Universal health care

The People's Health Movement, a global network of civil society groups, researchers, activists and teachers involved in health, proposes the launch of a global campaign on the Right to Health. PHM would like to invite civil society organizations, interested individuals and groups to participate in discussing the possibility of hosting such a campaign in South Africa. It would also contribute to building civil society for the Third People's Health Assembly, planned for 2010 at an African venue (to be determined). This edition of Critical Health Perspectives sketches the background to the campaign and some of the thinking behind it.

Reports in recent weeks suggest that health care in SA is in crisis.

15 September 2000

Issues that were debated over the past weeks were:

We all know where the government is headed with health care. The question that begs answering is: where is the private sector going? Right now the private medical sector is merely responding reactively to initiatives by the state. Besides the implementation of managed healthcare in the 1990s, the private sector has taken few new initiatives. The ad-hoc manner in which managed healthcare was implemented in the fee-for-service environment resulted in such care failing to deliver the expected result - making services cheaper and more accessible. The state is determined to bring about a social health insurance environment. The response in the private sector has been a scurrying by medical scheme administrators to ensure they secure state contracts. Much energy goes into this, while not enough is put into cutting costs for the members of private medical schemes. The state's goal with social health insurance is to put a safety net of affordable medical care within the reach of all South Africans. The effect of this poses a large risk to the survival of private sector health care. In its attempt to provide cheaper medical care, the state is positioning itself as a service provider in direct competition with the private sector. The problem therefore is two-pronged. On the one hand, by regulating enthusiastically the state sometimes brings about results that contradict its own intentions. For example, there is open enrolment and community rating without introducing compulsory membership of a medical scheme. This led to anti-selection, which resulted in there being no cross-subsidisation between young and old, healthy and ill. On the other hand, the private sector is slowly killing itself through the different role-players' shortsighted protection of their own interests. There is nothing new in the private sector. It is still merely a fee-for-service environment because there are too many vested interests. Doctors and hospitals protect their income and profits. Nowhere is there a joint initiative that brings together doctors, hospitals, medical schemes and administrators to create a system that is affordable. The profitability of a service provider or group of service providers is directly influenced by the profit on medication and consumables. In the fee-for-service environment there is no incentive for the service provider to pursue cost-effectiveness to the benefit of the member. The more expensive the item, the greater the profit. The state's answer to the health industry's inability to limit costs is firstly to use its buying power by means of a central state medical fund and secondly to make available its infrastructure as a service provider for the delivery of health care to the private sector. Furthermore, it is the legislator's intention to prescribe by means of regulations what the benefit structure of a medical fund should look like and what the administrator should charge for its services. Healthy competition between private medical schemes on the basis of service and benefits is therefore thwarted. The state also plans to rectify inequalities in terms of the risk profile of schemes by means of a risk equalisation fund. A good medical scheme with good risk management will get less benefit from the fund, while the one with poor risk management will be able to get more money from the equalisation fund. The accountability of trustees will come under fire and there will no longer be an incentive to manage risks. The intended introduction of a single scheme for public servants and possibly also local authorities means administrators are currently scurrying to secure state contracts. Because state schemes could be opened to private members, this could lead to further shrinking of private medical schemes. To try to make health care more affordable it can be expected that private hospitals will increasingly take doctors into their service. The state's intention to introduce a statutory tariff for doctors and their being forced into networks of preferred service providers poses the threat of even more doctors leaving the country for greener pastures elsewhere. The private sector will have to get its house in order and not merely be reactive in response to actions by the state. It will have to create a delivery system that ensures there is room for the doctor. By changing its delivery systems and forming partnerships, the private sector can assure its survival and aid the state to provide poorer people with accessible health care. (Source: Herc Hoffman, Sunday Times, 29/06/2003) Hoffman is chief executive manager of Multimed

Cape Town A social health insurance system designed to close the gap between private and public health care should be considered in the face of a stalled drive for equity in access to health care. Private sector spending per person was five times more than the public sector's, Parliament's health committee heard yesterday. Antoinette Ntuli of the Health Systems Trust said less than one in five South Africans were covered by medial aid and that while 70% of whites were covered only 10% of Africans enjoyed access to medical aid. She said in recent years there had been a decline in spending on primary health care and many provinces had fallen behind. She also suggested to the committee that attention should be given to mechanisms that determine the spending on provincial level on health services. Health is a shared competence between national and provincial government and health spending in the provinces comes out of their global allocation from the national treasury. The size of health spending is determined by the provinces. Ntuli said that consideration should also be given to introducing a stronger equity-backlogs component to the formula which determined the global allocations in the provincial budgets. She indicated that in addition to some provinces perhaps not allocating sufficient funds for health care there were also indications that SA was not getting value for money in terms of the money which it was spending on health care. She pointed out that while Venezuela had the lowest gross domestic product (GDP) per capita, it also had the lowest mortality rate of the four for children under five years at 23 per 1000. SA, with a per capital GDP almost a third higher, had a mortality rate for the under fives three times higher. Ntuli said that between 199293 and 1997-98 there was growth in government spending on health care and a shift towards primary health care. To illustrate the divide between private and public health sectors, she said that of all nurses in SA, 59% were in the public sector while of all psychologists 94% were in the private sector. Seventy-six percent of pharmacists were in the private sector, 93% of dentists, 75% of specialists and 73% of general practitioners. This led to the recommendation that further measures to reduce the inequity between the sectors should consider a social health insurance that allows for cross subsidising between the haves and the have-nots. (source: Wyndham Hartley Business Day, 1st Edition Oct 23 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)

At present, some (but not all) municipalities provide health services. There is considerable diversity between municipalities in relation to the range and extent of health service provision. Historically, local government health services have been restricted largely to the provision of preventive, promotive and rehabilitative primary care services, with particular emphasis on communicable disease control and environmental health. In addition, some municipalities provide ambulance services on an agency basis for the respective provinces (i.e. ambulance services have historically been a provincial responsibility, but in most cases provinces pay municipalities to provide these services on their behalf). In an effort to reduce fragmentation of health services, some municipalities are increasingly providing integrated preventive and curative primary care services.

Predictions by open medical schemes - schemes whose membership is open to the general public - that aspects of the Medical Schemes Act would threaten their very survival are proving to be alarmingly accurate. The report, published this month, notes that schemes have been involved in frantic maneuvering to avoid the worst effects of the Act's concept of universal healthcare. Merger activity has increased and is expected to continue at a brisk rate as schemes seek to grow and diversify their risk pools. The worsening solvency situation has arisen despite the fact that increases in medical scheme contributions have once again outpaced the consumer price index. Gross premiums received by the major medical schemes increased 21.1% to R17.5-billion in 1999. Despite this, 87% of schemes surveyed posted underwriting losses for the 1999 year. The average value of claims increased during 1998 and 1999 from 91.4% of premiums to 97.3% in 1999. Private hospitalisation, optical services and medicines were some of the main reasons for this inflation. Imported inflation - the Rand depreciated 25% during 1999 - was most evident in chronic medication and the cost of hospital equipment. (Source: Business Times, 8 April 2001)

It is well known that South Africa spends a considerable amount of money on health services compared to other middle-income countries. Yet, the average health status of South Africans is relatively poor.

These reports will bring together the collective experience of the targeted sub-districts throughout South Africa, so that lessons learnt locally can be shared nationally. This first report outlines plans for the Initiative for Sub-District, shaped through a process of consultation and technical advice during the first ten months of 1996 (see Appendices).