/ 6 February 2014

NHI: Let’s talk about this revolution


Towards the end of 2013, on the eve of the Competition Commission's inquiry into private-sector costs, Health Minister Aaron Motsoaledi yet again referred to the "war" he was engaged in with the private sector.

Comments like these are hyperbole, used for dramatic effect. They should have no place in the debate and should not be condoned. Exaggerating and distorting the facts concerning the private sector is unbecoming of a minister responsible for both the public and the private sectors, and does little to assist the process of dialogue between the health department and the private sector about the issue of costs.

There is also a danger that such an emotive view could prejudice the independence of the Competition Commission inquiry into private-sector costs, thereby predetermining its outcome.

The private sector is not the enemy of the people that Motsoaledi persists in trying to portray it as. In fact, all studies conducted concerning the private sector in general show the sector in a very positive light and not as the demagogue of greed he clearly wishes people to believe.

The private sector supports and is loyal to the Constitution and, in particular, is keenly cognisant of health as a constitutional right and is therefore working tirelessly to improve access to quality care to the people of this country. And it should also be acknowledged that the taxes paid by people working in and accessing services from the private sector are currently responsible for most of the public-sector health budget.

The minister is clearly passionate about and committed to the cause of universal access to affordable quality care, and I believe the vast majority of workers in the private sector share his desire to extend quality healthcare to more South Africans. Where we differ is how best to achieve that worthy goal.

During his talks, he extols the moral probity of universal access, and one cannot but marvel at the minister’s ability to hold audiences spellbound, imagining a better healthcare system for all.

But in projecting this moral imperative for a better future, Motsoaledi is being disingenuous – he is painting a picture and creating an aura of hope that simply cannot be, unless, that is, one ignores and disregards the realities of South Africa’s budgetary and human-resource constraints.

Anecdotal information
In support of his argument against the private sector, the minister repeatedly uses anecdotal information, comparing the cost of, for example, a medical male circumcision between the state and private sector. But these figures compare only the state-hospital fee with the total fee in the private sector that conveniently ignores the infrastructure, the staffing, the VAT-exclusive nature of state services and the effect of state tendering processes on pharmaceutical costs in the public service.

A recent well-researched report tabled by Shivani Ramjee of the University of Cape Town department of actuarial science at the 2013 Hospital Association of South Africa conference in Cape Town puts the difference in costs between the two services at about 5%.

It is true that healthcare inflation exceeds normal inflation by several percentage points (Statistics South Africa quotes South African figures of 4.3% between 2009 and 2013), but this is not unique to the private sector or to the South African private and public sectors combined. It is a worldwide phenomenon. In fact, a study by Towers Watson and Company in 2012 found that South Africa's healthcare inflation rate was the eighth lowest out of 52 countries surveyed.

The South African Private Prac­titioners Forum (SAPPF) responded to the green paper on the National Health Insurance (NHI) scheme in some depth but the forum has been waiting (it seems forever) for the "imminent" release of the white paper to see which of its suggestions may have been incorporated.

One possible reason for the delay in publication could be the difficulty being experienced by the authors of the white paper of reconciling the budgetary concerns of the ministry of finance with the health minister’s vision of the NHI.

Motsoaledi in his NHI talks consistently shies away from detailing the service package we are likely to see offered under the NHI. But the SAPPF has several concerns.

On a price-parity comparative basis, it needs to be highlighted that the United States, for example, spends about R80 000 a person a year on healthcare, the United Kingdom about R35 000, Australia R32 000 and the South African private sector R12 000. (It should be noted that this is private after-tax money and at little or no cost to the state.)

By way of contrast, the state currently spends about R3 000 a person a year of taxpayer’s money on South Africans who cannot afford private care.

Additional tax
It is my understanding that, to fund the NHI, taxpayers are to be asked to pay an additional tax, equal approximately to the amount that they are currently paying for their medical schemes.

For the sake of argument, let us assume that my understanding is correct. (There is no white paper to tell me I am not.) Approximately R100-billion will be added to the public healthcare budget.

Once this amount from the private sector is distributed among all the country's people, the amount spent by the state will rise by about R1 500 a person a year to this figure of R4 500.

Taxpayers will still be paying the same amount (or more) but will now only be receiving about a third of their previous value (down from R12 000 to R4 500), whereas the state patients will be marginally better off by about R1 500 more a person a year.

Now, one needs to compare what R4 500 will purchase in South Africa with what is available currently to British citizens (R35 000 a person) or to current South African private-sector beneficiaries (R12 000).

What can be deduced from this?

Firstly, by international standards, it should be clear that the cost of South African private care, at R12 000, is relatively inexpensive when compared with what is spent by the US, the UK and Australia.

Secondly, reducing the available private-sector spend by two-thirds means that many treatments and drugs currently available in the private sector will either not be available at all, or only after long waiting periods (hip and knee replacements or lens implants are a few examples), as severe rationing of care and a severely trimmed benefit package will be the only way of staying within budget.

This constrained benefit package will be considerably less than the care package currently available in the local private sector, under the UK's National Health Service or in Australia and New Zealand.

Universal access
Medical-scheme members and personal taxpaying citizens need to understand this when being sold the vision of an egalitarian system of universal access.

The minister is also being disingenuous when he states that there is no agenda to abolish private healthcare. Not only is the green paper explicit on the subject of wanting to see an end to the current two-tier system but the effect of taxing current medical-scheme members and personal taxpayers to raise the additional funds for the NHI will do just that.

It has been estimated that, should this additional tax materialise (how else is the NHI to be paid for?), 80% of all medical-scheme members would have to forgo their medical-scheme contributions in favour of the mandatory tax, as they would be unable to afford both and they would have no option but to migrate to the state service.

This would deal a death blow to all but the most financially robust of schemes and also, as a consequence, to most professionals operating in the private sector, many of whom would not be able to find work in the public sector and would consequently either retire or emigrate.

The current programme adopted by the health minister in promoting his vision of the NHI has lacked an essential ingredient: the robust public debate that such an important policy change demands.

Without such a process the minister risks losing the support of the very people who will be relied on to fund the NHI – the taxpayers.

In the absence of the white paper, I request the minister to call a conference with representatives of the private sector so that such a debate can take place.

Dr Chris Archer is the chief executive officer of the South African Private Practitioners' Forum