Spoonfuls of medicine

Robust criticism of specific national health insurance (NHI) proposals should not be seen as negating the need for fundamental strategic reform, which includes both social and universal insurance options as components.

Such reforms are urgently needed, but will require careful reflection, planning and phasing.

Widespread criticism of specific proposals being mooted belies the fact that a wide consensus potentially exists among many in government, civil society and the private system concerning strategic health reforms consistent with the goals of an NHI. Central to this consensus is that both the public and private systems need to be regulated properly to achieve explicit and attainable policy goals.

Key focus areas are: substantial improvements in public hospitals; full implementation of the district health system with the deepening of measures to ensure greater accountability; optimising the quality and quantity of cover on medical schemes; and the implementation of national insurance cover for emergency care.

South Africa has close to its national requirement of hospital beds, with about 82 000 and 28 000 in the public and private systems respectively. But the resourcing of public sector beds is less than 50% of private sector equivalents. This gap cannot be made up by the private sector and requires a substantial funding and resourcing strategy, which can only be implemented incrementally.


It is estimated that the recurrent financing gap is about R50-billion, with a need for an additional 160 000 new nurses and 6 000 new doctors who at present do not exist in the country.

It is estimated that getting public hospitals up to private sector levels will take 15 years, depending on the priority public hospitals receive in national policy.

But improved resourcing on its own will not improve the quality of public hospital services. For this to occur, consideration needs to be given to converting major hospitals into parastatals with strong independent and accountable governance structures, consistent with international best practice.

The achievement of basic health goals, such as reduced HIV and TB infection, and reduced child mortality, requires that priority be given to the full implementation of the district health system. It is also more important for districts to become better at dealing with health priorities than it is for them to attract higher-income clientele to clinics.

Of concern is the fact that it has taken 15 years to partially implement a somewhat dysfunctional district system. Strengthening districts, if prioritised now, should take about five years to achieve noticeable changes on the ground.

Medical schemes are central to improving access to healthcare within South Africa, consistent with well-established international practice, for income-earning families.

At present 16% of the population (eight million people), up from 14% in 2004, access their healthcare in this way, with contributions amounting to 3% of GDP (and not the 5% often inaccurately referred to, which includes out-of-pocket expenses), which is now below public health expenditure.

The demand for medical scheme cover correlates strongly with income, with near maximum take-up occurring for any family where contribution costs fall below 16% of household income even in the absence of a system of compulsory membership.

Two discrete, but related, strategic options exist to leverage private services to improve national coverage such that social solidarity improves systematically over time.

The first option involves strengthening the protection offered by medical schemes through the introduction of industry-wide cross-subsidies using a risk equalisation fund.

These should include both some income redistribution and sharing of risk between all contributing families. Extensive consultation and strategic work has long been completed on this framework and merely requires that implementation proceed.

The achievable target for coverage is estimated as five million within five years, taking coverage to 26% of the national population.

The second option proposes that consideration be given to the consolidation of the health platforms of the existing social insurance funds — the Road Accident Fund and the fund offering compensation for occupational injuries on duty — into a national insurance fund focusing initially on emergency care.

Existing earmarked taxes for these funds should be rationalised with benefits initially tailored to available resources. Thereafter the benefits covered should be deepened where appropriate over time.

The first of these initiatives, which is already under way, would maximise coverage for income earners, deepening to include low-income groups, particularly for routine care, chronic care, and elective hospital care.

The second would, within a fairly short period of time, use existing earmarked revenue sources to provide universal access to emergency and trauma care giving effect to the constitutional right of access to emergency care.

Overall there is much to be done to sort out healthcare in South Africa. An opportunity exists to substantially improve the health system over the next five years. But this is also an opportunity that can easily be squandered with implications that will be felt for decades.

Alex van den Heever is an economist and former member of the Taylor Committee of Inquiry into Comprehensive Social Security

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