Three critical pieces of health legislation are about to be signed into law or are being drafted for future legislation. These are the regulations relating to a transparent pricing system for medicines and scheduled substances (Medicines and Related Substances Control Amendment Act of 1997), social health insurance (Medical Schemes Act of 1998) and the certificate of need (National Health Bill — still to be signed into law).
Regulations relating to a transparent pricing system have already resulted in robust public debate. But the issue of the high cost of drugs in South Africa is not new. In 1990 the African National Congress’s health committee highlighted the issue along with another that has been recently revived — national health insurance.
In 2001 the pharmaceutical industry took the government to court, intending to strike down major provisions of the Medicines and Related Substances Control Amendment Act.
It was an action that drew international attention. Big pharmaceutical companies backed off, paving the way for the introduction of legislation that enabled the government to introduce affordable medicine by making the pricing system more transparent; offering generics as a cheaper alternative either by importation or local manufacturing; or importing cheaper medicine from other countries.
In 1994 doctors were consulted and met with then-director general of health Dr Olive Shisana about the now controversial Certificate of Need. Agreement was reached that this would be necessary to ensure a more equitable health system for the future.
The need for an introduction of some form of national health insurance began gaining momentum again last year.
South Africa’s health system has been one of the most inequitable in the world, with a small percentage (less than 17%) having access to the best “walk-in” health care while the majority remains reliant on a buckling public health system. In 2000 the World Health Organisation ranked South Africa a paltry 175 out of 191 countries in its health report. But the ranking was not only concerned with the amount of money spent on public health care. South Africa’s biggest shortcoming, according to the report, was its inability to regulate the private sector and, in turn, control the widening gap between rich and poor.
Although South Africa is probably one of only a handful of lower- to middle-income countries to introduce such legislation, countries like Australia, France, Germany, Canada, Belgium and the United Kingdom have used different models (depending on their particular health and social needs) to achieve the same outcome.
The regulations aimed at lowering drug prices are likely to become law as early as May 2. South Africa’s old pricing structure is notoriously complicated, secretive and confusing with incentives, discounts and mark-ups hidden along the drug chain.
The regulations are likely to change this. While the pharmaceutical industry has become one of the most lucrative in the world, the new legislation does not seek to deny the pharmaceutical industry, pharmacists, private hospitals and dispensing doctors the right to earn a profitable living.
Although only likely to be introduced in 2006, groundwork is being done to introduce social health insurance. Reforms introduced by the revised Medical Schemes Act have already prepared the way for some form of national health insurance. Essentially, social health insurance aims to ensure all people in formal employment have access to contributory health cover.
There are three areas that still need clarification from the perspective of future health-insurance users:
• What proportion of income would go towards health insurance and will employers be forced to pay a percentage?
• Will the state be the sole provider of health services or will it be done in partnership with the private sector?
• Who will administer the fund — the state, the private sector (albeit without replacing current medical aids) or a parastatal?
There are currently 7,025-million people who are beneficiaries of medical schemes (16,2% of a population of 43,325-million). A further 8,127-million could potentially become beneficiaries. Lowest income groups and those without an income are expected to remain in the publicly funded system. This amounts to 28,173-million people.
The government has made it clear that, over time, contributions to some form of health-care cover should become mandatory for all those with the ability to pay. It is expected that the mandates will be phased in over time, beginning with high-income earners and specific categories of employers.
The mandates could then be broadened with the establishment of a state-sponsored scheme to meet the needs of lower-income people who will not be able to afford conventional medical schemes. The current favoured proposal is that those on social health insurance will use designated facilities (public-private facilities) and, should they opt to go elsewhere, pay the difference.
Despite reforms introduced by the Medical Schemes Act, it is still possible for some open schemes to design and market themselves in such a way that they attract younger and healthier people. This leaves other schemes with older and less healthy people. Legislation aims to address this via a risk equalisation fund. In its simplest form, the fund receives contributions from those schemes with a younger age and better health profile and pays amounts to schemes with an older age and poorer health profile.
The legislation will also address the huge tax subsidies afforded to those on medical schemes. Estimates for 2002 were that tax-expenditure subsidies to medical schemes amounted to R7,8-billion, which represents more than R1 000 a beneficiary a year. This is more than the public sector spends per head on delivering health care. These tax subsidies could be re-routed to pay for those not able to afford health care.
Although a component of the soon-to-be introduced National Health Bill, it is critical that the Certificate of Need is introduced at the same time as social health insurance. Devised as an instrument to redistribute private medical doctors, pharmacists, health establishments and technology services to less well-served areas, the certificate has proved controversial.
However, Minister of Health Manto Tshabalala-Msimang told a parliamentary briefing this week that the regulations would not target doctors but health establishments (hospitals and medical centres), pharmacists and technology centres. Rather than relocating established doctors, the Certificate of Need will seek to limit the number of private doctors in a demarcated area. But it will take some time before it comes into effect. — Health-e News Service