Government is championing a radical and dramatic overhaul of the country’s health system, but observers warn that progress is likely to be slow because of the costs of the programme, not to mention government’s own review processes.
The observers say that the poor state of the health system at present is also likely to delay the implementation of the new plan. They emphasise that the plan will work only if it has the buy-in of key health sector stakeholders.
The ANC aims to create universal and comprehensive healthcare coverage for all South Africans.
While experts agree that the national health insurance (NHI) is something South Africa desperately needs, they say it is unlikely to succeed in the stated target of five years, given the present state of public healthcare.
South Africa spends about R1 361 per head of population on public healthcare, a total of R63-billion annually. Expressed in terms of the taxpaying base of 10-million individuals and companies, this is R6 300 for each taxpayer.
Current backlogs, including staff shortages, antiretroviral rollout and getting public hospitals to upgrade to approximate private-sector care could cost an additional R73-billion. This means that merely dealing with these three issues will push up the cost per head to R2893. The cost to the average taxpayer jumps to R13 600.
This excludes the cost of administering the new system.
The policy proposals released by the ANC do not indicate what new taxes might be involved, but the Board of Healthcare Funders has said that the contribution under consideration by the ANC working group is between 3% to 5% of income. This would push the top marginal tax rate to between 45% and 50%.
The first draft of the new NHI policy came under intense criticism for the claimed additional R100-billion it would cost the country, as well as its implications for the rights of individuals to access private healthcare.
The final document has been referred to the department of health, although it differs from the draft is unclear. The department did not respond to emailed questions, but Deputy Health Minister Molefi Sefularo has publicly stated that it wants legislation establishing the NHI approved by Parliament next year.
It is unclear to what extent the ANC will be able to fast-track these health-sector reforms. Some government officials say the process is still in its infancy.
In a report issued by the ANC last week the party proposes that a white paper process be launched to allow for policy and legislative review and consultation.
A white paper simply gives official status to a policy document, allowing for discussion on the matter before legislation processes begin.
According to one government official, a proposal of this magnitude would most certainly require such a review. But the process can be lengthy, calling into question the ANC’s aim to get the NHI rolled out by 2014.
The treasury is ”studying the proposals”, according to spokesperson Thoraya Pandy, and cannot comment at this stage.
What the plan will actually cost the country is unclear.
But according to Alex van den Heever, a health economist, the sums involved, while substantial, would simply not be enough for the promised universal coverage, let alone to pay for the proposed National Health Insurance Authority – a body that would run the NHI and which he estimates would cost R10-billion a year to fund.
”Whether we can implement an NHI depends on how well we run the public service,” he says.
With a public sector cursed by poor management, poor resource allocation, critical staff shortages and bureaucracy, this is not possible, he says.
He puts total public healthcare spending at R79-billion, including other forms of social insurance such as the Road Accident Fund.
This is 55% of total spending, including private medical schemes, at R144-billion.
Aside from introducing a new NHI system, the increases in expenditure simply to run existing public services are mammoth, says Van den Heever.
He points to three examples. He estimates that to increase the rollout of antiretroviral drugs will cost an additional R11-billion a year in 2009 to 2013 — and this to achieve a target rate of 80% of HIV-infected people.
To restore to the public sector the required staffing norms that existed in 1997-98 would cost an additional R12-billion between 2009 and 2013.
”This does not account for the additional practitioners we would need in the future,” he says.
To meet the shortfalls that would bring public hospitals closer to the service standards of those in the private sector, it would cost somewhere in the region of R50-billion a year.
The additional R72-billion, added to the existing costs, would double the burden on taxpayers.
The proposed payroll tax, set at 3%, would generate R12-billion in additional revenue from existing taxpayers, while increasing tax rates on high-income earners to 45%.
The proposed contribution set at 5%, would raise R21-billion and increase the tax bracket to between 47% and 50% of income.
Van den Heever also disputes claims that the percentage of the population paying into medical schemes has decreased in the past 15 years, a theoretical decrease that suggests that such schemes are becoming increasingly unaffordable.
In fact, the percentage has increased from 5,3-million people in 1994, or 13,8% of the population, to eight million people or 16,2% of the population in 2008.
The proposed NHI would have implications not only for healthcare providers and taxpayers, but for numerous participants in the private sector, including large pharmaceutical companies.
Dr Vikash Salig, chief executive of Dr Reddy’s Laboratories South Africa, says it is imperative that the country evolve to a position where every citizen is provided with suitable healthcare.
Should the NHI follow international examples, there is likely to be a central, desegregated procurement system with a ”quasi-tendering process”.
For private companies says Salig, ”success in the tendering process will be price-driven”.
But in the pharmaceutical sector there are a number of inefficiencies that need to be addressed before there can be increased competitiveness in the local market. These include a lag in pharmaÂceutical registration.
These problematic junctions, where the healthcare system comes up against such inefficiencies, are where NHI implementation could become difficult. ”The big concern is that we [will become] heavily involved in the debate around creating a utopian NHI, which we know will take a long time, and we don’t deal with the crisis that we have,” Salig said.
