Law

Companies in South Africa could lose about 15% of annual profits to HIV/AIDS by 2008, the most recent impact study shows. Boston University researchers point out that South Africa is already losing 5% of its labour force each year due to disease - enough to raise concerns among foreign buyers of local products. The findings, presented recently by the American Chamber of Commerce, found the total cost to the SA economy could soon be an annual reduction in the growth rate of between 0.3% and 0.4% - at a cost of R167-billion. The study says comprehensive treatment could significantly reduce this figure. At the current treatment cost of around R860 a month per person (down from about R4 860 four years ago), it would make sense for employers to pay for treatment to extend employee productivity. They should also set up prevention programmes. Researchers advise companies to increase their spend on medical expenses, which currently amounts to on average 13% of labour costs. The figures are based on estimated workforce HIV infection prevalence of between 10% and 30%. The direct costs of AIDS include absenteeism, lost productivity, hospitalisation and replacing workers. HIV infections may cost companies between 2% and 6% of salaries a year. Companies were also considering relocating within South Africa to areas with lower HIV prevalence rates. A recent study of workplace Aids and employee benefits by the Wits University Centre for Health Policy warned that businesses needed to counter the notion that the HIV/AIDS threat was mitigated by the ease of substitution of unskilled or semi-skilled workers. Figures showed that by 2010 about 15% of highly skilled workers would have contracted HIV. (Source: Business Times, 12 May 2002)

If parliament adopts new regulations, drafted by the Council for Medical Schemes, that would extend compulsory benefits, members of medical schemes will ultimately have to pay for such benefits. This is according to Sarah Bennett, a healthcare actuary at NMG-Levy Consultants & Actuaries. The draft regulations were published in the Government Gazette last week for public comment. Bennett says although the council's proposal to add 20 common chronic conditions to the list of prescribed minimum benefits would be to members' advantage, it would also cost them more. In many cases, chronic medication is currently only available in the more expensive options within a medical scheme. Bennett says medical schemes have used chronic medication benefits as a method of rating members according to the financial risk they pose, which is against the spirit of the Medical Schemes Act. The Act aims to encourage community rating, whereby young and healthy members cross-subsidise the elderly and sickly. Bennett says currently schemes must cover prescribed minimum benefits at public hospitals only. The draft regulations stipulate that if public facilities are not available or are full, prescribed minimum benefits must be covered in private hospitals. The council has proposed that the following conditions be added to the list of prescribed minimum benefits: voluntary HIV testing and counselling; the treatment of HIV/AIDS conditions; the prevention of mother-to-child-transmission; screening and preventative therapy for tuberculosis; the diagnosis and treatment of sexually transmitted diseases; pain management for the terminally ill; and preventative treatment following sexual assault. Some medical schemes already provide cover for these conditions. Bennett says that, for schemes that do not, extending the benefits is likely to result in a small increase in costs. Bennett says the council's proposal to allow members to use an affidavit, rather than documentation from a medical scheme, to show that they were previously covered by a scheme is likely to be contentious. Another contentious proposed clause prevents members from accumulating benefits from one year to the next, except for funds held in a medical savings account. (Source: Personal Finance, 12 May 2002)

The Committee of Inquiry into a Comprehensive Social Security System has proposed that SA move towards a national health insurance (NHI) system in which everyone, except the poor, contributes to the cost of providing universal healthcare. Presented to Cabinet last month, the committee's report covers many social security issues, including the idea of a basic income grant. Cabinet will consider input from relevant ministries before making the final decision on the report. Rather than advocate a big bang approach, the health subcommittee proposes that change be achieved gradually in four phases, starting in 2003. In phase one, the reforms involve containing costs in the private sector and raising the quality of public hospital services. Both are huge undertakings that are likely to take many years, but the model allows only one year before beginning phase two. This phase proposes a closed, compulsory medical scheme for all 1m civil servants, compared with 450 000 at present. Phase two should see the establishment of a risk-equalisation fund to redistribute funds from schemes that have a good risk profile (many young and healthy members) to those with a poor risk profile. The aim is to reduce the cost of medical aid by eliminating any residual risk selection from the market. With this proposal goes the transformation of the current tax subsidy to employers and employees with medical aid (worth R7,8bn/year for 7m people) into an income and risk-adjusted subsidy. Government spending on health (about R33bn/year) plus this R7,8bn subsidy will be pooled in a central fund and disbursed on a per capita basis to the whole population. The rich, young and healthy will receive a smaller subsidy than the sick, old and poor. Those using the public health system will receive the subsidy in kind and those belonging to medical aid schemes will receive discounts on their medical-aid contributions. The report recommends the tax system be restructured in this way to allow for the greater pooling of risk. Phase three (starting in 2005) focuses on creating a contributory, voluntary scheme for those with jobs but no medical aid. It will help to establish the institutions in government that will ultimately manage a public sector contributory scheme within an NHI framework. It will give members an enhanced public health benefit. The poor will receive a basic health benefit for free. In phase four (starting in 2006), low-income earners will be compelled to make contributions to an NHI fund as will all middle- and high-income earners. The latter will also pay contributions to schemes, which they will be compelled to join. Health economist Alex van der Heever, who chaired the health subcommittee, says this proposal should not worsen unemployment by increasing the cost of labour. He says about 70%-80% of this group already belong to schemes and only large employers will be targeted. Also, medical aid will be cheaper because of the reforms made in the earlier phases. Employers of low-income earners will not be affected as, unlike in previous social health insurance proposals, this group will not be compelled to take out medical aid. Like other employees, low-income earners will contribute to the NHI fund from personal income tax. The NHI fund will be funded through earmarked taxation, rather than general taxation, the current source of public health finance. (Source: Financial Mail, 17 May 2002)

The Competition Commission is set to probe tariff setting by the Hospital Association of South Africa, various independent practitioner associations representing doctors, and the Board of Healthcare Funders (the body that represents the medical scheme industry), says Advocate Menzi Simelane, commissioner of the Competition Commission. The Board of Healthcare Funders sets tariffs as a guideline but the upper end of these parameters tends to become a minimum. Service providers charging less are often ostracised, and relationships between parties in the industry perpetuate inefficient allocation of resources, not to mention spiralling costs. Many of these issues were highlighted at the Board of Healthcare Conference held this week in Swakopmund. Price setting between large provider groups - hospitals and medical practitioners - and healthcare funders remains clubby, with restricted competition, high profits and little incentive to reduce costs. The fee-for-service reimbursement model, whereby patients pay for every medical service at market-related rates, encourages over-servicing by providers. The more you do for a patient, the more you earn. Pharmaceutical costs make up a large part of the healthcare spend and these continue to rise. Branded pharmaceutical groups seek to protect their turf and oppose the use of generics. Groups lobby together when faced with the threat of discounts. Pharmacists, for example, boycott medical schemes when they try to impose discounts. Healthcare professionals cry foul when funders seek to restrict costs by imposing restrictions on choice. The objectives of the government's health policy are to broaden access to affordable healthcare and address growing inequities between the public and private sector, but progress has been negligible. In addition to private sector participants fighting for a larger chunk of the turf, the public and private sectors blame each other for not broadening access. Jonathan Broomberg, a director of Praxis Capital, points to problems in both government policy and the private sector as contributing to these trends. He says public policy has been unfocused and too broad in scope. For example, prescribed minimum benefits have had the unintended effect of raising the cost of entry for the employed and uninsured. In the private sector, there are few examples of genuine innovation such as provider risk-sharing models and similar mechanisms used overseas. Providers and funders remain comfortable with the present arrangements. This entrenches cost inflation and lack of access by uninsured people, says Broomberg. Partnerships between the private and public sectors have also been slow to get off the ground. Meanwhile, the system faces other challenges. Most doctors and dentists work in the private sector, providing services to a small, affluent minority and leaving most of the population out of the net. The population is ageing, which means there are fewer young people entering the system to cross-subsidise the older and more sickly. Health insurance makes up a rising proportion of payroll costs and employers are reluctant to increase their contribution levels. There is consensus that the industry needs a more effective mechanism to deliver healthcare to the consumer. Talks are taking place between some of the larger funders and providers in this regard. The overall impression from the conference is that the industry needs an overhaul to focus on containing costs, and that a more trusting relationship between providers and funders is needed. If this cannot be achieved, role players will continue to fight to obtain a larger slice of the pie as parties protect their own stakes at the expense of the long-term interest of the system. (Source: Business Times, 12 May 2002)

About 80% of firms expect HIV/AIDS to have a moderate' to extreme' effect on operations. Almost 70% of SA companies have a formal HIV/AIDS policy, according to an employer survey conducted by Deloitte & Touche Human Capital Corporation and released today. A total of 67 organisations from across a wide spectrum of economic sectors participated in the survey, which was conducted last year. According to the survey, about 80% of organisations expected that HIV/AIDS would have a moderate to extreme effect on their operations. The survey showed that about 14% of employee deaths in 2000 were ascribed to HIV/AIDS, while 15,8% of compassionate leave granted related to the disease. From 1998 to 2000, HIV/AIDS-related compassionate leave grew from 8% to 15%. Brian Brink, a senior vice-president at Anglo American, said the survey was useful and the information was important in terms of gauging business responses to HIV/AIDS. He said the big question was whether business was responding adequately to HIV/AIDS. The survey found that about 72% of employers offered HIV/AIDS awareness programmes. About 47% of organisations made attendance at these programmes compulsory and 35% offered the programmes beyond the workplace to families and the community. According to the survey, the cost of medical scheme premiums was the most important reason cited by employers for changing medical schemes. Employers estimated that medical scheme premiums accounted for about 13% of payroll last year. About 82% of respondents' medical schemes have implemented disease management systems and HIV/AIDS benefits were typically limited to between R15000 and R48000 a year. Employers tended to offer early retirement or alternative employment to AIDS sufferers, and most offered financial assistance for counselling if the sufferer made a disclosure. The survey showed that employers were beginning to defend their payrolls against medical scheme premium increases by shifting more risk to employees. About 21% of the respondents envisaged the HIV/AIDS pandemic would have an extreme impact on their organisation, 58% envisaged a moderate effect, while the remaining 21% saw little or no effect from the disease. Few organisations have conducted any form of testing among their employees, with 9% having conducted anonymous saliva testing and 5% conducting anonymous blood screening. Of those organisations that have implemented workplace testing, about 60% of employees participated and of these an average of 7% tested HIV positive. Where tests have not been conducted, 16% of the organisations indicated that this was due to unions refusing to allow members to be tested. About 40% of organisations have changed medical schemes in the past three years from 1999 to 2001. The major reasons for changing schemes were increasing costs and lack of service. About 79% of respondents contributed to the medical scheme for all employees and 21% contributed for some employees only. Where companies did not contribute to an employee's medical scheme this was usually because the employee could not afford to belong to a medical scheme. In some cases the organisation would then provide some form of occupational healthcare. The majority of medical schemes of respondents have an HIV/AIDS disease management programme. Two thirds of the participants' medical schemes limited or capped the treatment of HIV/AIDS. Medical schemes typically allowed up to R25000 a year for AIDS treatment. However, the reported range was wide, from R15000 to R48000. The survey reported that 81% of organisations would adapt the workload of employees with HIV/AIDS or provide them with alternative positions as their health declined. Organisations would typically offer the employee early retirement or provide an alternative position, allow the employee to work flexible hours, or set up a home office. (Source: Business Day, 17 April 2002)

The private healthcare sector was hurtling towards breaking point, where it would become impossible for the average family to afford medical cover, according to Gerrie van Zyl, the chief executive of Healthbridge. A three-person household taking home R10 000 after tax, at an average salary growth of 9 percent, would have to spend all their earnings on contributions towards a medical aid scheme by 2018, if the current pace of medical inflation (23 percent) continued, Van Zyl said. This kind of family was the bread and butter of most medical schemes, he added. Using the same assumptions, they could end up spending at least 20 percent of their earnings on medical AIDS by 2004, growing to 30 percent by 2007. There were two main drivers of medical costs - administration and clinical costs, Van Zyl said at the National Healthcare Structure Symposium in Midrand. Both relied on the efficient flow of accurate information when decisions were made on which treatment a patient needed. The Internet had managed to slash costs for hospitals and general practitioners by using real-time information to process claims, validate a member's benefits and submit electronic remittance advice, he added. Medical inflation has skyrocketed since the 1990s. In most organisations, health costs escalated from under 4 percent of the payroll in 1985 to between 14 and 20 percent in 2001, according to Agatha Pretorius, the managing director of Occupational Care South Africa. Employers, healthcare funders and care providers would have to create a partnership of co-operative risk sharing to clamp down on escalating health costs and safeguard the general well being of employees. Steve Jooste, a consultant for Medscheme, said pressures had created an environment where unrestricted use and cost of resources could no longer be subsidised by contribution increases. This would usher in a new era, which would be dominated by the identification, evaluation and management of financial and clinical risks. (Source: Business Report, 30 January 2002)

The Health Systems Research Unit at the Medical Research Council, South Africa's pleased to announce a three-day training course: Ran- domised Controlled Trials.

Randomised controlled trials are the most reliable way to evaluate the effects of an intervention, be it a drug, a new technology, a new way of training health care providers or organising health care.

Do you plan to evaluate an intervention? Would you like to learn more about the most reliable way to undertake an RCT? From among the most experienced triallists in the world? In December a team of triallists from all over the world will be gathering in Cape Town, to discuss ways of improving the design, con- duct, use and usefulness of RCT's. All are members of the PRACTIHC group, a European Union project to develop techniques for widening the use of pragmatic RCT's in health care decision-making. As part of this meeting the group will be offering a training course in RCT conduct.

The course is open to all. There is no cost for the training course itself for participants from developing countries. The course fee for developed country par- ticipants, or employees of agencies able to sponsor such training will be R5000. Participants will in general be expected to cover their own travel, subsistence and accommodation costs.

The course will cover all the stages of designing a trial and preparing a protocol. The structure of the course will follow that logic, and participants are expected to bring along a question which they wish to use as the basis of an RCT. The learning objectives of this course are to familiarise participants with the purpose, terminology and concepts of randomised controlled trials, and to encourage them to undertake trials which are relevant to priority health and health care problems.

Enquiries or applications is mailto:mandy.salomo@mrc.ac.za or by Fax to Merrick Zwarenstein +27-21-938-0483

Corporations like Woolworths, Pick 'n Pay and SA Breweries started programmes to deal with HIV/AIDS in their workplaces in the mid-1980s, but in some cases started to see real breakthroughs only recently. At a breakfast for Cape business leaders hosted by the City of Cape Town yesterday, Wendy Ackerman, director of Pick 'n Pay, said that her group had been offering treatment for pregnant mothers for some time, and it was little used. It was only after the group made a video for its internal television, which was flighted last month, that people started to come forward and respond to the treatment being offered. In KwaZulu-Natal, for example, the company was losing one or two employees a month as a result of AIDS. Woolworths CEO Simon Susman said that although Woolworths began its HIV/AIDS programme in the mid-1980s it acquired more concrete information in the 1990s and decided to take its programme into the wider community. It distributed thousands of condoms a year, and had trained 143 people in its peer education programme to become knowledgeable about AIDS and talk to communities. From a corporate point of view, said Susman, the AIDS programme was made a responsibility of the risk-management committee, which received quarterly reports. Dennis Coetzer, Western Cape MD of SA Breweries, said AIDS was a strategic issue for the group, and it had realised that it needed to devote adequate resources to it. The group had conducted an attitudes survey among employees and had found the majority of respondents still believed it was easier to get Aids from mosquitoes than sexual activity. This year SA Breweries had set aside four training hours for each employee as part of its AIDS awareness programme. 9Source: Business Day, 28 November 2001)

The Health Economics & HIV/AIDS Research Division at the University of Natal, Durban held the last seminar of its 2001 series on Tuesday, 20 November 2001. The seminar, presented by Patrick Connelly from Boston University, looked at the cost of treating HIV/AIDS with ARVs in South Africa, and was based on the findings from Connelly's recently completed MPH thesis. Connelly's presentation summarized and categorized these studies into studies based on modeling (projections) directed at government policy makers (public sector), cost analyses undertaken by the mining sector, and actual cost per patient data produced by disease management schemes (private sector). Following are some of the findings from the paper: (a) Studies projecting the cost of ARVs in the public sector - Abt Associates produced a report in November 2000 for the National DoH that projected the costs of treating PLHA with ARVs in the public and private sector. It remains confidential. - Futures Group will complete a study estimating the cost and cost effectiveness of the use of ARVs in the public health sector in November 2001 for the National DoH. - The Social Security Committee of Inquiry will complete a policy oriented cost study in November 2001. - The Treatment Action Campaign (TAC) is collaborating with other researchers to estimate the costs of using ARVs in different interventions in the public health sector in order to influence government policy. The study is expected to be complete in January 2002. (b)Mining Industry - The Chamber of Mines projects the cost of treating an HIV infected employee over a period of ten years to be between R70-80,000. - DeBeers has completed cost estimates and will make a decision in December whether to provide ARVs to all employees. - AngloAmerican will offer HAART to senior management and will also conduct a pilot study to determine the feasibility of expanding HAART. Anglo currently considers R1500 a month for HAART unaffordable and a wide scale programme too difficult to implement for all employees. (c) Disease Management Programmes - Aid for Aids (AfA) reports HAART treatment to be approximately R1850 per month. - QUALSA reports treatment costs are between R26,467 and R38,484 per year. - Aids Management and Support reports an average cost of R26,976 per year. A recent decline in drug prices and the advent of the United Nations Global AIDS and Health Fund, make the possibility of HAART in the developing world more conceivable. However, multiple operational studies by all areas of the South African health sector are needed to find the most efficient method of delivery of HAART and to convince the leadership of the efficacy of ARVs. (Source: HEARD, University of Natal, Durban, 20 November 2001) The full paper is available at: ftp://ftp.hst.org.za/pubs/other/arv_costing.doc

Public sector health workers exposed to the HIVirus by accidental needlepricks are now guaranteed the right to state-sponsored tests and medication in terms of an agreement signed between the employer and labour unions this week. The Public Servants Association on Friday said he agreement would help save the lives of healthcare workers.