There are so many things wrong with South Africa, how does one decide what needs fixing first? Energy supply, water supply, transport Infrastructure, municipal service delivery, education … the list goes on and on.
At or near the top of my list would be health care. On the public side, services have deteriorated to such an extent that large portions of provincial health budgets are spent on settling or defending malpractice lawsuits. On the private side, costs are spiralling and medical scheme membership is shrinking.
The logical answer would be for the government and the private healthcare sector to work together in devising a system that would close the gaps between public and private coverage, providing a good, basic level of health care for all, with necessary cross-subsidisation between rich and poor, young and old, healthy and sick.
But the government, with its proposed National Health Insurance (NHI) scheme, appears to be intent on leaving private funders and medical schemes out in the cold.
Not that I am a great fan of our medical scheme system. Medical scheme membership is the only form of insurance I know of where your premiums rise annually (well above the consumer inflation rate) but your benefits can change arbitrarily (usually to your detriment), leaving you never knowing exactly what you are covered for. You have to painstakingly go through the small print of your plan every year, comparing it word-for-word with the previous year’s plan, to find out where changes have been made, and I doubt many people take the effort to do that.
For example, on my plan, until recently, my wife was covered for a mammogram every two years. The surreptitious change to a mammogram every three years was, in my view, sneaky and not in the interests of good health.
Back to NHI. At a recent presentation at the Consult by Momentum Conference 2023 in Cape Town, Dr Boshoff Steenekamp, a health strategist at Momentum Health, underlined the absurdity of excluding private players and, interestingly, gave historical and international context to our health funding challenges.
Although the concept of universal coverage is not new, it gained vogue in the World Health Organization’s World Health Report in 2010.
Steenekamp, who has healthcare systems design experience within the Department of Health, said one must look at health services in three dimensions:
- Who is covered?
- What proportion of healthcare costs are covered relative to out-of-pocket costs?
- What type of services are covered?
He said it is impossible, even in wealthy, advanced economies, to fully achieve universal coverage. You can only do so much, which means providing a limited package.
Comparing a group of countries, including the Brics nations and a few others with similar economies, Steenekamp showed that South Africa already spends considerably more on public health care than our peers, but is near the bottom in actual health coverage. In fact the only countries that spend more in terms of a proportion of GDP are wealthy, developed countries.
- In 2000, about 35% of total health expenditure in South Africa was public expenditure; in 2020 it was over 60%. Of our peers, only Russia has higher public health expenditure as a proportion of total health expenditure.
- Over 15% of our national budget is allocated to health. This is higher than all our peers, including Russia.
- In South Africa, only about 5% of total health expenditure is out-of-pocket, the lowest of all our peers. In India and Egypt, over 50% of health expenditure comes directly out of citizens’ pockets.
Steenekamp says NHI proposes that 80% of total health expenditure be publicly funded, 10% privately funded and 10% funded out of pocket. Medical schemes would provide “complementary cover” only.
Of course, the question on everyone’s lips, including those of our Finance Minister, is: where would the government find the roughly R200 billion a year needed to fund this grand scheme?
Steenekamp reckons VAT would have to increase from 15% to 21.5%, personal income tax would have to rise by 31%, or a payroll tax of 10 times current UHF contributions would need to be instituted. The problem is that higher taxes do not directly translate into increased revenue.
Current medical scheme expenditure is R2 346 per beneficiary per month, as against public health expenditure of R417 per person per month. NHI would allow for expenditure of R684 per person per month: an increase of 63% for those relying on state health care, but a drop of 66% for medical scheme members.
Steenekamp says the NHI Bill contains some very good ideas, but the private sector must be more involved. “We must enhance the bill to be inclusive of all key stakeholders. You cannot do something of such a magnitude by excluding major players and the strong capacity we already have,” he says.
Economics lessons from other countries show that private funding must be a substantial part of overall funding. In the UK 20% is private; in less developed countries this goes up to 40%. “We need to use what we have and improve on what we have,” Steenekamp says.
PERSONAL FINANCE
