Healthcare needs rules

INQUIRY: COMMENT INVITED ON ITS IDEAS

‘Health market’ a fallacy because it does not function the way markets should work.

If a service is provided by a company rather than government, this does not automatically mean a market is at work. The point is obvious but has passed by many in South Africa. Private provision of services is moving into the spotlight as the government looks to make the health system more accessible to the poor. One aspect is the Health Market Inquiry (HMI), established by the Competition Commission and chaired by former Chief Justice Sandile Ngcobo. It recently released a provisional report recommending more regulation of private health care. It has invited comment on its ideas.

It is inevitable that whatever proposals it comes up with will be attacked as an assault on the free market. This will ignore the reality – that there is no market in health care in South Africa, at least not one which works the way markets should work.

Markets work only for people who have enough money to take part. So the local healthcare market would exclude many people who cannot afford private care. But that is not the only problem – even those able to join medical schemes do not get the benefits markets are meant to offer.

For markets to work, consumers must be able to make informed choices: they must have both a real right to choose and enough information to make that choice. But information and choice operate weakly in private healthcare and not at all in the private health insurance offered by medical aids.

The Competition Commission and the department of health are not trying to abolish the market, they are trying to make it work. The accurate debate is about whether they are doing it in the best possible way.

It might be true that people who can afford private medical care can choose their general practitioner. But that is where it ends. If patients need specialised care or hospital treatment, they don’t choose the specialist or the place they will be treated.

Given all this, the HMI’s proposal that healthcare providers and funders should be regulated is a pro-market move – it seeks to make informed choice more of a factor than it is now.

Similarly, an amendment to the Medical Aid Schemes Bill, which would abolish brokers, is currently up for discussion. It, too, is not an attack on the market. Its likely effect would be to force brokers into the customer relations departments of the medical schemes, improving market information by ensuring that consumers know that they are dealing with people who work for the schemes, not for them.

Again, to oppose this measure is not to defend the market – it is the opposite.

For years, it was assumed the market was delivering satellite television when there was only one supplier. Concentration in the formal economy means most goods are produced by subsidiaries of a handful of companies – and sold in stores owned by only two or three. While competition between a couple of firms is technically a market, it is hardly one which offers benefits to consumers.

The claim that markets must be left alone very often means there is a need to leave existing private providers alone. This hides the reality that, in current circumstances, the challenge is not to protect private providers but to ensure they really are subjected to the rules by which markets are meant to force them to play.

Steven Friedman is a professor of political studies at the University of Johannesburg. First published on The Conversation.