Healthcare: a new approach

01 October 2007 Heidi Kruger, Board of Healthcare Funders

If the government's plans for a social health system are to be realised, the emphasis and expenditure within the private healthcare realm on specialists and private hospitals must be exchanged for an emphasis on primary care, as is the case in most health systems across the globe.

According to the Registrar's report for 2006, close to 60% of the country's annual private healthcare spend of R60 billion goes to medical specialists and private hospitals. Add to this the 17% spend on medicines and 76% of the total private healthcare spend is accounted for.

With medical scheme membership stagnant at about 7 million people, the rising and seemingly uncontrollable upward trend in private hospital and medical specialist expenditure is of enormous concern.

Re-examining the current model

The current 'model' of medical insurance vs. health benefit therefore needs to be re-examined, especially when it pertains to the Prescribed Minimum Benefits (PMB). The PMBs, introduced in 1998 by way of the Medical Schemes Act were a laudable attempt to ensure that medical scheme beneficiaries have access to essential hospital and chronic care. But despite this the cost of private care has soared in the last decade. However, the problem is not just of soaring costs but allocational inefficiencies in private sector financing arising from, amongst other things, disproportionate use of hospital and specialist services.

The pattern of health care utilisation is arguably influenced by the general benefit structures of existing products in the industry and the legislated Prescribed Minimum Benefits which seem to emphasise hospital and specialist services.

Supplier and consumer induced demand

The concept of a standard, basic set of health services provided by every medical scheme is a progressive one that we must not lose sight of, especially as we move towards a social health system, but while it is legislated that each and every medical scheme must cover these benefits in full, there is no legislation governing the tariffs for these benefits. This guaranteed payment, coupled with little or no competition in the market has had a seriously adverse effect on the cost of private healthcare and has created an environment of 'supplier and consumer induced demand'.

A good example of this is the high percentage of Caesarian Section deliveries performed in the private sector in SA now averaging approximately 65-66%, while sources in the public sector portray their rate at around 20% - in line with the international average.

In view of this, BHF has proposed the "Essential Healthcare Package" for consideration by Government. In essence, the benefit package consists of a set of revised PMBs and includes primary care components from the DoH Norms and Standards of Health Clinics (used in the district health system) to replace the current PMBs for medical aid beneficiaries.

Developing a basic benefit package

Consideration is given to recent policy developments which have placed emphasis on developing a basic benefit package (BBP) that will provide a safety-net for all and should at the very least provide a minimum acceptable standard of care without detracting from the principle of buy-ups and other mechanisms of funding higher levels of care.

Any regulated, mandated benefit package must take into account the differing demographics, economic and cultural status, varying health risks and burdens of disease to ensure equity. The BHF proposal therefore addresses relevant social governance principles and integrates a primary healthcare package with referred care benefits in order attempt to address the local burden of disease.

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