning and culture 7,6 Social development 7,3 Health 7,0 Economic development 7,0 General public services 5,8 Peace and security 4,6 0 2 4 6 8 10 12 Per cent average nominal growth in spending 7 http://www.treasury.gov.za/documents/national%20budget/2019/

Employment and medical scheme membership MEDICAL SCHEME MEMBERS 2,5 2 1,5 1 0,5 Trading economics, https://tradingeconomics.com/south-africa/employed-persons 8 CMS Annual Report 2016 17

Progressivity of health spending Concentration curves and Lorenz curve for market income Health 9 Inchauste, Gabriela, et al., et al. The Distributional Impact of Fiscal Policy in South Africa. s.l. : The World Bank. Poverty Global Practice Group & Macroeconomics and Fiscal Management Global Practice Group, February 2015.

Change in Gini: disposable vs market income (in Gini points) 10 Inchauste, Gabriela, et al., et al. The Distributional Impact of Fiscal Policy in South Africa. s.l. : The World Bank. Poverty Global Practice Group & Macroeconomics and Fiscal Management Global Practice Group, February 2015.

11 Source for population, poverty and taxpayer numbers: SARS Tax Statistics 2018, StatsSA, NHI White Paper presentation

Objectives of mandatory minimum benefit package(s) 1. Facilitating catastrophic insurance cover 2. Ensuring risk based cross subsidies 3. Improving allocative efficiency 4. Reducing burden of disease 5. Improving equity 6. Controlling moral hazard and cost escalation 7. Fostering competition 8. Facilitating transparency & participatory democracy Neil Söderlund, Possible objectives and resulting entitlements of essential health care packages , Health Policy 45 12 (1998) 195 – 208

13 CMS, IHRM Breakfast meeting. 21 May 2010

Single base benefit Risk PMB level Base benefit PMB Cross subsidies will correctly be from low risk to Number of beneficiaries per option high risk, but incorrectly from low income to high income 14

Single base benefit and risk adjustment address horisontal equity Base benefit Risk adjusted benefit Base benefit 15

Total health expenditure and monthly expenditure per beneficiary by risk pool (2017) R 1 491 R 746 R 334 R 178 R billion R billion 192 161 Tax credit Health benefit PMB Medical scheme Total public health Total benefits paid (for 9 million) public service expenditure benefit (9 expenditure, 2017/18: (including from users (for 9 million) million) savings accounts), (48 million) 2017 16

17 CMS presentations to health portfolio committee , 15 September 2010

Risk pooling challenge to equity in provincial expenditure? (2015/16 budget) 50% R 4 500 46% R 3 892 R 4 000 40% R 3 500 R 3 000 R 2 402 Health expenditure 30% R 2 500 per capita R 2 000 20% 26% R 1 500 R 1 000 10% R 500 0% R 0 Health as % of total National Treasury. Documents - Medium Term Budget Policy Statements - 2015 Statistics South Africa. Mid-year population estimates 2015. Pretoria : Statistics South - Tables in Excel. National Treasury. [Online] 2015. [Cited: 4 May 2016.] Africa, 23 July 2015. Statistical release P0302. http://www.treasury.gov.za/documents/mtbps/2015/tables.aspx.

Statistics South Africa. Mid-year population estimates 2015. Pretoria : Statistics Health Systems Trust: http://indicators.hst.org.za/healthstats/77/data/eth South Africa, 23 July 2015. Statistical release P0302. 19

Flow of funds to support horisontal and vertical equity (Contribution subsidy is central) Risk and Central Equity General Taxes Income Fund Fiscus Adjustment Converted Vehicle tax credit Risk adjusted contribution subsidy Provinces Provinces Prospective risk Provinces Provinces Member assessment Provinces Medical Provinces Provinces Schemes Community-rated (Differential cost Employer options) Contribution 20

Flow of funds to support horisontal and vertical equity (Contribution subsidy is central) Risk and Implement a very Central Equity General Taxes Income basic mechanism Fund Fiscus rapidly – reform Adjustment Converted the tax credit Vehicle tax credit Risk adjusted contribution subsidy Provinces Provinces Prospective risk Provinces Provinces Member assessment Provinces Medical Provinces Provinces Schemes Community-rated (Differential cost Employer options) Contribution Very simple age and gender adjusted contribution 21 subsidy paid directly to medical schemes

Application of benefit packages Primary and preventive Revised PMB care with package hospitalisation for Primary and public health priorities preventive care Revised delivery team PPPs for hospitalisation • • Multilateral tariff Mechanism to prevent Risk management negotiations buy-down to low cost • Flexibility to develop new options • commercial delivery entities Coding systems • • Outcomes measurement Human resources, • Reimbursement systems RWOPS 22

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What happens with the HMI recommendations? • Submitted to parliament • Review health policy to accommodate the HMI recommendations: • Market failure • Government failure • Capability requirements • Establish a consultative forum to participate in the policy development process 24