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Private health care consumes over 50% of total health care spending in South Africa, but is inaccessible to most of the population, and in many cases, highly inefficient. Nevertheless, many, if not most South Africans rely on, or aspire to private sector care. This study has obtained and analysed much of the currently available data on private health care financing and provision, and attempts to describe the influence that it has on the health of all South Africans.
Medical schemes are the main means of financing private health care, although they covered only 18% of the population in 1995. Members are predominantly from high income groups, white, and formally employed. There was an increase of around 50% in black African medical scheme members of medical schemes between 1990 and 1995, and organised labour has been increasingly active in setting up medical scheme cover for members.
Historically, medical scheme membership was strongly linked to employment, and employers generally paid the larger portion of premiums for workers and retired employees. Since medical schemes were by law non-profit organisations, fairly strong levels of cross-subsidy between rich and poor, and sick and healthy, generally operated. Successive deregulation of the medical schemes industry in 1989 and 1994 has weakened the tradition of cross-subsidy operating within medical schemes. This has resulted in the more traditional employment based schemes losing their younger members to commercial funds offering risk-rated premiums, with resulting steep premium increases for the elderly and sick. Planned revisions to the Medical Schemes Act will reduce the potential for selection against those at high risk of ill-health. The medical schemes sector has experienced cost-inflation well in excess of the consumer-price index throughout the 1990s. Some of the cost explosion appears to be due to very high rates of discretionary, non-life-saving interventions, such as tonsillectomies, insertion of grommets in childrens ears, and hip replacements for arthritis. Up until recently, medical schemes took little interest in what interventions doctors performed, or how much they cost, and simply reimbursed all fees charged. There have been a number of responses to spiralling cost-inflation. In some cases, employers have simply abandoned their role in providing health care cover, while in others, medical savings accounts, managed care, and limited benefit packages have been introduced.
Not all financing of private health care emanates from medical schemes. A significant proportion of out of pocket spending goes to private health care, particularly in poor communities. Spending on health care as a proportion of family income doubled in black households in the first half of the 1990s, and in the lowest income categories, less than one fifth of private health care consultations are covered by insurance. The state funds private health care through two specialised insurance funds, the Workmens Compensation Fund, and the Road Accident Fund. They fall under the control of the Departments of Labour and Transport respectively, and have demonstrated cost inflation in excess even of the medical schemes sector during the 1990s. |
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