PUBLIC-HEALTH PUZZLE
There is still uncertainty about just how government’s NHI plan will be implemented. Some proposals, such as getting private health-care workers involved in the public sector, have raised eyebrows
The department of health finally has some sort of answer for where it will get the R256bn to fund National Health Insurance (NHI): from cutting staff in the department and slashing the number of medical schemes.
This was the view put forward by health director-general Precious Matsoso at the Board of Healthcare Funders conference in Cape Town last month — essentially the annual gathering of the medical schemes that are supposed to fund the NHI.
Matsoso said national treasury figures show some provinces are splashing out 70% of their (chunky) budgets on staff — and that’s before they even begin paying for delivery.
“We trim and reduce the size of national departments so we can rescale and invest where it is needed most,” she said.
However, the exact figure needed to fund the NHI is not yet certain. Health minister Aaron Motsoaledi has gone back on the R256bn figure outlined in the NHI white and green papers, saying it is too “linear” and “relies on too many variables”. He says the department has heeded World Health Organisation advice against committing to specific costs of universal health coverage.
“Calculating the exact figure is guesswork,” he says.
Motsoaledi says that having each province run its own administration is not working because it duplicates services and raises costs unnecessarily. He says centralising and reshuffling the health department will streamline how all departments and budgets are run, and prepare the ground for NHI implementation.
At the same time, the department wants to hire well-paid private health-care staff and bring them into public service under NHI. But not only are the pay scales in these sectors worlds apart, the public sector also offers few incentives to health-care professionals.
Provinces such as Gauteng and Kwazulu Natal already face debt and a multitude of legal cases for negligence, among other accusations. Unserviced machinery, medicine shortages and a lack of specialists characterise the sector.
One thing the minister is certain about is that implementing the first five programmes of the NHI — designed to cater for the disabled, children, the elderly and pregnant women, and provide mental health-care services — will cost about R69bn over the next four years.
He says the money for this will come from the tax credit incentives currently enjoyed by medical schemes. Motsoaledi has calculated that, over the same four-year period, medical schemes will cost government R80bn.
It’s not just public health that is going to be restructured; it’s the private sector, too.
Motsoaledi says medical schemes are collapsing on their own, and they need to adopt the NHI single-buyer, single-payer model. “If all schemes use the public tender system, they could save R2bn,” the minister says.
In 2015, schemes incurred a combined deficit of R1.2bn, up from R456m in 2014. Bonitas, the Government Employees Medical Scheme (Gems) and Bankmed were identified as among those with the highest net health-care deficits.
The proposal is that small schemes with fewer than 6,000 members, as well as
Gems and other state medical schemes, be merged into a single structure, reducing the number of schemes and trimming the number of options available in medical schemes.
Discovery Health CEO Jonathan Broomberg says while larger schemes tend to have larger, more stable risk pools than smaller schemes, many smaller schemes are stable, have strong reserves and provide excellent benefits for their members.
“Any process of consolidation will therefore have to be carefully defined and implemented to ensure that it is in the best interests of all [affected] members, and also is fully compliant with applicable legislation,” he says.
A 2017 medical scheme study by advisory firm GTC measured value for money from options in 11 broad categories, as well as the ability of schemes to sustain that value, from the 144 options offered by 23 schemes.
In its rating system, based on a plan’s competitiveness in relation to others in the same category and on the company’s solvency, smaller schemes with fewer than 1m members were ranked top of the crop.
The problem is, these are the schemes targeted by the consolidation plan.
Come February, 29 medical schemes that do not meet the minimum requirement of 6,000 members, as per the Medical Schemes Act, will be dissolved.
Sipho Kabane, acting CEO and registrar of the Council for Medical Schemes, says the main idea is to create bigger pools to ensure better cross-subsidisation.
Broomberg is of the view that the current approach to solvency, which uses a “one size fits all” model, is outdated and not in the best interests of schemes and their members. He says it results in some schemes being heavily overcapitalised, with reserves far beyond what is actually required to protect members. At the same time, some schemes with reserves above the statutory level of 25% actually do not provide sufficient protection to members, and these should be required to hold higher reserve levels.
He suggests a more appropriate line would be some form of “risk-based capital” approach, in which the solvency of each scheme is separately determined based on various characteristics (size, for example) to determine its risk profile.
What it means: Small schemes with fewer than 6,000 members, as well as state schemes, may be merged into a single structure