Is NHI a healthy way to go?

Daily News - - FINANCE/NEWS - STAFF RE­PORTER

IN THE face of di­vided pub­lic opin­ion, the much-touted Na­tional Health In­surance (NHI) sys­tem looks set for full im­ple­men­ta­tion in the com­ing years af­ter the white pa­per gazetted by Health Min­is­ter Dr Aaron Mot­soaledi in June 2017.

The govern­ment plans to fully im­ple­ment the NHI by 2025. And it will be manda­tory for ev­ery cit­i­zen to be­long to the NHI, and all state med­i­cal schemes will be made re­dun­dant. But it is un­clear how the NHI will af­fect pri­vate med­i­cal schemes, although it is likely that smaller schemes will cease to ex­ist.

Ac­cord­ing to the white pa­per, “(the) NHI is a health-fi­nanc­ing sys­tem de­signed to pool funds and ac­tively pur­chase ser­vices with th­ese funds to pro­vide uni­ver­sal ac­cess to qual­ity, af­ford­able per­sonal health ser­vices for all South Africans based on their health needs, ir­re­spec­tive of their so­cio-eco­nomic sta­tus.

“The NHI will be im­ple­mented through the cre­ation of a sin­gle fund that is pub­licly fi­nanced and pub­licly ad­min­is­tered.”

The white pa­per says the NHI will be fi­nanced by the NHI Fund, which must be es­tab­lished through leg­is­la­tion. The fund will be fi­nanced out of gen­eral taxes and from pay­roll and sur­charge taxes.

The main fea­tures of the NHI in­clude the fol­low­ing:

● In­te­grat­ing all sources of fund­ing into a uni­fied health-fi­nanc­ing pool that caters to the needs of the pop­u­la­tion.

● Pay­ing for all health­care costs for the pop­u­la­tion.

● Manda­tory pre­pay­ment of health care, which dif­fers from other modes of pay­ment, such as vol­un­tary pre­pay­ment and out-of-pocket pay­ment.

● En­sur­ing that in­di­vid­u­als do not suf­fer fi­nan­cial hard­ship and/or are not pre­vented from ac­cess­ing health ser­vices. This means elim­i­nat­ing var­i­ous forms of di­rect pay­ment, such as co-pay­ments.

● Pur­chas­ing health­care ser­vices for ev­ery­one, and will use its power as a sin­gle pur­chaser to iden­tify the coun­try’s health­care needs and de­ter­mine the most ap­pro­pri­ate, ef­fi­cient and ef­fec­tive mech­a­nisms for draw­ing on ex­ist­ing health­care ser­vice providers.

The NHI Fund, in con­sul­ta­tion with the health min­is­ter, will de­ter­mine its pric­ing and re­im­burse­ment mech­a­nisms. Health­care providers who want to con­tract with the NHI Fund will have to com­ply.

Ma­ture

Di­rec­tor-gen­eral of the Depart­ment of Health Pre­cious Mat­soso said the white pa­per stip­u­lates that, un­til the NHI is fully im­ple­mented and ma­ture, the role of med­i­cal schemes will not change.

How­ever, she said this doesn’t pre­clude any changes to the busi­ness of med­i­cal schemes or trans­for­ma­tion re­quired in med­i­cal schemes.

“Cur­rently, the med­i­cal schemes’ role un­der the fully ma­tured NHI is that of com­ple­men­tary ser­vices cover. This means that only ser­vices not cov­ered by the NHI can be of­fered as cover. If med­i­cal schemes un­dergo both vol­un­tary and reg­u­la­tory re­form to be­come aligned and con­sis­tent with the ob­jec­tives of the NHI, there will be a need to relook this,” Mat­soso pointed out.

The Coun­cil for Med­i­cal Schemes (CMS) has an­nounced plans to con­sol­i­date the med­i­cal schemes in­dus­try by dis­solv­ing or con­sol­i­dat­ing small schemes in line with the white pa­per.

More than 228 000 peo­ple be­long to 31 med­i­cal schemes that had less than 6 000 mem­bers at the end of De­cem­ber, 2015, ac­cord­ing to the CMS’s 2015/16 an­nual re­port.

The Depart­ment of Health said only 8.8 mil­lion peo­ple be­long to med­i­cal schemes out of about 55.5 mil­lion.

Ger­hard van Em­me­nis, the prin­ci­pal of­fi­cer of Boni­tas Med­i­cal Fund, said it’s im­per­a­tive that mea­sures are put in place that will en­able med­i­cal schemes to work in tan­dem with the NHI to pre­vent du­pli­ca­tion of ser­vices, im­prove ac­cess to health­care and de­liver qual­ity ser­vice.

“If the fu­ture means there is only com­ple­men­tary cover from med­i­cal schemes, it will be very lim­ited in its of­fer­ings, with cover for ser­vices such as den­tistry and rare con­di­tions. This means the num­ber of med­i­cal schemes will greatly re­duce,” Van Em­me­nis added.

Martin van Staden, a le­gal re­searcher at the Free Mar­ket Foun­da­tion, said there is no doubt that South Africa needs se­ri­ous health­care re­form, but the NHI as it is cur­rently pro­posed is un­re­al­is­tic, and if it is at­tempted it will do more harm than good to the econ­omy.

“With the 2010 cost es­ti­ma­tion in­flated with the Con­sumer Price In­dex, in 2017 terms the NHI will cost the tax­payer not R255.8 bil­lion but R368.8bn, by 2025. Even this, how­ever, is a con­ser­va­tive es­ti­mate in light of overly gen­er­ous fu­ture growth es­ti­mates pro­vided by the govern­ment.

“Fur­ther­more, in 2017 terms, the NHI will cost South Africa R156bn ev­ery year from 2025 on­wards – as­sum­ing we achieve 2% growth – which is roughly equal to four 2010 Soc­cer World Cup tour­na­ments or 1.4 mil­lion govern­ment houses a year. The NHI would dou­ble South Africa’s health bud­get,” Van Staden warned.

In its re­sponse to the white pa­per, the South African In­sti­tute of Race Re­la­tions (SAIRR) said the NHI was premised on a num­ber of flawed as­sump­tions, and it over­looked many of the gains al­ready made in man­ag­ing the bur­den of dis­ease.

The SAIRR said the white pa­per dis­re­gards the main rea­sons for the poor per­for­mance of the pub­lic health­care sys­tem, and this fail­ure re­sults in a skewed di­ag­no­sis of the prob­lems in the health­care sec­tor, re­sult­ing in a skewed as­sess­ment of how th­ese prob­lems can be over­come.

“The govern­ment should in­crease the af­ford­abil­ity of med­i­cal scheme cover and health in­surance by in­tro­duc­ing state­funded health­care vouch­ers for house­holds earn­ing less than R15 000 a month,” the SAIRR pointed out.

“The cur­rent med­i­cal tax credit could be com­bined with a portion of cur­rent pro­vin­cial health ex­pen­di­ture to yield sig­nif­i­cant amounts of an­nual rev­enue. This could be used to pro­vide ev­ery house­hold within this in­come range with a voucher that could be used solely for the pur­chase of health­care ser­vices from ei­ther the pub­lic or the pri­vate sec­tors,” the SAIRR sug­gested.

In Switzer­land, health­care is uni­ver­sal and is reg­u­lated by the Swiss fed­eral law on health in­surance.

There are no free state-pro­vided health ser­vices, but pri­vate health in­surance is com­pul­sory for ev­ery­one.

The govern­ment sub­sidises health care for the poor on a graded ba­sis, with the goal of pre­vent­ing in­di­vid­u­als from spend­ing more than 10% of their in­come on health care.

In Singapore, the govern­ment con­trols and heav­ily sub­sidises the pop­u­la­tion’s health care, but a prin­ci­ple is that no med­i­cal ser­vice is pro­vided free of charge.

This ar­ti­cle was first pub­lished in the 4th quar­ter 2017 edi­tion of Per­sonal Fi­nance

PIC­TURE: AP/AFRICAN NEWS AGENCY (ANA)

A sur­gi­cal pro­ce­dure un­der way at Chris Hani-Barag­wanath Hos­pi­tal in this file photo.

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