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The National Health Insurance — vision and practical implications

The proposals for a state-funded National Health Insurance (NHI) policy have generated a great deal of media reporting and reaction. While many people agree that global access to quality healthcare is a national priority, there are equally significant concerns about the cost and quality of the future NHI. Shrikant Peters unpacks the values underpinning the NHI and the implications of the proposals in their current format.

The National Department of Health recently published the NHI Bill, which sets out a roadmap to re-create the South African healthcare system. By doing so, government wishes to achieve the aim of universal health coverage, which will enable everyone in the country to access high quality, person-centred healthcare, without the risk of financial ruin, through a system of social solidarity cross-subsidisation.

The fact that the public healthcare sector is in dire need of reform has not been disputed by any health stakeholders. Although South Africa spends over R400 billion on healthcare per year (more than 8% of our GDP), the funds are evenly balanced between the public and private sectors. This is extremely concerning, given the fact that only 16% of the population has access to private sector healthcare through medical aid cover or “out of pocket” payments. The remaining 84% of the country have to make use of dilapidated, over-crowded state facilities where waiting times to receive care are long and resources limited.

This should come as no surprise, given that we are ranked by the World Bank as the most unequal country in the world, with a GINI coefficient of 63.4. Still, given a system that allocates six times more to a citizen accessing the private health sector than it does to citizens in the public health sector, one really must question the morality and sustainability of this model.

One really must question the morality and sustainability of this model (…) that allocates six times more to a citizen accessing the private health sector than it does to citizens in the public health sector.

Life expectancy in South Africa is 62 years, having steadily increased from a nadir of 52 during the disastrous years of HIV denial. However, South Africa still experiences a quadruple burden of disease, including HIV and TB, chronic diseases of lifestyle such as diabetes and hypertension, violence and injuries, and maternal and child mortality rates, which are unacceptable in a modern lower-middle income country. With the economy teetering on recession and our levels of human development stubbornly low, the need for efficient, effective and quality healthcare remains paramount.

The contents of the NHI Draft Bill

This is the third time that National Health Insurance has been proposed – the first being under the auspices of the pre-World War II (and pre-apartheid) Smuts government, and the second at the dawn of democracy in 1994.

The current process was started at the ANC’s Polokwane Conference of 2009, which set former Health Minister Aaron Motsoaledi the task of drafting the initial legislative documents, aided by the World Health Organization and health sector experts, particularly health economists.

The proposed solution to inequitable expenditure distribution between the public and private healthcare sectors is to have a single pool of funding for all healthcare. This would be a national government entity, to be called the National Health Insurance Fund. It is to be funded completely by pre-payment through increases in taxation, and a growing diversion of funds away from medical schemes.

The proposed solution to inequitable expenditure distribution between the public and private healthcare sectors is to have a single pool of funding for all healthcare.

A single pool of funds also pools risk between the young and old, the well and the sick, and the wealthy and the poor. With a single payer, healthcare prices can be brought down in the private sector. Through an accreditation process, only facilities that have achieved a basic standard quality of care will be allowed to contract with the fund.

Funding for the system will come from a 2% payroll tax on employers, an increase in employee tax also in the range of 2%, and a 1% increase in value added tax (VAT). With the increased expenditure and improved benefits in the public sector, it is envisioned that membership of private medical schemes will diminish over time.

Multiple initiatives have been implemented simultaneously over the past ten years to prepare the South African healthcare system for the implementation of NHI. The aim of these initiatives was to strengthen the healthcare system and improve the basic quality of care in the country, prior to funding changes.

Multiple initiatives have been implemented simultaneously over the past ten years to prepare the South African healthcare system for the implementation of NHI.

This included the creation of the Office of Health Standards Compliance (OHSC) and the now-legislated National Core Standards (NCS), which the office uses to audit all health facilities in the country. Facilities are obliged to adhere to the NCS, failing which the OHSC is empowered to shut facilities down until these deficiencies are addressed. NHI pilot districts were also set up to test models for the contracting in of general practitioners to further equip the public healthcare sector with more doctors.

A raft of new national structures have been proposed in the current NHI Draft Bill; including advisory committees for determining benefits (what the NHI will cover), healthcare benefits pricing (how much the NHI will pay for each service), health product procurement and health technology (what medicines and equipment the scheme will cover) and the National Health Tertiary Services Committee and National Governing Body on Training and Development, which will have close links to medical, nursing and allied health schools across the country.

Creating all these structures will take much time and effort on the part of parliament and the Department of Health. As a result, the first benefit packages (which will focus on maternal and child health) are expected to be implemented only in 2025.

Policy controversies and the imperative for public engagement

The biggest  concerns about the current proposals centre on the concentration of power and money in organs of the state.

Politically, the Bill vests considerable decision-making powers in the National Minister of Health, who has the sole ability to appoint and dismiss the NHI Fund Board, its CEO, and the various committees – including the Benefits Committee and the Health Products Regulation Committee. He would therefore be able to dictate what benefits South Africans can access and which products are allowed to make use of state tenders.

The Bill vests considerable decision-making powers in the National Minister of Health, [who could] dictate what benefits South Africans can access and which products are allowed to make use of state tenders.

Structurally, the new purchaser-provider split in the healthcare system is envisaged as the NHI Fund purchases  services from individual health districts and large hospitals directly, thus bypassing provincial departments of health and denuding them of significant financial and decision-making powers.

In addition, the pooling of resources, while creating economies of scale by monopolising consumer power in the state, is a risk. In the United Kingdom, National Health Service funds are devolved to counties and trusts, and are not given to one government body.

The Bill in its current format does not address the social conditions that have a direct impact on health, such as unemployment, access to safe water and food, decent work and education. This must be addressed to achieve the desired group-level population health effects. With the country’s finances precariously balanced, government cannot afford to spend at a rate that puts the country into further debt. Therefore, the rate of NHI implementation will be directly proportional to economic growth (if any), which could further delay equitable access to health care.

And finally, simply making finances available to the public sector will not, in and of itself, create the conditions necessary for quality healthcare to flourish – all facilities in the country must become learning organisations – able and incentivised to improve the quality of services they offer patients, competing for customers based on the healthcare outcomes which they achieve.

Simply making finances available to the public sector will not, in and of itself, create the conditions necessary for quality healthcare to flourish.

Thus, it is important for the public to engage and make themselves aware of the parliamentary submission process, the timelines for implementation, and the envisaged checks and balances that are to be enforced. In doing so, we can achieve a truly equitable, highly effective and unified National Health System for South Africa.

* The opinions expressed here by Spotlight.Africa contributors and editors are their own and not official statements of the Society of Jesus in South Africa or of the Catholic Church unless explicitly stated.

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Shrikant Peters
Shrikant Peters is a medical doctor and lecturer, specialising in Public Health Medicine at the Western Cape Department of Health and the University of Cape Town. He holds a BA in Politics, Philosophy & Economics from the University of South Africa. He has worked at Addington, Mahatma Gandhi, Eerste River and Hillbrow Hospitals. He has a special interest in the improvement of quality in the public healthcare sector and writes in his personal capacity. He is a practicing Catholic (but could always use some more practice).

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