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Private Sector Investment in NHI is critical

01 April 2013 Olabode Olajumoke, Aon Hewitt

Lack of budget clarity on funding model could spell further delays.

The budget speech briefly mentioned plans for the roll-out of the NHI, stating that the initial phase of the NHI development will not place new revenue demands on the fiscus. But in the long term, it is anticipated that a tax increase will be needed once the plan starts rolling.

"The budget’s mention of the establishment of a contingency fund was not earmarked, but the expectation is that this could be used towards building more capacity towards the NHI rollout,” says Olabode Olajumoke, employee benefitshealth actuary at Aon Hewitt South Africa. "This lack of clarity could suggest that the implementation of NHI may be set back further by a number of years.”

The private sector therefore needs to offer its own solutions as to how the NHI could work. Challenges include funding and infrastructure development.

The private sector plays a vital role

There has been fierce debate within the private healthcare sector since the South African government announced plans to implement the NHI. But the private sector – including hospitals, healthcare providers, consultants and medical schemes – simply cannot afford to sit back and adopt a wait-and-see approach.

"All have valuable knowledge that can be used to mould NHI into the current healthcare structures. The South African private healthcare sector can easily compete with that of many developed countries, so it is critical that these skills are utilised properly and not laid to waste,” says Olajumoke.

There needs to be transparent dialogue with all stakeholders in order to determine what is feasible and what can be done to ensure that the process runs as smoothly as possible. NHI committees are currently working with both the private sector and government to this end. "The outcome certainly needs to address concerns regarding provider reimbursement arrangements, lifestyle habits leading to high risk medical claims and fraud, among others,” Olajumoke asserts.

One-size-fits-all approach will not work

The successful implementation of NHI hinges upon two vital factors: Money and putting the right systems and structures in place from the outset. The first implementation of NHI may not be immediately successful, as there are bound to be teething issues, but there is no question that the NHI will require a complete overhaul of the current crumbling public health system.

To determine how NHI will work in different locations is also tantamount to its success.

"A one-size-fits-all approach will not work. Clinics in remote areas will have more cases of malaria or HIV, while in metros, cancer and TB are likely to be significant risks. The upgrade of inefficient medical facilities should be first paramount on the agenda,” says Olajumoke.

Learning from Africa

Olajumoke says we can learn a great deal from the methodologies employed in the rest of Africa as many countries such as Nigeria and Kenya have already introduced some form of medical benefit to their citizens. South Africa is perhaps better equipped to meet the healthcare needs of the country, given its larger economy and the resources at its disposal.

The Nigerian government introduced a form of NHI for basic income groups, which is expected to later be rolled out to students and then to other demographics. In Kenya, the government rolled out a scheme to cater for the healthcare needs of the lower income bracket.

"Both of these schemes were income-means based, which seems to be the fairest and most practical way to fund such a model. While the introduction of health insurance schemes in both Nigeria and Kenya should be welcomed, neither is working optimally, due to rising costs and inefficiencies in medical delivery,” says Olajumoke.

The escalating cost of healthcare is one of the biggest challenges of properly funding viable medical benefits in both Africa and globally. This is related to the rising cost of provider fees and importation of medical equipment and drugs.

"Now is not the time to take a wait-and-see approach to the health crisis facing our nation. There needs to be robust and constructive debate with actionable plans between the state and the private sector,” concludes Olajumoke.

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