Many of the government’s statements denigrating private healthcare and medical aids – and why it is so critical that South Africa needs National Health Insurance (NHI) – are fallacies: unsubstantiated and outright lies, according to research commissioned by the Board of Healthcare Funders (BHF).
Dr Katlego Mothudi, MD of the BHF, says despite the goal of universal healthcare being commendable, sidelining private funders is damaging to healthcare options, and the government has used falsehoods and misconceptions to villainise medical aids and private healthcare to help push through the flawed laws.
He told BusinessTech that one of the biggest misconceptions about the NHI, among at least 10 others, is the central idea that healthcare is a “public good”, suggesting all healthcare funding should exclude medical schemes and be government-funded.
“Healthcare is more accurately described as a social good. A public good, like military services, is one that the government must provide and from which no one can be excluded, regardless of payment. While healthcare is essential, it is not feasible to provide it as a public good,” Mothudi said.
The BHF asked Professor Alex van den Heever, Chair in the Field of Social Security Systems Administration and Management Studies at the Wits School of Governance, to investigate many of the government’s claims – and his report supported the organisation’s stance.
“Despite their hyperbolic nature and lack of systematic research, these statements have significant weight because of their endorsement by influential individuals. Professor van den Heever’s report identified frequently repeated assertions that he concluded were unsubstantiated and untrue,” Mothudi said.
These are outlined below:
1. Medical schemes are unsustainable
NHI representatives said in 2009 that medical schemes were headed for collapse because of unsustainable financing models… that schemes were already reaching insolvency levels (in 2009) and “regardless of NHI, if private sector medical schemes premium increases continue at this rate they’ll become non-existent”.
• Academic finding: The assertion that the medical schemes system is not viable and financially failing is not supported by the factual evidence. From 2005 to 2022, medical schemes have maintained stability in all relevant variables. This assertion is assessed as false.
2. Commercialisation is fatal to health systems
In 2011, the former Health Minister called private healthcare a “monster”, which was echoed by the former Deputy Minister as “monstrous and brutal”. The Minister said it is an “uncontrolled, unregulated commercialisation of healthcare”, undermining healthcare as a public good.
• Academic finding: Many countries have established regulated private health financing that works alongside social health insurance and universal healthcare. The position that these are not compatible is not supported by evidence and is assessed as false.
3. Healthcare is a ‘public good’
At the same time (2011), the former Health Minister posited that the use of a “public good” for “excessive profit” is unacceptable, which is why the government introduced the NHI scheme in the first place.
• Academic finding: Healthcare as a ‘public good’ is mistaken and false. A public good is a technical term used in economics to refer to product markets where the exclusion principle cannot be applied: i.e, you cannot exclude access to the product in exchange for payment or other eligibility criteria. Healthcare does not match this definition.
4. Medical scheme benefits run out and medical scheme members are forced to go to public hospitals, adding to the public healthcare burden
This has been used to drive the narrative that a state-run fund in the NHI is necessary to eliminate this practice.
• Academic finding: The NDoH has not conducted a study to back up this claim. Medical schemes must cover the prescribed minimum benefits by law, oncology benefits cannot be exhausted, ICU services cannot run out, and where public facilities are used, the medical schemes must reimburse the state. The claim is assessed as false.
5. Out-of-pocket payments (OOP) make up a lot of private healthcare spend
The NDoH has posited that OOPs, in the form of co-payments or direct payments to the private sector, are significant and are even required by medical aid members with full coverage. This confirms the system doesn’t work and needs to be replaced by the NHI.
• Academic finding: The claim is not based on any empirical study that can be found. According to the WHO, out of 187 countries, South Africa has the 11th lowest OOP expenditure (2000-2022) with expenditure at less than 1% of GDP. The claim is assessed as false.
6. Money spent on private healthcare is inequitable
One of the most commonly stated justifications for the NHI is that the same amount of money is spent on private healthcare to cover a small percentage of the population as is spent on public healthcare to cover the rest of the population.
This has led to per capita spending of more than R11 000 in the private sector versus R2 800 in the public sector.
• Academic finding: Using after-tax money on private healthcare does not reflect health inequity, nor is there any clear instance of how this harms public health system users. The claim of inequity is regarded as false.
7. The distribution of healthcare professionals is inequitable
Another popular justification for the NHI is that the private sector’s profit motive and higher spend ‘steals’ professionals away from the public sector.
The Health Department has said that ‘the cream’ of South African society has access to huge financial and human resources, leaving less for the public sector.
• Academic finding: The Health Department has no information system that can track or justify the claim. Thus, it has no evidentiary foundation. The department has also not performed any systemic analysis to support the claim. The official healthcare workforce makes no such claim, and available information contradicts the assertion. The claim is assessed as false.
8. Medical aid tax credits are an unfair subsidy to the rich
The NDoH says ‘private money’ spent on private healthcare is subsidised by the state to the tune of R47bn due to subsidies through medical aid tax credits.
It says without these subsidies, medical aids would cease to exist – and it’s unfair on anyone not on medical aids because they do not get access to this subsidy.
• Academic assessment: The department has not performed any systematic analysis to back up the claim, and is contradicted by the official documentation that outlines the basis for the subsidy. Further to this, the subsidy is 75.4% paid for by medical scheme households. The claim is assessed as false, manipulative and deliberately excludes any assessment of the subsidy and value it delivers.
9. Most medical scheme beneficiaries are white
A highly divisive and politically emotive argument used to justify the NHI is that private healthcare only caters for privileged white people.
This was repeated by president Cyril Ramaphosa at the signing of the Bill, when he waved off the backlash to the laws as the fears of “well-to-do rich people” and referring to “white fear”.
• Academic assessment: the claim is factually incorrect and false. More than half of all medical scheme beneficiaries are black South Africans, with white South Africans accounting for less than a third.
10. Medical schemes are risk-rated
An official claimed in 2009 that medical aid schemes have a risk-rating policy that recruits younger, healthier people who need less medical attention, only to dump them later or charge them more when they are old and cannot afford premiums.
• Academic assessment: The Medical Schemes Act prohibits risk rating. The claim is assessed as false.
11. People find private and public healthcare equally good/bad
Officials have stated that the public and private healthcare systems are equally good/bad, and that South Africans report the same levels of customer satisfaction when using private and public healthcare services.
• Academic assessment: Using the same set of data, used as a basis for the claim, it’s simply not true. Overall levels of satisfaction for public healthcare is at 53.8% ‘very satisfied’, compared to 92.6% for private healthcare.
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BusinessTech article – NHI built on lies: health funders
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