National health from a private sector viewpoint

Gareth Stokes, FAnews Online Editor

Unlike some of government’s recent proposals, National Health Insurance (NHI) enjoys wide support from local stakeholders. We’d all love to be able to walk into a public hospital or clinic – present our NHI card – and receive first world medical benefits without having to dock up any extra cash for the service. And in the perfect world that’s exactly what we’d get. Problem is we know from commentators in the United Kingdom that national health doesn’t always go to plan. Developed world beneficiaries of state healthcare services soon learned the system was too stretched to cater for them all – with long waiting lists for the simplest of medical procedures. Why does the South African government think they can do better?

At a recent Old Mutual Actuaries & Consultants (OMAC) breakfast, Jan Howell, Consulting Actuary for OMAC explored the potential implications of the NHI. He wanted to know what the system, intended to provide universal and compulsory healthcare coverage for all South Africans, would mean for medical scheme members and administrators.

Will NHI destroy private medical schemes?

Howell doesn’t expect a significant impact on medical schemes in the short to medium term. However, should the proposal be implemented in its current form, the role of these schemes will change dramatically over the long term. He joins a number of industry experts in reserving judgement around the NHI’s impact on individual scheme members until more is known about the NHI funding model. An affordable NHI will probably see many existing medical scheme members continuing with their private cover. This assertion is borne out by evidence from the UK and Sweden, where as many as 15% of the population retain private care despite “expensive” compulsory contributions to the public cover.

Howell explains that, should the NHI proposal be implemented as is, medical schemes will be allowed to continue to operate; however, individual medical scheme members will not be permitted to opt out of the NHI. South African citizens will be obligated to contribute to a NHI tax which will be calculated according to an individual’s income. If the introduction of NHI results in adjustment to some of the requirements of the Medical Schemes Act, it is likely that schemes may start to offer insurance-type cover. If the requirements of the Medical Schemes Act are not relaxed then only the very rich will be able to afford both the NHI tax and a medical scheme for their families.

What will medical schemes do under these circumstances? “As a result, medical schemes are likely to offer members a greater choice with regards to healthcare providers and more convenient timing of procedures in the hope of enticing members who might not be satisfied with the choices available on the NHI. Alternatively, schemes may opt to offer top-up cover or supplementary cover for procedures that are not covered by the NHI,” he says.

Healthcare resources remain a serious hurdle

The danger sign flashing over government’s ambitious proposal is the resources (both human and infrastructure) backlog. FAnews reckons government has two options… Press ahead with  NHI and fail, or delay the implementation until they’re ready to do it properly. The problem is South Africa might never be ready. Recent studies suggest the number of general practitioners and specialists per capita will decline each year over the next decade, with as many as 25% of newly qualified doctors and specialists choosing to practice offshore.

Government has acknowledged that the public sector healthcare infrastructure currently in use across the country isn’t up to the job. Comments by finance minister, Pravin Gordhan, as well as health minister, Aaron Motsoaledi indicate that the initial focus will be on improving the quality and efficiency in the public sector. “The 5-year timeline to achieve this efficiency in the public sector is very ambitious and this may well delay the implementation of the NHI. However, it is nevertheless important to start considering the effects of this proposal,” says Howell.

Editor’s thoughts: I think the majority of South Africans are in favour of an efficient and effective National Health Insurance system. At the same time most of us realise this system cannot be successfully implemented given the poor state of existing healthcare infrastructure and the severe shortage of doctors, specialists, nurses and other medical professionals. Would you like government to go ahead with NHI – or should they rather focus on improving existing public healthcare structures? Add your comment below, or send it to gareth@fanews.co.za