Will South Africa finally make progress towards a universal health system? | by Di McIntyre

by Oct 17, 2011All Articles

health_systemSouth Africa has long faced considerable health system equity challenges.  In particular, 43% of total health care expenditure is attributable to private health insurance schemes, which only cover 16% of the population.  General tax funding allocated to the health sector also accounts for about 43% of expenditure, and is used to provide services for most of the rest of the population.  Out-of-pocket payments account for the remainder of expenditure, most of which relates to co-payments by private insurance scheme members but also includes direct payments to private primary care providers by some of those not covered by private insurance.
The Minister of Health recently released a Green Paper on introducing a National Health Insurance (NHI).  It indicates that the NHI will be guided by the principles of the right to health service access, social solidarity, equity, affordability and the provision of appropriate and effective health services. It also states that the objective is to achieve universal coverage, where everyone has financial protection from the potentially impoverishing costs of health care and access to needed health care.  Core elements of the proposed NHI include:

Substantially increasing the pool of public funds (previous statements indicate that this will take the form of tax funding including: increased allocations to the health sector from general tax revenue; a surcharge on personal income; a payroll tax on employers; and/or increased VAT);
The creation of an independent public entity to pool these public funds and use them “to purchase health services on behalf of the entire population from contracted public and private health care providers” on a single payer basis;
All South Africans, legal permanent residents and registered refugees and asylum seekers will be entitled to benefit from these services;
A relatively comprehensive package of out- and in-patient services will be funded; and
There would be no fees charged at the point of service.

The Green Paper recommends that the NHI be phased in over a period of about 15 years, divided into three five-year phases. The first phase will be devoted to rebuilding the public health system.  The capacity and quality of public health services declined dramatically during the late 1990s and early 2000s, when a neo-liberal fiscal policy restricted government spending at precisely the time that the HIV epidemic was exploding, increasing the burden on public sector services.  Specific interventions planned are: ‘re-engineering’ primary care services, including the deployment of teams of community health workers in every ward; an audit of all public sector facilities and improvements in physical infrastructure and ensuring all facilities have a full complement of functioning equipment; increased training of the full range of health care workers; service quality improvement measures; and measures to improve management in hospitals and health districts.   Other preparatory activities such as establishing the NHI fund/independent public purchasing entity will also occur during this phase.

The second phase will focus on changing the way of paying health care providers.  It is proposed that primary care services will be paid for on a capitation basis while diagnosis-related groups (DRGs) will be used to pay hospital services.  Strategic purchasing of services from both public and private health sectors will also be initiated during this phase.  The final phase will be devoted to further expanding health service capacity to achieve universal access.

While there has been a relatively muted response to the release of the Green Paper, with many stakeholders adopting a ‘wait-and-see’ approach, there has been sufficient public commentary to identify key areas of support and concern. 

The proposals have been praised for:
Being based on universal coverage principles;
Adopting a carefully phased approach;
Focussing firmly on addressing the problems in the public health sector first; and
Building a strong foundation of improved primary care services.

The major concerns expressed include:
Although there appears to be a commitment to a single public pooling and purchasing entity, the Green Paper makes mention of also considering a multi-payer option whereby private insurance schemes would act on behalf of the NHI, raising concerns about high administration costs, limiting income and risk cross-subsidies and less ability to cost-containment benefits of a

Purchasing of services from the private sector may retain a two-tier system as wealthier groups live closer to private providers than the less well-off and given the rapid increase in fee levels among private for-profit providers, may threaten the sustainability of the NHI; and

Although it is proposed that there will be no fees at the point of service, the Green Paper also mentions having to consider co-payments, which would limit the financial protection afforded to beneficiaries.

There are clearly some contradictions within this policy document that need to be resolved.  It is also apparent that key stakeholders will use the period before the finalisation of the policy to influence the NHI design to best meet their personal objectives.  While the release of the Green Paper is a positive development in efforts to move towards universal coverage in South Africa,
unwavering commitment to the core principles outlined in this policy document is required if the final NHI design is to be compatible with achieving these principles.

Di McIntyre is the South African Research Chair in ‘Health and Wealth’ and a Professor in the School of Public Health and Family Medicine at the University of Cape Town

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