The Mercury / Cape Times / Star
June 09, 2009 Edition 1
Gavin Mooney

I am A health economist visiting South Africa from Australia. With respect to South African society, as a foreigner the thing that strikes me more than anything is the continuing poverty amid such incredible affluence.

With respect to South African health care, two things hit me: the public sector is grossly underfunded and overworked; the private sector is grossly inefficient and inequitable. This is a disastrous combination for health and for health care. Reform is desperately needed in both society and health care.

The poverty in this country is shocking. There is poverty in so many parts of the world, so why should I expect anything different in South Africa? “The poor are always with us.”

Maybe, but when we look around at the amazing wealth and conspicuous consumption that accompanies this poverty, South Africa really stands out.

That is what leaves one speechless, even angry. To drive from Khayelitsha to Newlands in the Cape, as my wife and I did recently – a drive of only 30 minutes – is to go to another planet. The contrast is
stark.
The statistics confirm this impression. Just one example: according to Statistics South Africa, in 2001 “the 10 percent of the population in the lowest income decile shared R1.1 billion, whereas the 10 percent of the population in the highest income decile shared R381bn”.

Let’s think about these income statistics for a minute. The bottom 10 percent have R1.1bn; the top 10 percent have R381bn. So your average member of the top echelon gets 346 times as much as the average member of the bottom echelon.

Yet another way to express this: those at the bottom take nearly a year to earn what those at the top earn in a day. Unfair? I’ll say.

There is a lot of evidence to show that poverty is bad for people’s health. There is also evidence that inequality is bad for people’s health, so being poor and surrounded by affluence is worse still.

With the best will in the world – or even just in South Africa – it will not be possible for the government to make massive inroads into poverty and inequality quickly. It could do a lot better than it has been doing in the last 15 years, but it will take time. So the risk is that the health of the poor will remain bad.

Well, not necessarily. How health care is currently organised and financed needs to be examined. Making health care more accessible to the poor would help greatly.

This is where the government’s plans for National Health Insurance (NHI) come in. The goal here is “all for health and health for all”, giving everyone access to appropriate health care, with everyone pitching in to pay for it.

Currently the split between private and public care is grossly inequitable – over 40 percent of health care funds are in the medical schemes for about 16 percent of the population. And yet those in the schemes are on average much healthier – not because of their private care but because they are rich and the rich the world over have better health. Unfair? I’ll say.

The public sector needs a major boost. There is a need to debate the future of the private sector. But the key issue that should drive government health policy is not that, but delivering health to the poor.

In examining NHI in South Africa, I had initially thought that a complete nationalisation of health care was needed.

That is not attainable, at least not in the short run. The public sector simply could not cope if the private sector were to be “closed down”.

There is also a risk in treading too softly. The private sector will fight – it is fighting already.

The solution? Build up the public sector and make it genuinely competitive with the private sector. But additionally, the private sector needs to be reformed. It is grossly expensive for what it does.

Two reforms are needed in the private sector: first, remove all the tax breaks for private health insurance.

They are totally unjustified in health terms and just as unjustified in economic terms. Second, make the private sector’s processes and premium setting much more transparent to allow real competition.

There are too many schemes, with too inefficient health care delivery.

The government might also contemplate emulating what the Australian
government did when it set up its Medicare system.

To bring a greater element of competition to the private sector, the government set up a private health insurance company called Medibank Private.

That engendered a greater competitive edge through the whole sector.

In South Africa, there is a start already in the Government Employees Medical Scheme, whose membership could be made more open. What would be the implications of all of this for the private schemes?

Most importantly, it would mean that they would have to take reform seriously; those that don’t would go to the wall.

But perhaps just as importantly, those that do take reform seriously will have the opportunity to flourish.

The private sector will be reduced, but those schemes remaining will have less to fear from a reformed public sector.

People who want to take out private cover will still be able to, but they will be paying twice for their health care.

That issue of “paying twice” will almost certainly mean the private sector withering away – but not immediately.

There has been a scare campaign conducted by the private sector suggesting that an NHI might be costly. This is just nonsense. It does, however, show the lengths to which the defenders of the present system will go to try to preserve it.

Again, it has been suggested that an NHI is a rich-country option and South Africa cannot afford it. Again this is wrong: all countries can afford an NHI if they place enough weight on social cohesion and equity.

An NHI will cost more, but not a fortune. Let’s play with some numbers.

Say that the private sector remains for 10 percent of the population but that efficiency gains will reduce costs for them by a third.

Assume that improving the public sector will result in a 25 percent increase in costs and that bringing health care to all will lead to another 50 percent increase.
On the tax breaks in the private schemes, as seen through the eyes of a foreign health economist, these are not just of monstrous proportions, but monstrous.

They amounted in 2005 to over R10bn, which was equivalent to 20 percent of the public health sector budget. These tax subsidies simply cannot be justified.

All in all, with an NHI, I estimate South African health care costs
would go up by maybe 15 percent to 20 percent.

The details of the system are still up for debate, but little of this debate is in the public arena. This to me is wrong.

The NHI is about getting health care in this country established as a social institution and not a “commodity”. Commodities are what consumers buy in the market place.
That is no way to deliver health care.

No, the health care system needs to be seen as a social institution driven not by the values of the market or the stakeholders (read vested interests), but by citizens’ values.

In Australia I have worked with citizens’ juries – randomly selected citizens brought together, given good information and asked what they want as citizens from the health care system.

Three things stand out: they want to give equity a high priority; in general what they want and what they are getting are different; and those most opposed to using ordinary citizens’ values are the so-called “stakeholders”, who see their positions of power being usurped by “ordinary citizens”.

The question for South Africans is: what do you want of an NHI? Oddly, no one seems to have asked them. This is a fractured society, divided by race in the apartheid years; today by class. What South Africa seems to need is some way of acting together as a community united in some common purpose.

Here in South Africa, my wife and I meet people from all walks of life.

We are struck by their friendliness and resilience. But we also see the crass poverty and the inequality which are cancers on the face of this wonderful country.

Bringing health care to all, building a truly democratic health care system with those who can afford it pitching in to help those less well placed – a health care system built on social solidarity and compassion – that is what NHI is about.

And who knows? It might be a pilot for a future South African society as a whole.

# Mooney is honorary professor at the University of Sydney and currently visiting professor at the University of Cape Town. He is to be awarded an honorary doctorate by UCT this month.