On 12 August 2011 the Department of Health (DoH) distributed a “Green Paper” titled National Health Insurance (NHI) in South Africa. “South Africa is in the process of introducing an innovative system of healthcare financing with far reaching consequences on the health of [all] South Africans,” they said, promising that the “NHI implementation will ensure that everyone has access to appropriate, efficient and quality health services … and result in major changes in [healthcare] service delivery structures, administrative and management systems.”
A successful NHI implementation hinges on collaboration between all stakeholders in the healthcare industry, whether they are private or public sector aligned. In other words the DoH (with its public sector healthcare assets), medical schemes (with their eight million beneficiaries) and business (with their hospitals and clinics) should work towards the same end goal. But for some reason – instead of fostering such partnerships – the health minister Aaron Motsoaledi and other high-ranking public sector stakeholders avail of every opportunity to bash the private sector. For years they have engaged in blatant “anti-private sector” propaganda to paint one of the world’s best-functioning private healthcare systems as the enemy of the common man. The private healthcare sector is the devil, in other words...
A brutal system that commercialises an essential service
In his latest tirade, delivered Sunday 9 October 2011, the minister labelled the private healthcare industry as a “brutal system” which had commercialised an essential service. Quoted in a Sapa release (on iafrica.com), he asked a group of general practitioners in Durban: “How can we run such a brutal system?” He then said that government would not fold its arms when there was such rampant commercialisation in the healthcare sector. Ironically – government is less concerned with the efficiencies in this system than the perceived cost! And one has to ask: What has the profit generated by free market activities in the private healthcare space got to do with a functioning NHI? More importantly: How can the private sector sit down at a table and work on an NHI solution when such vitriol is continually directed at it?
There is no shortage of self-serving statistic to back up Motsoaledi’s claims. Private hospitals and specialists receive the bulk of the country’s annual healthcare expenditure, he ranted, with private hospitals (R31.1 billion) and specialists (R19 billion) eating up the bulk of the R84 billion total. Another R14 billion goes to pharmaceuticals, R6.2 billion to general practitioners and only R14 billion to public-healthcare and non-medical expenses! What is he saying? These numbers are meaningless because there’s no reference made to the actual services purchases… Nor do these “numbers” compare existing healthcare expenditure to what an all-encompassing NHI solution might entail. In other words – is the contribution per capita under the current “brutal” system likely to be significantly less when NHI is fully functioning? Besides – commenting on how much is currently spent in the private sector when this money is contributed by beneficiaries of such care is disingenuous.
What concerns us is how this private sector bashing crops up throughout the Green Paper too… A prime example of this discrediting process is in point 27 of the 12 August 2011 release: “Over the past decade private hospital costs have increased by 121%, whilst over the same period specialists costs have increased by 120%.” This, they conclude, “means that the private healthcare sector will have to accept that the charging of exorbitant fees completely out of proportion to the services provides have to be radically transformed!” What? By my calculation these “excessive” price increases work out at around 8% per annum – a touch above CPI, but not extraordinary. To find excessive increases one need look no further than electricity – a basic service under government’s control – which will have surged 95% over three years ending 2012.
Government’s signature is already everywhere in private health
Private sectors might make profits – but there is already a crossing over between the concept of regulated healthcare and the proposed NHI. Government, through the Council for Medical Schemes and other regulatory intervention such as PMB, is already calling the shots in the private medical insurance sector! The bottom line is that the private sector’s “place” in the eventual NHI solution is by no means guaranteed.
This reality is not lost on everyone. Jasson Urbach, a director of the Health Policy Unit (a division of the Free Market Foundation) shared some of his thoughts on the prescribed minimum benefits (PMB) system recently. “Critics of private healthcare argue that the private sector does not do enough, that it dumps patients on the public sector and is only interested in ‘money first’,” he begins. He goes on to mention an article by Sonderup, Spearman and Geffen, who argued in the Business Day that medical schemes were evil because they failed to cover the treatment of many diseases causing patients to fall into the void between the public and private sectors.
Not so, countered Urbach: “It is government that determines which conditions are included in the list of PMBs, not medical schemes, and certainly no one individual scheme.” He pointed out that when benefits were determined politically rather than by medical schemes responding to what individuals needed, the benefit packages expand and their costs increase!
The “Eureka” moment
The spiralling private sector costs government complains about were in part caused by their intervention in healthcare provisioning. “The consequence is that low cost medical schemes that cover the basic needs of low-income people can no longer be efficiently designed and the unfortunate low income earners are denied cover – and it is these individuals that are driven into the void between the public and private sector,” said Urbach.
“Medical schemes are not charities, but rather obliged by economic realities and the interests of the members of their schemes to take great care in managing available resources. If scheme managers were to recklessly pay claims that are not included in the agreements with scheme members they would be guilty of dereliction of duty and would threaten the solvency and continued existence of the schemes they are managing.”
Editor’s thoughts: The NHI will radically alter South Africa’s financial services landscape… As yet little has been said about its likely affect on medical schemes – and the thousands of intermediaries who operate in this space. Do you think medical schemes broker concerns have been adequately represented in the healthcare debate to date? Please add your comment below, or send it to gareth@fanews.co.za
Comments
Added by Ben Holtzhausen, 11 Oct 2011