DRUG makers like Eli Lilly, Merck and Novartis are competing to offer discounts of 12%-50% on prescriptions for elderly people under the Medicare plan that began yesterday.
Government is investigating a proposal to create a single compulsory medical aid scheme for its 1,1-million employees, which would have major implications for the healthcare sector and the medical aid industry. Private medical aid funds would potentially lose thousands of their members while medical aid brokers, who rely on state employees as a major source of their commission income, would be forced to find new markets. Also, a significant shift of medical aid funding from the private health sector to public hospitals and clinics would occur, as the scheme would be structured in a manner to make optimal use of the public health sector. An interdepartmental task team has been investigating the proposals, and final research by outside experts is under way. The public service and administration department is expected to finalise its recommendations for submission to the cabinet later this year and, if accepted, it will enter into negotiations with trade unions in the hope of implementing the plan from next year. High-income employees, who would be forced to leave their chosen private medical aid to join the state scheme, have already expressed resistance. Details of the proposals were presented yesterday by the department's chief negotiator and senior manager of labour relations and negotiations, Kenny Govender, to Parliament's public service and administration portfolio committee. About 400 000 of all government employees and their families have no medical aid cover because they cannot afford it. The rest belong to 61 private sector funds of their own choice, to which the government as employer pays a contribution. Govender said uncovered employees posed a financial risk to government, which never knew when these employees would take on medical cover, at which point government would have to start making contributions. The continual rise in private medical aid costs was also a drain on government and had to be contained. (Source: Linda Ensor: Business Day, 28 January 2004) Link \//\ HEALTH INSURANCE AND THE POOR IN LOW INCOME COUNTRIES http://www.hospitalmanagement.net/ihfdocs/health_insurance_in_low_income... Government is investigating a proposal to create a single compulsory medical aid scheme for its 1,1-million employees, which would have major implications for the healthcare sector and the medical aid industry. Private medical aid funds would potentially lose thousands of their members while medical aid brokers, who rely on state employees as a major source of their commission income, would be forced to find new markets. Also, a significant shift of medical aid funding from the private health sector to public hospitals and clinics would occur, as the scheme would be structured in a manner to make optimal use of the public health sector. An interdepartmental task team has been investigating the proposals, and final research by outside experts is under way. The public service and administration department is expected to finalise its recommendations for submission to the cabinet later this year and, if accepted, it will enter into negotiations with trade unions in the hope of implementing the plan from next year. High-income employees, who would be forced to leave their chosen private medical aid to join the state scheme, have already expressed resistance. Details of the proposals were presented yesterday by the department's chief negotiator and senior manager of labour relations and negotiations, Kenny Govender, to Parliament's public service and administration portfolio committee. About 400 000 of all government employees and their families have no medical aid cover because they cannot afford it. The rest belong to 61 private sector funds of their own choice, to which the government as employer pays a contribution. Govender said uncovered employees posed a financial risk to government, which never knew when these employees would take on medical cover, at which point government would have to start making contributions. The continual rise in private medical aid costs was also a drain on government and had to be contained. (Source: Linda Ensor: Business Day, 28 January 2004) Link \//\ HEALTH INSURANCE AND THE POOR IN LOW INCOME COUNTRIES http://www.hospitalmanagement.net/ihfdocs/health_insurance_in_low_income...
The advisory team set up by the health department to look at reforming tax breaks on medical scheme contributions has recommended not scrapping these subsidies as was widely expected and instead wants employees to pay an income-based levy as part of their medical scheme contributions. The team chairman, former Medscheme CEO Anton Roux, said the team was concerned that changes to the tax breaks enjoyed by employers who paid medical scheme contributions might discourage them from providing medical cover for their workers. The proposed levy would be used to fund the difference in cost between providing a basic basket of healthcare (called the prescribed minimum benefits) in the public and private sector. It was expected that the reforms would help lower the price of medical scheme contributions and enable low-income workers who use state hospitals and clinics to buy their own health insurance. The present system was inherently unfair, said Roux, as only high-income earners enjoyed much larger tax breaks on their medical scheme contributions. The effect was that the rich got a much larger health subsidy from government than the poor. The team's recommendations were the culmination of six months of industry-wide consultation with employers and medical schemes. The work was conducted in tandem with a team looking into setting up a Risk Equalisation Fund to share risk between medical schemes. The two teams had published their reports, which were to be scrutinised by an international team of experts at the end of this month, before being finalised by the department. Government hoped the reforms would not only make medical aid more affordable and attract new members, but would also stabilise the industry and make the overall the healthcare system more equitable. The fund's team recommended that government start a new risk-sharing system next year, which would do away with some of the advantages enjoyed by medical schemes with a high proportion of young members, who were generally healthy and therefore low risk and cheap to service. At the moment, people who belonged to schemes with an older age profile frequently paid higher monthly contributions for the same cover as people who belonged to a scheme with a younger profile, said the fund team chairwoman Heather McLeod, director of the Centre for Actuarial Research at the University of Cape Town. It's grossly unfair that if your employer puts you into a scheme with an older profile you pay so much more for the same benefit, she said. Under the proposed fund, schemes would be subsidised for their risk profile, based on a calculation involving the age of its members, and the number of members with chronic diseases, HIV/AIDS, and pregnancy. Schemes with many young and healthy members would pay into the fund, and those with older, sicker members would be paid out from the fund, helping drive down monthly contributions. McLeod said the fund would only cover HIV/AIDS, the prescribed minimum benefits, and deliveries. (Source : Business Day, 14 January 2004).
The South African Medical Association is hosting a conference on the Strategies for Survival of Doctors in South Africa to be held at Caesars Gauteng on September 20 and 21. The focus of this event will be on surviving medical practice within the confines of medical ethics, new health legislation and a Social Health Insurance System. International speakers include Dr Delon Human, secretary general of the World Medical Association, and Dr Jim Appleyard, president elect of the World Medical Association. Prominent local speakers include are Dr Ayanda Ntsaluba (DG of Health), Prof TJ Mariba (HPCSA president), Justice Albie Sachs, Ms Brenda Khunoane (Director Social Health Insurance), Dr Siva Pillay (Council for Medical Schemes), Minister Geraldine Fraser-Moleketi, and Mr Clem Sunter. Enquiries: Magda Naude on firstname.lastname@example.org or tel, 012 481-2042, fax 012 481-2100. or email@example.com Registration fee: R1 995 (incl VAT) SAMA members, R2 565 non members. Registration form and programme @ http://www.samedical.org.
Medical Research Council
This report is the result of two inextricably linked processes at the Centre for Health Policy. In 1992, the Centre produced a proposal for financing a National Health Insurance Fund. In the context of this work, it became clear that among other things, there was an insufficient understanding of the cost of primary health care (PHC). The Centre began to develop a research protocol that aimed at studying the cost of PHC in different delivery models such as public clinics, private general practitioners (GPs) and in health maintenance organisations (HMOs), and feasibility of an essential package of PHC services that could be available to all. When this project began, few costing studies of primary health care facilities had been undertaken in South Africa, the notable exceptions being a comprehensive costing of Diepkloof Community Health Clinic in Soweto (1991) and a costing analysis of Alexandra Health Centre (1992). The cost of providing primary care (PC) either through public or private sector facilities had not been well researched, and yet the kinds of decisions that were required about the delivery of health care depended to a great extent on what care was affordable.
Complaints about our health service abound. Even in the Western Cape, which spends more on health per person than most provinces, problems have been arising thick and fast. Clinic queues are so long that patients wait hours for a five-minute consultation with a doctor - inadequate time for a proper diagnosis. Stocks of life-saving drugs have at times run dry at clinics and hospitals, and patients have been sent home without medicines for life-threatening illnesses. Tertiary hospitals have been running out of money and cutting services, including bypass surgery and immediate operations for all cancer cases. We are told that healthcare is our right, yet the country's public health system seems to be failing us. Why? The Western Cape health department argues that the national health budget is inadequate and the health system is inefficient. Academics and health researchers agree. Institute for Democracy in South Africa health researcher Alexandra Vennekens-Poane, who has completed extensive analyses of the health budget, finds that we spend more on health than other countries do, yet we are a far sicker people. The average South African spends 18 years in poor health, the World Bank reported of South Africans in the years 1990 to 1998. These figures are likely to be worse now, given the rising number of people with AIDS. South African men on average lived until they were 47, and women until they were 57. In low-income countries, supposedly poorer than South Africa, health was better. The average man spent 13 years in poor health and died aged 55. Yet South Africa spends more money on health than poorer countries. We spent 3.3% of our GDP on health in the years 1990 to 1998, the World Bank found. In low-income countries, the figure was 1.2% on average, and in upper middle-income countries the figure was 3.4%. Vennekens-Poane calculated that on average R843 was spent last year on each South African who does not have medical aid. Three years ago the figure was R820, and in three years' time it will be R900 after adjustment for inflation. This seems to indicate that South Africans should be getting a fair health service. This is not the case. Provincial disparities remain enormous. The Western Cape spent R1 264 per person this year and Gauteng R1 387, while Limpopo spent R629 per person, Mpumalanga R717 and the North West R697. The disparities are decreasing, but differences will remain for the next three years. And the spending per capita does not tell the true picture for several reasons: they are based on 1995 medical aid membership figures; since then unemployment has risen and medical aid tariffs have soared. Far more people are likely to be using the government health service than is calculated for; there have been small yearly real increases in health spending per person, but HIV/AIDS is taking a huge toll; some hospitals are under-utilised. In the Eastern Cape, Mpumalanga and Limpopo, the bed occupancy rate in many hospitals is around 50% to 60%, the most recent government fiscal review says; the national health department's aim is that each person dependent on public health should visit a primary care facility three times yearly. We are far from achieving this aim. Last year, the average was 1.8 visits per person. This indicates that people are either going to hospitals, which provide a more costly service, or not getting treatment - in which case they are likely to land up in hospital later, with a more serious illness; and, on the one hand, the health budget is simply too small to meet people's expectations, and even to meet government's own expectations. On the other, the health system is not streamlined. I find it difficult to point to one particular thing, but there do seem to be inefficiencies, said Vennekens-Poane. Maybe it's a combination between these inefficiencies, the number of patients with AIDS-related illnesses and free primary healthcare all having to be catered for, without significant increases in the health budget. Vennekens-Poane found that health expenditure per person is rising very slightly over the period 1999 to 2005 - an average of 1.6%, when inflation is taken into account. But the national health budget is not increasing in proportion with the total budget. Health spending is rising more slowly than other sectors, including housing and welfare. In the past three years, average growth in health has been 11% without adjusting for inflation. That of total government spending has been almost 4% higher, at 14.7%. The average annual growth in health spending over the next three years is expected to be 9.3% and the average annual growth of total spending will remain higher, at 10.4%. Vennekens-Poane calculates that consolidated national and provincial public health expenditure declined from 3.8% of the GDP in 1997 to 2.9% two years ago, and can be expected to stabilise at around 3.2% between 2003 and 2005. In a government-commissioned study, the National Health Accounts (NHA) project, academics including Di McIntyre of the UCT Health Economics Unit found that government healthcare funding boomed between 1992/3 and 1997/8, and then began to tail off. It was worrying, the academics wrote that problems experienced by large sections of the South African population in accessing healthcare services and enjoying quality care persist. It's very clear. The trend was established, and we are seeing nothing to suggest that it might change, McIntyre confirmed last week. The academics recommended in the study, which was published in the South African Health Review of 2002, that the government should reconsider the amount spent on health and the mechanisms by which it distributes funds to poor areas. Unless this is undertaken seriously, the earlier gains in healthcare provision made by the new government will be squandered, and patterns of service delivery on the ground will contradict stated government policy. Their predictions still seem to be coming true. Gerrit Muller, chief financial officer of the national health department, confirmed that the burden on health services was increasing but, after a leap in the late 1990s, the budget's growth had diminished. The health department was constantly pushing for a bigger budget and health spending was set to increase in coming years, although not dramatically so, Muller said. Provinces determine the range and structure of their health services, so national health has no control over efficiency in each province, he said. When Western Cape health MEC Piet Meyer delivered his budget speech earlier this year, the provincial health department made another argument for a bigger health budget. Provincial health chief Craig Househam said recently that the standards in the Western Cape were the minimum that one would aspire to. The Western Cape health department said it is trying to make its service more efficient by introducing Healthcare 2010, a plan to treat patients at a level of care that provides the best treatment at the least cost. The plan has been heavily criticised by tertiary hospital doctors. Healthcare 2010 may result in a diminished total package of services rather than a more streamlined system, as many academics predict. Whatever the merits of the plan, there is broad agreement on two scores. The national health budget should be increased and inefficiencies in the system must be ironed out. If this doesn't happen, health in South Africa is likely to limp on from one crisis to the next. - (Source: Jo-Anne Smetherham: The Cape Times, 27 August 2003)
Siyabulela Qoza of Sowetan Business spoke to Dr Penny Tlhabi, managing director of the Board of Healthcare Funders of Southern Africa, 25 August 2003. How has the industry transformed over the years? The healthcare industry generates about R40 billion a year with about half of that going to the private side of the business. In terms of consumption, this constitutes about 8,5% of gross domestic product. Most of the transformation has happened at the level of people served. People who earn more than R5 000 a month are well served and there are opportunities in the market of people who earn less money than that. Only about 10% of people in the market belong to medical aid schemes. White men still mainly control the schemes but there is movement taking place. Whether this movement is enough, or fast enough, is another question. Women are opting out of the industry because the working hours are not flexible. The training programme for specialists is not friendly to women. What are the opportunities for black economic empowerment within the industry? There are limited opportunities at the medical aid schemes level except for the administrators. At the moment 10% of total healthcare spend goes to administrators. Private hospitals and pharmaceutical companies attract 33% each. Neither of these industries is within our jurisdiction. But we are interested in their transformation and are aware of what is happening. The Government is planning to put all its employees into one scheme. There is huge interest in the transformation of the administrators because the Government will enter into contracts with administrators to serve its 800 000-strong workforce. Is there a need for government intervention? The private healthcare industry can emulate the financial services charter. The initiative is driven by the private sector. Besides, people are likely to commit to it more if they feel they were championing the cause. Is there room for growth in the industry? There is a perception that the quality of care in public facilities is deteriorating. The result has been that people who would not think of buying private healthcare are joining medical aid schemes because of the higher standard of healthcare. There is a lot going for the private healthcare industry. We need to make sure people who can afford private care are on medical aid. What is the effect of HIV/AIDS on healthcare provision and what do you expect going forward? There is pressure on public facilities. They will struggle because there are estimates that 30% of bed occupancy will be taken up by AIDS-related illnesses. The effect is expected to peak between 20 10 and 2015. This pressure may burst schemes because people would be claiming more than they put in. Schemes have been coming up with innovative ways of dealing with this. Are industry regulations moving in the right direction? We can understand that the government had to transform the industry primarily because access to healthcare was skewed. But we differ with the government on the social health insurance route it has taken because of huge income disparities in our country. The government needs to ensure that there is enough space for the private healthcare to operate profitably. Based on earlier proposals, the Government seems to want to play a bigger role in the provision and financing of healthcare. If you look at the unemployed, there is a need for the Government's role but there should be room for the private sector to cater for everybody else. How solvent are the medical aid schemes? We will know that at the end of the month when we get a report on the industry report on solvency. Is healthcare affordable in South Africa? About 16% of the population has medical aid cover, meaning 84% of South Africans cannot afford healthcare cover.
Health care spending is at lower levels than seven years ago, Health Department director-general Ayande Ntsaluba said in Boksburg today. Speaking at government's primary health care conference and looking back at nine years of primary health care services under democratic government, Ntsaluba also raised issues including a lack of adequately trained staff and reliable medical distribution that could negatively impact on government's promised antiretroviral treatment rollout for all. Giving one of his last speeches as director-general before he leaves his post on Friday, Ntsaluba noted that, spending in 1997/98 and 1998/99 fell by over nine percent and four percent respectively. After this there was a slow and uneven recovery in spending to reach R33.8-billion in 2002/03 - which is less in real terms than the spending in 1996/97. There were large inequities between provinces, with some spending as little as R75 per capita and others R245 per capita - with at least R200 per capita considered desirable by national government. In part, he said, low expenditure rates reflected the inability of some provinces to attract staff to rural areas. This in turn will pose a challenge for metro and district municipalities which, he said, will fund and render environmental health services by July 2004. Indicating a growing health burden on provinces, he said too that provinces may decentralise other primary health care services to municipalities with funding coming from the provinces. Addressing areas that could impact on government's capacity to roll out antiretroviral medications to all as part of a universal treatment programme, Ntsaluba pointed out that many clinics were single nurse services and could not provide a full range of services. He said that two key pillars of effective medical service required more attention. One was effective data collection and the other reliable access to medication. This in turn has implications for the roll-out of antiretroviral medications which demand a reliable supply of medication, and so does sufficient staffing. He said that the department was developing mid-level workers in a range of categories. Training had already begun with pharmacy assistants and we are looking at a medical or clinical assistant category at present. Looking at positive aspects, Ntsaluba noted that government had built 701 clinics in the past nine years. This improved health services to more than seven million people in underserved areas. Nonetheless, he pointed out that primary health services had been extended to significantly more South Africans. (Source: Sapa, Business Day, 25 August 2003 )
Low-income earners are a vast largely untapped market for the medical schemes industry. At the recent Discovery Health / Personal Finance Health Wise seminars, Penny Tlhabi, the managing director of the Board of Healthcare Funders, discussed the challenges schemes will have to overcome if they want to attract low-income members. The Department of Public Service and Administration's initiative to start a single medical scheme for all public servants is expected to be a catalyst for extending private healthcare to low-income groups. The proposed government scheme will be able to contract with a number of administrators, and is expected to use its large membership to negotiate a viable low-cost option. There is talk that this low-cost option could later be opened to all low-income earners - not just those in the public sector. The key issues driving the need to develop low-cost options for low-income earners are: the government's desire to redress past imbalances and ensure that all South Africans have access to quality healthcare; the move towards employment equity in the workplace; trade unions' demands for equal treatment for all employees; and, the deterioration of public health facilities, which is stimulating the demand for private healthcare. In addition, low-income options present the only real opportunity for growth in the medical schemes industry, as the higher-income market is already saturated. Despite the need for access to medical schemes, there has been little growth in new membership. The number of people who belong to medical schemes has remained more or less the same: there were about seven million members during 2001 - an increase of only 0.23 percent on 2000. These seven million members represent only 16 percent of the South African population. The medical schemes industry is highly competitive, with a substantial number of members moving between schemes. Research conducted by the Board of Healthcare Funders (BHF) last year showed that only three out of the 10 largest schemes surveyed increased their membership base. Despite medical scheme industry estimates that another seven million people could join low-cost medical scheme options, the uptake has been very slow, with only about 150 000 people currently in such options. Also, a significant portion of these new members consisted of people moving from one scheme to another, cheaper scheme, or from a high- to a low-cost option within their scheme. Reasons why people are not joining schemes include: shrinking employment in the formal sector of the economy; the unaffordability of membership; and, falling disposable incomes. Obstacles facing schemes The main objective of the Medical Schemes Act is to ensure that vulnerable groups, such as the elderly and people with chronic conditions, have healthcare cover. The Act made open enrolment and community rating compulsory for medical schemes. Open enrolment means you cannot be turned away by an open medical scheme that you want to join. Community rating means that schemes cannot make you pay a higher contribution because of your health or age. A scheme may only differentiate its contribution rates on the basis of your income and number of dependants. The Act also introduced a basket of essential benefits that all schemes have to provide, known as prescribed minimum benefits. However, while the medical schemes industry supports the objectives of the Act, the implementation of the legislation has had some unintended consequences, because membership of medical schemes is voluntary. One of these unintended consequences is that prescribed minimum benefits have made low-cost schemes unaffordable for low-income earners. In terms of the latest regulations under the Medical Schemes Act, the prescribed minimum benefits will be extended from January 2004 to included 25 common chronic conditions. In the past schemes have structured their benefits in such a way that many members who are in poor health are forced to join the more expensive options if, for example, they want to access chronic medicine benefits. This has forced members who cannot afford to pay the higher rates to buy down into the lower-cost options. As a result, the low-cost options have a lot less healthy members and their claims soar. The ultimate consequence of this is that the contributions on these options increase, making them less affordable. The Act requires that, by the end of 2004, schemes keep 25 percent of their gross contributions in reserve. Schemes have had to increase contributions to meet the reserve requirements, and these requirements do not take into account the real level of financial risk that schemes face. This is a highly significant driver of costs and it does not encourage growth in scheme membership. Other challenges facing medical schemes include: a growing burden of diseases such as tuberculosis, HIV/AIDS and malaria; a shortage of medical specialists in South Africa; and, a lack of competition among healthcare providers. The growing concentration of power among providers has made it difficult for schemes to enter into contracts with specialists and private hospitals. There is also a lack of hospital networks that are willing and able to manage the risks faced by medical schemes and, ultimately, members. This prevents low-cost options from lowering their costs by, for example, entering into a contract with a hospital in terms of which the hospital will treat its members for a fixed fee per day or per operation, and in this way share the risk between the scheme and the service provider. Costs in the private aging healthcare sector are increasing dramatically - between 1982 and 1997, the increase in real terms was 517 percent. These increases are being driven by the cost of new technology and drugs, the population and the fee-for-service system. (In the fee-for-service system, members pay a fee, set by the healthcare provider, for services they receive. Schemes and members have little control over the fee and there is a tendency by the service providers to overservice.) There are no real incentives, such as tax breaks, for low-income earners to belong to a medical scheme rather than rely on public healthcare.What is needed for low-cost schemes to succeed? A new business model must be developed for low-cost medical schemes so they can become viable. The model will require schemes to forge strategic partnerships with carefully selected healthcare providers on the basis of a shared vision, the ability to practise cost-effective medicine and integrity. The most important issue is the quality of the providers in the network. Another critical issue is information systems and how information is used to develop incentives for providers to practise cost-effective care.Measuring the quality of healthcare is also very important because, if used inappropriately, risk-sharing models may affect the quality of care of members. For example, if a doctor is paid a fixed fee per month to service all the members of a particular medical scheme, he or she may be incentivised to underservice his patients in an effort to maximise his profits. Incentives for administrators, consumers, schemes, and providers should be aligned through risk-sharing so that each one assumes a portion of the risk. It was also necessary for low-cost schemes to provide innovative, pro-active and well-managed HIV/AIDS benefits, and innovative benefits based on clinical best practice rather than crude financial limits, and for there to be incentives, including tax subsidies, for employers and employees to obtain and retain medical scheme cover. The use of co-payments and deductibles (where members pay a portion of the account) - where appropriate - for elective procedures, is important to expose consumers to the costs of healthcare and encourage them to act prudently. Furthermore, education programmes for members that enable them to make informed choices are critical to the success of these products, In conclusion there is definitely is a business opportunity for low-cost schemes, but it requires innovation and a can-do attitude. (Source: Personal Finance, 16 August 2003).
The groundwork is being laid this month for far-reaching changes to healthcare in South Africa that will put it on a par with developed countries in Europe. They will start with a National Health Act expected to be passed by parliament next month. It is aimed at a uniform standard of public health services throughout the country. Meanwhile, plans are being made to set up a new government medical aid scheme by 2005 to which all state employees, and possibly other people, will belong. Ayanda Ntsaluba, the director-general of the department of health, said at a recent conference that the tax subsidies now received by employers contributing to private medical aid schemes for their staff might be reduced, while more would be spent on those using public health services. It is intended to make membership of a medical aid scheme mandatory for all employed people in about three years' time and the government is investigating ways of making these more affordable for those in low-income groups. All medical aid schemes will contribute to a risk equalisation fund to compensate schemes with large numbers of high-risk members. Public hearings on the National Health Bill will be held in parliament on August 18 and 19. But the bill does not cover the proposals for health insurance, which are being dealt with by officials in several ministries. Kamy Chetty, the deputy director-general for health, explained that the bill did not duplicate the British National Health Service but created a uniform structure for public health services throughout the country. It covers a wide range of subjects, from protecting the welfare and safety of young men attending traditional initiation schools to stipulating the number of beds in hospitals and ensuring the confidentiality of individual health records. It gives the minister of health additional powers to ensure there are adequate education and training facilities for healthcare personnel, and enabling a co-ordinated relationship between private and public health establishments. Jo-Anne Collinge, the director of communications at the department of health, said the bill introduced a unitary system, but many of the structures it incorporated already existed and therefore did not call for new financial arrangements. There would be a bigger overlap between public and private medical care, as people belonging to medical aid schemes paid to make use of facilities in public hospitals. Two task teams have been set up to consult stakeholders about changes to the subsidy paid to employers and the establishment of a risk equalisation fund. They are due to report back in six months' time. (Source: Business Report, 6 August 2003).