The South African government is taking its first steps towards implementing a social security system. A social security tax will be introduced in 2010 to provide basic pensions, disability benefits and life cover to all of its citizens. Recent developm
It remains to be seen exactly how the system will be implemented. One possibility is that a national healthcare system will be formed on the back of the social security system. This system would be funded by increasing the income deduction made from individuals by way of the social security tax.
While the Department of Health is moving toward a national healthcare system, governments around the world are facing up to the fact that the provision of such services to all are simply too expensive. As example, the United Kingdoms National Health Service (NHS) faces numerous problems in providing satisfactory healthcare to all its citizens.
World governments running the other way
A global report compiled by PricewaterhouseCoopers (PWC) predicts that private health insurers will play a larger role in the provision of healthcare services in the future. The report is titled: "Health choices: The Changing Role of the Health Insurer."
Jannie Prinsloo, SA healthcare industry leader said: "We are seeing a worldwide trend to expand the role of private insurers. Taxpayers are losing faith in the ability of governments to fund and provide healthcare."
The report also notes that the international trend is for substitutive schemes, where publicly funded health care is being replaced by private cover. In South Africa, there are some 131 private medical schemes covering the lives of some 7 million members, indicating we already operate in this arena.
PWC estimates that healthcare spending in major developed countries will reach 16% of GPD in the coming years. South Africa currently spends around 8% of GDP, with government chipping in 40% and the private sector the balance.
Small insurers might fall by the wayside
Another trend identified by PWC is the importance of scale. It is likely that a great deal of consolidation will occur in the South Africa private health insurance industry.
Larger schemes are able to bargain for better deals with healthcare suppliers - thus improving their competitive advantage over other schemes. The result will be a sharp reduction in the 131 schemes currently operation.
A case in point is Discovery Health, which is by far the largest medical insurance scheme in South Africa at present. With more than 2 million lives, Discovery is 6 times bigger than any of the next 15 biggest health insurers.
The best mix of private and public benefit
South Africa can be commended for including access to healthcare services as a basic right in the constitution. The problem is that supplying this basic right is nearly impossible. Only 15% of the population is currently covered by private healthcare insurance, so government's effort to regulate premiums and cover is not helping a large chunk of the populace.
The solution will come in the form of a regulated national health insurance scheme. All taxpayers will have to contribute to the scheme with wealthy individuals no doubt contributing to both state and private healthcare insurance schemes.
Deborah Flannery, healthcare industry specialist for PWC sums up: "In South Africa, private health insurers are not just interested observers of the national debates over healthcare financing. The business of health insurance is integrally linked with our social policies. Reform is on the agenda, in SA and elsewhere, and will redirect and redefine the role of health insurers."
Editor's thoughts:
Government appears to be tacking the issue of healthcare on two fronts. First, they are regulating private healthcare in an attempt to pool funds and provide same benefits for all. And second, they are pushing ahead with a national health system. If you have any other ideas for a workable solution, send them to gareth@fanews.co.za.
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