The rationale behind an overhaul of
the South African healthcare
system
HEALTH OUTCOMES IN SA
Namibia
Brazil
Chile
Mexico
Netherlands
Zimbabwe
Nigeria
South
Africa
Population
2m
186m
16m
107m
16m
13m
144m
47m
Life expectancy at
birth male
59
68
74
72
77
43
48
50
Life expectancy at
birth female
63
75
81
77
81
42
49
52
Healthy life
expectancy at
birth male
43
57
65
63
70
34
41
43
Healthy life
expectancy at
birth female
44
62
70
68
73
33
42
45
Child mortality
(per 1000):
61
33
10
27
5
86
191
68
Adult mortality
male (per 1000)
367
225
128
162
89
771
447
598
Adult mortality
female (per
1000)
311
118
64
94
65
789
399
532
Total expenditure
on health per
capita (USD)
338
765
697
756
3 383
147
50
869
US$
HEALTH OUTCOMES IN SA
Top 4 contributors to death




HIV/AIDS
Infectious diseases
CVD
Injuries/trauma
South Africa has almost the highest incidence of TB (all forms)
per 100 000 population and, of the 15 countries with the
highest estimated TB incidence in 2005,SA and its neighbours
(Botswana, Namibia, Zimbabwe, Mozambique, Lesotho,
Zambia, Malawi and Swaziland) provided 9 countries.
TB
DEATH RATES BY AGE AND GENDER
 Mortality for ages 15-64 increased substantially from 1997
to 2004 (males 1.8 times, females 2.4 times)
 More specifically, in certain age groups
- death rates for females 20 -29 more than tripled
- death rates for males 30 – 44 more than doubled
 The bulk of these increases is attributable to
communicable diseases
 South Africa is one of only 21 countries (all either in
Africa or the former Soviet Union) where life
expectancy at birth has declined by 4 years or more
between 1990 and 2001.
DEATH RATES - AGE AND GENDER 97-04
 Communicable and related diseases
PUBLIC/PRIVATE SECTOR
Population covered:
 Public – 40 million (84.5%)
 Private – 7.5 million (15.5%)
Expenditure on health:
 Public – R60 b – funded through tax allocations
 Private – R64 b – voluntary contributions (except
employer based schemes)
CONTRIBUTORS TO BAD OUTCOMES
Inefficiencies in health not particular to the public sector.
A divided healthcare system contributes significantly to the
dismal results.
Health expenditure on the 7.4 million private beneficiaries is
six times that which is spent in the public sector.
Contributing to the inefficiencies is the imbalance in human
resources in the private sector versus the public sector.
One pharmacist for every 1000 beneficiaries in the
private sector, and 17 000 beneficiaries to one
pharmacist in the public sector.
One GP for every 540 beneficiaries in the private
sector, and 4000 to every one GP in the public sector.
This, amidst a growing burden of disease especially in
the public sector.
PUBLIC/PRIVATE SECTOR
Discrepancies: Provider population pvt vs public
Source: UCT
MEDICAL SCHEME SPEND
Gross income – R74 billion
 Hospitals – R24 billion  17.5% - 37% of total
 Pharma (out of hospitals) 11 billion  18.2% - 17.3% of total
 Specialists – R14 billion  13.7% - 21.7% of total
 Dentists – R4.9 billion  14.6%
 GPs - R5.2 billion  18.5% - 8.1% of total
 Non healthcare costs R9.7 billion
Source: CMS Report 2008
MALALIGNNMENT
Funders
 Regulatory reforms on funder side – social
solidarity principals.
- Social benefit or commodity?
 Community rating in a voluntary environment
 FFS environment
 PMBs
 Regulated
 Referred and hospital based care
 Paid in full
MALALIGNNMENT
Funders
 Competition Commissioner ruling
 Costs increased.
 Collective guidelines on new
technology.
 Collective blacklisting of fraudulent
providers.
 Collective trade practices e.g.
marketing standards.
MALALIGNNMENT
Providers
 Uncertainty around NHRPL.

Ethical tariff. (3000 extra tariffs in the SAMA Guide to
Billing)

Members at liberty to go directly to specialists –
bypassing gatekeeper.

PMB’s - regulated but in the absence of regulated
pricing and delivery vehicle for benefits.
FRAUD & ABUSE
 It is estimated that as much as 10% of claims paid are either
fraudulent or abusive in some way (depends on the size of
the scheme, the nature of the reimbursement models
and benefit design).
 Quality of care decreases because of perverse
incentives, e.g. kickbacks; c-section rate
 Threat to the long term sustainability of the private health care
sector.
FRAUD & ABUSE







Third party payment system
Fee for service
Incentives are not aligned
Weak / overloaded legal system
Grey areas between fraud and abuse
Conflict between over-servicing and quality care
The moral hazard
NATIONAL HEALTH INSURANCE
Key objectives:
 Universal coverage – Everyone will have equal access to a
comprehensive package of benefits
Based on two principles
 The right to health - meaning that health services will be free at the
point of service, therefore there will be mandatory pre-payment.
 Cross-subsidisation
- Income cross-subsidies (to pay according to ability to pay)
- Risk cross-subsidies (benefit according to need)
NHI
Considerations: Funding
 Earmarked tax - possibly between 3% - 5% of personal
income
 Increased allocations from general tax revenue
 Possibly RAF & COID
 The NHI will operate on a single purchaser model, which
means that the NHI agency or NDoH will purchase
health services for the entire population. The advantage
will be in the economies of scale.
 Single Administrator system?
NHI
Considerations: Provision
 Public sector to be the backbone for providing
healthcare, BUT
- standards in public sector must be raised
- resources
- governance
- infrastructure
 Accreditation of providers is a key principle.
Private‐sector practitioners will be accredited as NHI
providers based on their ability to provide services that
meet quality standards and their willingness to accept
NHI payment levels.
THE BHF PROPOSAL
Key points of a multi-payer system
 There is a role for a multi-payer system under a single-purchasing
NHI-funded health system.
 The multi-payer has a key role to play in terms of risk-pooling and
provider payment
 The French NHI system – rated number 1 in the world by the WHO provides universal coverage to comprehensive services through a
multi-payer system.
 The French multi-payer system has been effective in controlling
costs whilst at the same time providing improved levels of access to
increasing levels of service.
THE BHF PROPOSAL
Multi-payer systems harness competition to:
 control costs
 improve quality and consumer rights through incentives
 provide expertise to collect data
 conduct health technology assessment
 monitor fraud and abuse
 act as an intermediary between the government and the member
resulting in improved accountability and overall governance.
THE BHF PROPOSAL
 It makes for a seamless health financing experience for members of
medical schemes and a smooth transition for them into the NHI
system.
 People will not have to terminate their medical scheme membership
and be forced into an unknown and at first unpredictable new health
financing environment.
 The model recognizes and protects the constitutional rights of
medical scheme members to the quality, scope and levels of care
they currently experience. The proposed model precludes the
diminution of access by NHI in respect of current members of
medical schemes.
 Medical schemes will continue to collect contributions in respect of
optional additional benefits from members.
THE BHF PROPOSAL
 Boards of trustees will be able to play a strong consumer advocacy
role.
 People who previously could not afford to join schemes will find that
they now can do so because their contributions are paid by the
State. The growth of schemes will ensure continued funding of
schemes and volume-based business for scheme administrators.
 The optional additional benefits offered by schemes will be voluntary
but still be able to cater for those who want something over and
above the NHI benefits.
 The existing skill, knowledge and infrastructure of the private funding
system will not be lost or wasted but will be harnessed to ensure
that NHI works.
WIN/WIN SCENARIO
Earmarked
tax
Current
budgetary
allocation
Tax
allocations
NHI Fund
NHI Agency (purchasing, HTA, fraud prevention, etc.
Top up
Package
Top up
Package
Top up
Package
Scheme
1
Scheme
2
Scheme
3
NHI
Package
NHI
Package
NHI
Package
Top up
Package
State
Fund?
NHI
Benefit
Package
Scheme
4
NHI
Package
Thank you