Health policy continues to be a mess in South Africa, with disjointed and incoherent positions being taken or, often, a policy vacuum existing, leaving stakeholders in limbo, writes Michael Settas in Business Day.
He writes:
The Board of Healthcare Funders’ (BHF) recent loss in its High Court case to compel the Council for Medical Schemes (CMS) to implement low-cost medical scheme products exemplifies just such a vacuum. That an industry representative body needs to take a statutory regulator to court to facilitate the expansion of more affordable health services to citizens tells us there are severe blockages in policy adequately addressing on-the-ground demand from citizens.
Notwithstanding that the BHF lost this case – it is appealing the matter – the merits of its arguments are obvious. The current medical scheme framework serves only wealthier citizens, hence only about 15% (9m) of the population is covered by them. Even if we examine those who are covered, about 2m are public-sector workers and their families, whose medical scheme contributions are heavily subsidised by taxpayers.
The general household survey routinely undertaken by Stats SA has shown for many years that about 30% of citizens will first seek medical care in the private sector, even though most of these patients do not have any form of medical insurance. It is obvious why these patients do not first seek care in the public sector, but without being able to purchase prepaid private insurance cover, they must bear the cost of the private sector care out-of-pocket.
Worse for BHF and its medical scheme members is that the CMS has – for years – been extending an exemption to a small group of insurers to, in effect, undertake delivering similar low-cost products. The CMS will not allow any new insurance companies an exemption, thus neatly delivering to this small pool of insurers a regulatory induced monopoly.
The insurers are currently delivering what the medical schemes are also wanting to deliver, namely lower cost medical insurance cover. And demand has been high, especially where employers subsidise such cover for employees.
However, there are unnecessary costs and disadvantages to using a temporary exemption. Since this market is a monopoly, innovation and cost savings from efficiencies are less likely due to minimal competition.
Second, the medical tax credit does not apply to insurers, making their low-cost version of these products more expensive for their members than if the same products existed within medical schemes.
The temporary nature of the exemption also provides no policy certainty, hence no one is making long-term investments into this market.
The only health policy decision that the government seems determined to implement is the ANC’s ideological National Health Insurance (NHI), but that is highly unlikely to come to fruition. As is common practice for many ANC-inspired pieces of legislation, it is unconstitutional, and five separate legal challenges have been launched against it.
The NHI will also require enormous tax increases from an already heavily burdened tax base.
SA Inc currently has a total tax burden of 26% of GDP, making it the second most taxed upper middle-income country. The recent attempt to raise VAT by two, and then one, percentage point has been met with stiff resistance from within the GNU, so one can only imagine the resistance that is going to arise from attempts to raise new NHI taxes estimated within the NHI white paper at 3.2% of GDP – roughly R240bn at current value.
What fails to be understood among all of this is that there are citizens who need decent healthcare now. They are being failed by a public sector that is in a shambles due to widespread governance failures and management ineptitude, and a current medical scheme framework that is simply not affordable for most.
• Settas is Chair of the Free Market Foundation’s Health Policy Unit.
See more from MedicalBrief archives:
BHF loses low-cost benefit options legal battle
BHF back in court over ‘irrational’ blocking of low-cost medical options
CMS anger over claim it’s depriving South Africans of basic private healthcare
Court slaps CMS with deadline to explain low-cost schemes hold-up