Following my last post describing an analogy between the space shuttle disasters and the possibility of a system failure following the envisaged implementation of National Health Insurance (NHI) in South Africa my thoughts have returned to what I wrote in March 2022. This post reflected on the alternatives to what is proposed in the South African model of NHI. As I wrote then since 1994 the divide between those who have the ability to afford what in South Africa is termed private healthcare and those dependent on the State operated Public Health Service for the provision of healthcare has regrettably grown.
The widening gap cannot be laid at the door of the private health sector but rather at the door of a failing public health sector that has failed to meet expectations since 1994. A private health sector that ironically has become stronger and more entrenched since the democratic transition in this country in 1994. Segregated along racial lines until the early 1990’s nevertheless many South Africans irrespective of all race and socioeconomic status utilised public health services. But in the last two decades in general only those unable to afford private health care resort to using an ailing public healthcare service.
Healthcare in the modern era is expensive whether provided by the State or the private sector and has become increasingly so with the advances in medical science. Health expenditure constitutes at different times in the lives of citizens, particularly as they age as I have recently experienced, a significant expenditure in both sectors.
In my March 2022 post, I elaborated on the various models of healthcare provision in countries across the globe and will not repeat that here. But particularly relevant to South Africa is the challenge posed by the very narrow tax base on which the National Treasury can rely to fund healthcare services. Many of those who are already heavily taxed currently utilise, by choice, the private health sector in South Africa. That choice is driven by the perception and reality of quality healthcare provided in the private sector.
National Health Insurance in South Africa, as proposed, would be funded by tax paid by all citizens through a government-run national “insurance plan” i.e. the National Health Insurance Fund. An understanding of the current funding flows within the health sector, indicates that this would require an additional taxes at least equivalent to current medical aid contributions. It is difficult to understand the logic on which the argument is based, that a single National Health Insurance funded healthcare service, would be able to provide healthcare at a standard similar, economies of scale notwithstanding, to what is possible with the private health sector at present. Consequently what must of financial necessity occur, at least in the short to medium term if nothing else were to change in the equation, is a reduction of the quantum and quality of healthcare services currently available in the private sector and possibly at best a consequent modest increase of these modalities in the public sector.
The question with which I grapple is whether it is reasonable and realistic to expect those who generate the wealth that supports government through their taxes, and in this case, the Public Health Service, to unconditionally accept a lowering on the standard of healthcare. Healthcare for which they currently pay dearly with their hard earned post tax income. Other than in a communist or totalitarian society, it would seem an unlikely scenario without significant consequences. Given the crucial importance of access to quality healthcare to those who are economically active, a consequence could be a mass exodus of those highly trained and skilled South Africans that the country could ill afford.
The philosophy of Universal Health Coverage (UHC) defined as access to quality essential health-care services and access to safe, effective, quality and affordable essential medicines and vaccines for all with “financial risk protection” is difficult to counter as a laudable goal. However, other than based on a simplistic egalitarian approach, to achieve this goal with the resources available now or in the foreseeable future is an unlikely, if not impossible, challenge for South Africa.
While I support, in principle, the goals of UHC and indeed the introduction of any system that provides for a more equitable distribution of healthcare resources, I am not in favour of the centralised top-down system as envisaged in the NHI Bill. I would propose a funding model that does not centralise funding into a single public entity at a national level such as the National Insurance Fund functioning as a quasi independent public entity with a board appointed by the National Minister of Health. The country’s current experience with a public entity such as Eskom, and sadly several others, should set alarm bells ringing in this regard.
My preference would be for a designated budget line in the National Treasury set aside for the purpose of funding healthcare to be disbursed directly to the provincial health departments with retention of a decentralised delivery model. This could include funds from the removal of the current tax deductions allowed to tax payers for contributions to medical aids made by their members. Clearly the totality of this funding would be dependent on the ability of the National Treasury through funds raised by taxation to allocate funding to public sector healthcare after consideration of other priorities in government.
A precondition to any new dispensation must be to address the woeful shortcomings currently prevalent in many public sector provincial health departments and their facilities related to management, staff establishments, logistics, infrastructure and equipment. Effective management without undue political interference is key to the success of any health system that is to be successful.
To think that simply by implementing National Health Insurance as envisaged that these challenges will disappear is wishful thinking and holds the risk of collapsing an already fragile public and private South African health sector. This would be the system failure to which I alluded in my previous post.
I am not a lobbyist for the private health sector, far from it, I am rather an advocate for an effective public healthcare sector. However, as I have previously stated I would leave the private health sector to function independently but with the withdrawal of State tax subsidies through deductions allowed for of medical aid contributions. This has the potential to increase the financial incentive for those citizens with disposable income to consider utilising improved public sector health services.
The private sector could become a partner in the provision of healthcare rather than a competitor. My argument for the retention of the private sector, rather than what is envisaged in the NHI Bill, is a need for significant risk mitigation against a collapse of the health system in South Africa as a result of a potential exodus of skilled personnel and the flight of capital from the health sector overall. I, however, would envisage a greater degree of regulation of the private sector, again through amended legislation, as regards fees and the quality of services provided in addition to what is currently in place through the Council for Medical Schemes.
In my view the implementation of what I consider to be an ideologically driven National Health Insurance scheme as envisaged in the NHI Bill, the consequences of which I frankly believe are poorly understood by many of the policy makers, is an action with extremely high risk and with no measures prevent to its possible mission critical consequences. The key to moving closer to the ideal of Universal Health Coverage in South Africa is addressing the shortcomings of the current public sector rather than attempting to legislate the demise of the private health sector as we currently know it.
At times I feel like a lone voice in the wilderness but I must remain hopeful that, unlike the engineers and managers prior to the Columbia and Challenger space shuttle launches, the decision makers will take off their political hats and put back their expert hats and truly listen to the warnings before the NHI launch!
Unless something dramatic happens these will be my last comments on South African National Health Insurance as from my perspective I have now exhausted the topic !
