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NHI a complex process as part of wider plan to reform health sector – Crisp

The National Health Insurance (NHI) is not simply about redistributing resources between the public and private health sectors, but one component of the plan to reform the entire health system, writes head of the NHI Nicholas Crisp.

He was responding to an opinion piece in Bhekisisa on 10 August titled NHI: The problem with trying to kill two birds with one stone, Dave Martin, a rural development specialist who lives in Nqileni village in the Eastern Cape, questioned whether National Health Insurance would make things worse than better.

Martin has used public healthcare for most of his life and lives within reach of two well-run state hospitals – about 20km from both Zithulele and Madwaleni district hospitals – and has seen first hand that public sector healthcare can be fixed.

But he’s concerned that the government’s proposed NHI scheme will worsen things for people, because it’s trying to fix two problems at once: poorly run public health facilities, and redistributing the money available for healthcare more equitably.

Crisp says:

NHI aims to reform the entire health system, and in so doing indeed solve the two problems Martin raises: how to improve badly run, under-resourced public health facilities, and how to divide the money available for healthcare in a more equitable way.

But the view that “the NHI’s approach seems to avoid dealing with the difficult questions as to why some hospitals work well, and some don’t” minimises the challenges the reforms aim to address.

Here’s why.

1. Health budgets aren’t allocated nationwide using the same formula

Provincial governments use their provincial equitable shares for their health budget. (Provincial equitable shares are funds from the national purse given to provinces). But the legislatures are not obliged to keep to the functional allocations (meaning provinces can decide themselves how much each department gets).

Treasury funds many extra health costs in the provinces through conditional grants, channelled through the national Health Department.

This is to overcome the inequity in health allocations (because different provinces get different amounts of money from Treasury based on their population and economic development), to pay for interprovincial care as not all of them have the same means for providing complex services, (like as special surgery for correcting heart or skull defects in children, managing spinal injuries or bone marrow transplants) and to support national priorities like training health staff and dealing with HIV and TB.

Health grants amount to more than in any other department, both in number and value.

Provinces also don’t spend their health budgets the same way. This is because they look at how they spent their money the previous years and adjust it based on the currently available funds (so-called “incremental budgeting”). But the groups being served change all the time: people move away, age groups change and the burden of disease varies.

2. Quality is not always about management

While there are clear differences in “quality between successful and failing state health facilities”, it’s not always “due to the manner in which they are managed”. It is far more complex, because of things like centralised decision-taking, longstanding infrastructure neglect, other departments being in control of parts of the health spending and inequitable allocations.

The NHI Bill addresses how hospital management will be decentralised and how establishments – or providers of services, e.g. doctors, dentists, etc, –will be paid from the central Fund. There is a specific provision for the 10 national central hospitals to be formally made into independent entities within the public service, placing greater responsibility on the boards and giving direct authority to the management.

But there is no specific provision for other hospitals to be similarly autonomous, so provincial Health Departments will probably still run the remaining facilities. The difference is this will not be a primary assigned function in law but a delegated function – so they will not be able to make decisions themselves, but will have to abide by what their governments decide.

3. The NHI is only one component of getting a single health system in place

Money currently spent in private healthcare establishments, whether through prepaid medical schemes or out-of-pocket payments, will not be redirected to public establishments as is inferred.

The NHI will not be a provider of any services, but will manage the bulk of the money to buy the bulk of the benefits for everyone.

This is an important principle, referred to as a “purchaser/provider split”.

It is different from the current 10 public budgets (nine provincial budgets plus a national one) and 72 medical schemes with 308 options for buying health services in a haphazard and inequitable manner. The NHI agency will have to purchase from all accredited public and private providers.

What will change over time in the privately funded environment is that medical aid schemes will only be allowed to pay for services the NHI does not cover.

The plan is that the Bill will have a “phased implementation”. The first phase has started and will run till the end of 2026. It is meant to be a time for putting in place systems and structures to run and manage the NHI as an agency, including appointing staff and buying health services for “vulnerable groups such as children, women, people with disabilities and the elderly”.

The second phase, in 2027 and 2028, is aimed at making additional resources available where necessary and starting to contract private health service providers for their services. In other words, the complexities of moving funds received from provincial equitable shares and conditional grants, as well as other, smaller amounts from other departments (for example, Correctional Services), into the control of the NHI agency will mostly happen from 2027.

Martin states that “the end point (of the proposed NHI) seems to be clear: a redistribution of funds from private healthcare into the public system and a similar redistribution of patients between public and private health facilities”.

The reality is far more complex.

The aim is to pay providers equitably for the services they provide, to refer patients to the nearest facility where their health needs can be met. There will be a gradual realignment of both patient flows and funding flows. This is what universal health coverage is about, and a single NHI fund aims to prevent individual financial hardship in accessing healthcare.

4. NHI not about ‘redistributing resources between the public and private health sectors’

The scheme’s goal is to give everyone free access to the same set of basic health services, regardless of their income, and for that we need to use every resource as efficiently and as effectively as possible. We need to eliminate waste, duplication, fraud, theft and all other structural inefficiencies in the system.

Those who expect that public sector funding will increase simply because the state will be in charge of how money for health services is spent may be disappointed. If an establishment doesn’t offer the healthcare benefits it’s accredited to provide, it will not be paid, and some may see reduced budgets as a result. Managers will be forced to manage more effectively.

Reforms like these do not happen overnight.

The transition period is designed to help us change management systems, develop monitoring and evaluation mechanisms and realign current budgets. Incompetent or corrupt managers and dysfunctional administrative departments will find themselves with fewer “resources to squander”.

Being cynical about corruption is distasteful: we must all abhor fraud and corruption and ensure that the reforms are designed to reduce risk as far as is possible and identify early any elicit actions that cannot be designed out.

If we want to “fix public healthcare to a decent standard that is possible within the existing financial framework” we need to acknowledge that a public system that has one fifth of the funding of the private system will need serious investment (read: more tax – now).

By the same token we need to recognise the embarrassing revelations in the Health Market Inquiry report into the private health sector and be as enthusiastic about rectifying those structural problems too. The parallel systems are both in trouble, albeit for different reasons.

But that only means that we, the users, are the ones who are really in trouble.

It is good that Martin is sceptical. But thinking that tinkering at the edges alone will fix our very broken health system may lead us to a worse fate than scepticism about the future.

Nicholas Crisp is the deputy director general in the national health department responsible for implementing the country’s National Health Insurance scheme.


Bhekisisa article – Right of reply: “It’s far more complex” — the health department responds to one of our NHI op-eds (Creative Commons Licence)


See more from MedicalBrief archives:


Income tax hike and payroll tax proposed for NHI funding


Government dodges issue of NHI funding model – DA




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