by Aug 7, 2009All Articles

Cape Times 9 July 2009
by Neil Nair

The pious rhetoric and feigned concern for the workability of the National Health Insurance for South Africa, by the private sector (largely open medical schemes) underlies their fear of a reduction in profits.  The lack of consultation has oft been spoken of in the process  thus far, without denying the importance of this, one has to ask who was consulted on the present system, surely not the most important stakeholder, the people.  The silent majority had to endure whilst the profiteers were quite comfortable that present legislation passed through in their best interests without any genuine consultation and the mega profits rolled in.  No longer will be go on bended knee because we do not understand the language of business disguised in fancy terminology and confusing data to obstruct our understanding of what is in the best interest of the public.  It is therefore critical that the average South African appreciates the full value of NHI, before being scared into believing that the devil that you know is better, because Citizen X only gets to hear the scare mongering of the fearful business class.

Noam Chomsky elucidated, “All over the place, from the popular culture to the propaganda system, there is constant pressure to make people feel that they are helpless, that the only role they can have is to ratify decisions and to consume”. We must no longer allow this we surely must know what is in our best interest.

Before confronting the question of why NHI must work let us elucidate for the general public what is NHI (National Health Insurance) which is often confused with SHI (Social Health Insurance). Mandatory or compulsory health insurance is often called Social Health Insurance (SHI), particularly where only certain groups are legally required to contribute and where only those who make insurance contributions are entitled to benefit from, or are covered by, the insurance scheme. National Health Insurance (NHI) on the other hand refers to a system that is universal, or covers the entire population irrespective of whether they have personally contributed to the scheme or not. As the terms social and national health insurance are often used inter-changeably and sometimes create confusion, the basic difference is who pays and who is covered.  In simple terms therefore it is a compulsory form of health insurance that covers every person in the population – more importantly though it covers everybody equally and indeed universally.  The concepts of “risk pooling” and “social solidarity” become key constructs of National Health Insurance, whereby the entire population and households share the financing of the health costs. 

As an inception for NHI in South Africa it is important to understand that it does not seek to replace the present provider model with an all inclusive public model – it seeks to replace the existing private funder model with a singular funder model.  To make assertions that the NHI would be constructed upon the foundations of SA’s under-resourced and malnourished public health system is a poor starting point, as asserted by recent media commentary.  The foundations of NHI shall be built upon the strong foundations of equitable funding such that delivery is better resourced, evenly spread and universally available.

NHI is also not a new construct being cast upon the nation. As early as 1994 the ANC confirmed: “Because of the burden associated with paying for health services at the time of illness, in the long term we are committed to the provision of free health care at the point of service for all citizens of South Africa” – A National Health Plan for South Africa (ANC, 1994).  Noted, it has been lost along the way – NHI though has always been part of the plan.

Now that we have this out the way; let us try to understand why NHI is so very important for our country.  South Africa has one of the most skewed and unequal health systems in the world – not far off from the model of the USA.  A recent article by Deborah Charles, provided the following indictments on the US health system: “When Jim Hann learnt he would be laid off he scheduled surgery to donate a kidney to his wife. Steve Drake rationed his asthma medicine after he was let go, while two-time cancer survivor Roberta Furchak had to draw on retirement savings to cover tests after she lost her job. All three were trying to compensate for losing health insurance in a country where unemployment often means going without coverage. With unemployment rising to its highest level in a quarter of a century, more Americans are confronting the double crisis of losing their jobs and their employer-sponsored medical aids, which covers 177 million people.  Many unemployed Americans say they cannot afford the high premiums that insurance firms charge for personal policies. People like Furchak and Drake, who have pre-existing medical conditions, battle to even find coverage. A recent study by the Robert Wood Johnson Foundation said the number of uninsured Americans could jump to more than 65 million in 10 years as health-care costs doubled. The US Census Bureau says about 46 million Americans are without medical insurance”.  For those who argue a free market in healthcare let them respond to the millions of sick and desperate people the world over who die simply because they cannot access healthcare.

The problem statement is simple, South Africa has embraced a free market for healthcare resulting in the following: –

  • 14.8% of the population is covered by medical schemes and are able to secure most of their health services in the private sector. The per capita annual expenditure on this group, combining both medical scheme expenditure and out-of-pocket payments by medical scheme members (e.g. for co-payments or to pay for services not covered by their scheme) was equivalent to approximately R9 500 per beneficiary in 2007.
  • A further 21% of the population are not covered by schemes and use the private sector on an out-of pocket basis (mainly for primary care), but are likely to be entirely dependent on the public sector for hospital (particularly inpatient) care. The per capita annual expenditure on this group, including their out-of-pocket payments to private primary care providers and government spending on hospital care, was equivalent to nearly R1 500 per person.
  • The remaining 64.2% of the population can be said to be entirely dependent on the public sector for all their health care services. For this group, less than R1 300 was spent per person for government primary care and hospital services.

For those who argue that South Africa cannot afford universal coverage under a NHI model let them answer why it is ok to spend R1 300 on one citizen and R9 500 on another.  South Africa’s fairly healthy GDP spend on healthcare is approximately 8.5% – which compares quite favourably against other, even developed nations and is estimated to be the 32nd highest in the world. 

  • Of 8,5% of GDP spent on health- 3,5% is spent on the public health sector ( 85% population) and 5% in the Private sector- serving around 15% of the population
  • Public sector- inadequately funded and under-resourced
  • The private sector, which treats health care  as a commodity and consumes more than  60% of the total health care resources, serving around 11% of the population
  • Human Resources in private sector include more that -60% doctors, specialists and other health professionals (except  nurses).  Private sector health professionals are amongst the highest paid in the world.
  • The South African medical aid model adds to the burden of the health system, in that: –
  • It is a market-driven private health care system
  • Medical schemes and private providers compete not so much by increasing quality and lowering costs, but by avoiding unprofitable patients and shifting costs back to patients or to the under-funded public health system, notwithstanding attempts at community rating.
  • It generates huge administration costs that, along with profits, divert resources from clinical care to the demands of business.
  • In addition, consulting and marketing firms consume increasing percentage of health care money

Trends in total non-healthcare expenditure paint a stark picture for private healthcare – given the growing non-healthcare costs and profit mongering from administrators, brokers and marketing companies. “Total non-healthcare expenditure rose by 7.3% from R8.3 billion in 2006 to R8.9 billion in 2007. Prior to 2006, the increase in non-healthcare expenditure was consistently higher than CPIX. During the past two years the rate of increase seems to have been contained to levels below CPIX. Total gross non-healthcare expenditure has increased by 359.3% since 1997. Since 2000 it has grown by 116.2%. This was driven by a 137.0% upswing in administration fees, a 70.2% rise in fees for managed healthcare, and an increase of 353.7% in broker costs. By comparison, gross claims have climbed by 106.2% since 2000”. Source:  CMS Annual Report 2007/08

To answer the question, why do we need and indeed must insist on NHI as a population: –

  • Health is a human right as enshrined in South African constitution.
  • SA signatory to international and regional human rights instruments.
  • The state is obliged to provide access to quality health care for everyone without discrimination on any grounds of discrimination including on the basis of economic status – i.e. everyone is entitled to the right to access quality health care.
  • The present two-tier system serves to accentuate inequities.
  • The commodification of health care denies the poor of their right to quality health care.
  • There is a need to radically shift the way society provides health care – by pooling  all health care resources, economic and human resources  into  the public sector.
  • With 8,5% of GDP spent on health, SA has enough resources to provide an effective and vibrant health care system.

Furthermore a National Health Insurance Model will not only seek to consolidate a single payer system, it will also seek to incorporate the values of a healthy society in a proactive manner.  The concepts of preventative health must be allowed to develop more fully via the establishment of community health centres and the employ and training of community health workers.  A refined human resources model is in development to accommodate this thinking under NHI.  The curative model will also be enhanced by greater investment in the fields of research and development and indeed manufacturing of drugs and medical equipment.  The opportunity to develop a system that incorporates all of these in the public interest has to be seized.

Most fundamentally the answer lies in the fact that profit has little place in the provision of healthcare. Surely we all understand that moving towards NHI requires the collaboration of both the public and private sectors – fundamental to this though must remain the needs of the people. A pragmatic and synergised strategy must and will be sought.

The private sector will indeed find all measure of reasons for why NHI is impractical as it may impede on profits.  The real issue lies in what value does it serve for the people. 

Neil Nair, Principal Officer – SAMWUMED, Delegate to the COSATU Working Group on NHI(written in my personal capacity

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