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Budget reaction - Healthcare

28 February 2013 Various

Budget speech commentary - Financial Intermediaries Association of Southern Africa

Healthcare:

The 2013 Budget announced that the medical schemes tax credit was increased from R230 to R242 for each of the taxpayer and the first dependent and from R154 to R162 for each additional dependant. “The inflation-linked increase in the medical schemes tax credit is the minimum increase the FIA would have expected,” says Gregory Setzkorn, Chairman of the Healthcare Committee at the FIA. “While individual taxpayers will no doubt enjoy the additional tax relief the concession does not go far enough to encourage new entrants to the medical schemes industry.”

There is good news for the over-65s. “Taxpayers 65 and older may claim as a deduction all qualifying medical expenditures not covered by their respective medical schemes,” says Setzkorn. “They can also claim a deduction for medical scheme contributions exceeding four times the amount of the medical schemes tax credits.”


 

Board of Healthcare Funders of Southern Africa (BHF) commentary on the health agenda

Dr Humphrey Zokufa is the MD of BHF and a member of the NHI Ministerial Advisory Committee.

* South Africa already spends 8.5% of its GDP on health and still has poor health outcomes when compared to similar middle-income countries. It is evident that South Africa needs to more efficiently use the money it already spends on healthcare.

* BHF and its membership believe in universal coverage for all SA

* The private funding sector is a national asset, rich in expertise and experience in governing and administering healthcare systems, which can be made available to government as it implements NHI.

* BHF believes that the NHI model could be similar to the ‘Gautrain’ model where the private sector is contracted by government to fulfil a function of building the entire system, and the establishment of the Gautrain Management Agency, under the Provincial Government, manages the running of Gautrain. This model creates flexibility and establishes an appropriate platform to attract , retain, contract and remunerate the required skills and expertise adequately. To have a well functioning NHI system will certainly require such a model.

* BHF has committed its support to government in the rollout of NHI, whether it be the pilot sites or the implementation of an actual NHI. To this end BHF has indicated a number of areas where the private funding sector could support government during the implementation phase of NHI:

· Designing and costing of the NHI package of benefit package
· Development of coding structures for reimbursing healthcare providers
· Development of healthcare tariffs, payment and provider reimbursement models
· Measurement of healthcare quality and other outcomes
· Fraud management interventions
· Accreditation of providers/facilities and provider contracting
· Communication and education – to the general population and providers of service
· Provider Network Management
· Peer Review and Profiling
· Administration, Claims and Information Systems and Managed Care Services
· Call Centre Support Services

* BHF, however, stresses the urgent need for reform of the private sector in the build-up to NHI, in order to align this sector with current and future national health policy and to ensure a seamless integration of the 8.2 million medical scheme members into the NHI, such as regulated tariffs and a review of the PMBs.


AJ Jansen van Nieuwenhuizen, director and head of Tax, Grant Thornton Johannesburg says:

“The Minister’s mention that the proposed funding for the NHI will be published this year, i.e. during 2013, at least provides a deadline to advise as to how this Health Insurance will indeed be funded. We were hoping for more clarity, though, during this Budget and yet another delay is frustrating.”


Budget Speech shows NHI implementation slower than expected

Minister of Finance, Pravin Gordhan was short on detail regarding National Health Insurance (NHI) in his budget speech, indicating that the pace of implementation was slower than expected.

This is according to Resolution Health Medical Scheme and its administration and managed care partner, Agility Global Health Solutions [Africa] (Agility Africa).

“It was not so much what was said, but what wasn’t said. The lack of detail suggests that there is much work to be done on the practical implementation of the process,” says Mark Arnold, Principal Officer of Resolution Health Medical Scheme.

“There is also much to be done in figuring out exactly how it will be funded. The National Treasury is working with the Department of Health to examine the funding arrangements and system reforms required for NHI. A discussion paper inviting public comment on various options will be published later this year,” continues Arnold.

Gordhan said new policy initiatives such as NHI would only be affordable if South Africa succeeded in driving growth towards 5% a year and government revenue doubles in the next 20 years. He said if growth continued along the present trajectory, substantial spending commitments would require reductions in other areas of spending and adjustment to tax policies.

George Roper, CEO of Agility Africa says, “NHI obviously remains a priority, but is competing against a range of other spending requirements. If it does not deliver, even in the early stages of implementation, it may run the risk of being disadvantaged when competing for budget allocation against more successful policy initiatives.

NHI pilot projects began last year, and were allocated a R150m conditional grant for the fiscal year 2012-13. Only 14% of the budget had been spent by last month, far short of the 83% benchmark used by the Treasury. Each of the 10 pilot districts was allocated R11.5m, and seven central hospitals in these districts received R5m each.

“When it comes to implementation, most ambitious plans do need refinement,” says Arnold.

“The Budget Speech shows there has also been a realisation that health infrastructure as well as medical and nurse training capacity must first be improved if NHI is to be successful. In 2012, a total of 1 967 health facilities and 49 nursing colleges were in different stages of planning, construction and refurbishment,” concludes Arnold.


 

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