Let’s Put Constructive Solutions on the Healthcare Table

Let’s Put Constructive Solutions on the Healthcare Table

by Professor Nicola Theron

(Originally published by Business Day on 22nd September 2023)

The Hospital Association of SA held its annual conference this September week. It is always a well-attended affair, with senior representatives from healthcare funders, hospitals, practitioners and government. In 2023 the National Health Insurance (NHI) Bill was high on the agenda as it is now before the National Council of Provinces (NCOP) for consideration.

It is well-known by now that if the NCOP were to pass the NHI Bill in its current format, and it remains unchallenged, the role of medical schemes will be greatly reduced, to only be allowed to pay for complementary services (according to section 33 of the NHI Bill).

It’s not clear what these services will be, but what is is that this will severely affect the viability of the private healthcare sector, as medical aid members will have to pay an NHI tax and medical aid contributions. Some estimates calculate a 31% increase in personal income tax, which is clearly not feasible.

There were calls from numerous healthcare stakeholders at the conference to amend the NHI Bill in a way that allows for private sector healthcare to continue to provide for its 9-million recipients, and to expand its reach for the benefit of all. This would lighten the substantial burden the public healthcare sector is suffering under.

At the same time, it was widely acknowledged that the private healthcare sector itself needs reform, both to improve healthcare delivery and lower costs. This is not difficult to do, and there are already many reasonable recommendations, proposed by various government-convened commissions, most recently the health market inquiry in 2019, which would go a long way towards achieving this.

The examples are many: mandatory health insurance cover, reform of prescribed minimum benefits (PMBs), risk equalisation and the introduction of low-cost benefit options (LCBOs). Unfortunately, the Council for Medical Schemes is opposing the implementation of LCBOs and this is now the subject of litigation.

To address the inequality in our healthcare system and nurture and expand the country’s high-quality healthcare services for the benefit of all we need to introduce both private healthcare reforms and amend the NHI Bill to allow for the private healthcare sector to continue to offer high-quality healthcare.

What exactly is the aim of NHI? In simple terms, the government wants to access medical aid premiums (now about R200bn per annum) as it believes it can use this money more efficiently when consolidated in a single fund, and drive costs down. This, it is believed, will ultimately also benefit members of medical schemes, who are paying costs that are too high.

Of course, the key problem is that this ignores the fact that people willingly part with money for quality care in the private sector. Increasing personal income tax by a third to access services provided by NHI may not be immediately welcomed. You can only raise so much tax money from the current, but declining number of 5.2-million taxpayers.

The conundrum is that there is absolutely no evidence that supports the details of NHI policy. There is no research done on the funding requirements, the total cost, what tax increases would be required, and no evidence on the proposed benefit package, no evidence on prices the government as the single buyer of healthcare services will pay to healthcare providers.

The evidence we do have shows two things: that SA cannot afford NHI in its current form, a fact that has been confirmed by the National Treasury; and that the government should use its regulatory powers to reform the private sector along the lines of well-researched health reform proposals that have all been canvassed.

The government needs to review the PMBs, introduce low-cost benefit options and expand medical aid cover for the employed but uninsured by introducing mandatory cover. The government will find a willing and able partner in the private healthcare sector to drive these reforms with urgency. At the same time, the government needs to introduce quality improvements in the public sector; once again it will find a willing and able partner in the private sector to assist with this.

There are numerous options on the table that will allow everyone to access an improved, affordable and more equitable healthcare system. A healthy public sector that competes with the private sector will provide people with a choice. The mooted single buyer of NHI will remove all choices and introduce huge costs and inefficiencies, benefiting no-one in the long term.

• Theron is an extraordinary professor of economics at Stellenbosch University and an affiliate at FTI Consulting. She writes in her personal capacity.

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