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A gathering storm

It is radical, overdue, aims for equity, is hugely expensive and needs lengthy, careful, consultative ‘phasing in’. It will forever change the face of private and public medical practice and the medical aids that doctors in private practice rely on most for payment. That is what can safely be said about mandatory health insurance, more commonly called National Health Insurance (NHI), which aims to level the South African playing field through universal, affordable healthcare in one system over the next five years, writes Chris Bateman.

What is far less certain is whether private sector doctor dependency on profit-driven medical aids will be swapped for a ‘patient numbers, one size fits all’ fee structure in which general practitioners act as ‘gatekeepers’ for the new overall healthcare delivery vehicle.

Also up for fierce debate is how much more it will end up costing higher earning members of private medical aids, whether the R200-billion funding model is ‘workable’ and, most crucially, whether a debilitated public health sector can be ‘revitalised’ sufficiently – or within the ambitious time frame.

There is huge common ground that urgent reform is needed. Even the sectors most threatened by the new proposals kick off their increasingly frenzied and anxious (what government protagonists call “premature”) lobbying, with this caveat.

Copies of the ‘concept document’ leaked into the public domain early this June, a month before the ANC task team, headed by the HSRC chief Dr Olive Shisana, was due to hand over the research to Minister of Health, Dr Aaron Motsoaledi for official release.

Motsoaledi’s aim is a national three-month ‘review and consultation’ process before a modified proposal is submitted to Parliament for draft legislation.

Highlights of the concept document are:

• Creating a new NHI funding and administration body, separate from the health department, to oversee a R200-billion implementation. It will promote cross-subsidisation between rich and poor.

• Legally preventing medical aids from offering any benefits already offered by state facilities.

• Paying general practitioners directly from the new body, although probably less than many currently earn.

• Making state hospitals the first port of call for medical aid members – unless they pay out of pocket for private facilities.

• An income-related payroll tax on employers and employees alleviated by a state subsidy on existing payments to medical schemes.

• Up to 85% of medical scheme membership fees redirected to the NHI as a tax.

“Grand gesture” overcompensation

The private sector’s opening shots were over what specialist economist in public policy, health and social security, Alex van der Heever, called “overcompensation in the form of the grand gesture”.

These included predictions of an overall patient benefits result equal to about one-quarter of those currently available to private scheme members.

No one seriously doubts the honourable intentions of Shisana’s team, even though they may differ hugely on the ideology.

Here is the context: the richest 10% of South Africans have 47% of all income, while the poorest 10% have 0.2% of all income – one of the greatest levels of income disparity in the world. Income equals access to healthcare in today’s South African set-up.

Shisana describes her team’s proposal as driven by “a need to act in unity to achieve universal financial risk protection; more so now, when the economic climate requires that individual and companies start to contribute to a nation-building process”.

An eloquent SA Health Review (2007) table of healthcare coverage, expenditure and resourcing reveals that (in 2005) there were 243 people with private cover per primary care practitioner, compared with 4 193 per primary care practitioner in the public sector.

That is a great deal of public sector doctor/patient pressure (therefore denial of access).

The 21% of patients who used a combination of private and public healthcare relied on an average of one doctor among 588 of them.

Those are among the more potent realities driving Shisana’s proposals. But a plethora of alarming unintended consequences, based entirely on the leaked task team document, were immediately and lucidly raised.

Jonathan Bloomberg, Discovery Health’s head of Strategy and Risk Management, pointed to countries with similar socio-economic profiles having taken “decades” to establish universal healthcare access on the scale being attempted in South Africa.

Fix state hospitals first – or face failure

Bloomberg said fixing the “severe and ever worsening” problems of the public hospital system was paramount. Once public hospitals were able to offer an excellent service, it would “make sense” to move to some form of NHI at a rapid pace.

However, the process being used to implement NHI and the pace at which it was being done, could remove any hope of getting it right.

In an independent rating of healthcare system performance across 43 countries (conducted by Monitor Group), South Africa’s public sector ranked 36th. The private sector ranked among the top seven – and was the 22nd most expensive.

Chris Archer, CEO of the South African Private Practitioners Forum (SAPPF), agreed that collapsing the private sector healthcare resources into one single-payer system administered by the state would not improve the health status of poorer citizens.

“Unless managed with great caution and circumspection”, this could easily result in “a catastrophic loss’” of much needed skills and resources, which would worsen delivery.

This is an much shortened version of an article that first appeared the “South African Medical Journal”.

Regulating fairly

and effectively

The Council for Medical Schemes protects beneficiaries

and promotes equity in access to private health insurance

The Council for Medical Schemes (CMS) is the statutory body established in terms of the Medical Schemes Act (Act 131 of 1998) to provide regulatory oversight to the medical schemes industry in a manner that is complementary with national health policy.

The CMS comprises a Council of up to 15 members, appointed by the Minister of Health, and an executive management team headed by the Registrar of Medical Schemes who is also the CEO of the Council. The Registrar is also appointed by the Minister of Health.

This new structure was established in 2000.

The CMS is funded by levies charged to medical schemes in terms of the Council for Medical Schemes Levies Act 58 of 2000. Funding for other projects, such as the Risk Equalisation Fund (REF), is provided as a grant from the Department of Health.

The introduction of REF is required to protect medical schemes with sicker and older members and to prevent the selection of preferred risks by schemes, thereby replacing the existing unhealthy competition based on risk profiles with healthy price and efficiency competition. The absence of risk equalisation results in systemic discrimination against older and sicker people.

The vision of the CMS is to regulate fairly and effectively in order to protect the interests of beneficiaries, and to promote equity in access to medical schemes.

The CMS’s strategic objectives include:

• to monitor the impact of the Medical Schemes Act and recommend improvements;

• to secure adequate protection for beneficiaries by approving the manner in which medical schemes carry out business and by monitoring their financial performance;

• to support the work of trustees and promote public understanding of the way in which medical schemes function;

• to take fair and timely enforcement actions when required;

• to investigate and resolve complaints of beneficiaries;

• to foster the development of the CMS as an attractive workplace and an employer of choice; and

• to develop strategic alliances with counterpart regulators and others.

The key achievements of the CMS thus far:

• The registration of all medical schemes and accreditation of all administration companies, managed care organisations and healthcare brokers in terms of the Medical Schemes Act.

• Improvement of the financial soundness of medical schemes.

• Decreases in non-health expenditure levels of schemes in real terms since 2006.

• Interventions to improve governance in medical schemes, including: enforcement actions, regular trustee training programmes in centres around the country, publication of a report on good corporate governance and governance guidelines, and regular meetings with trustees.

• Resolution of approximately 8 800 consumer complaints over the past four years (average of about 2 200 per annum), and the establishment of a call centre handling around 50 000 calls per annum.

• Facilitation of a stakeholder consultation process for the development of proposals to promote the emergence of low-income medical schemes.

• Initiation of joint process with the Department of Health on the review of the prescribed minimum benefits (PMBs).

• Enforcement of compliance with provisions pertaining to PMBs.

• Full compliance with the Public Finance Management Act and unqualified audits by the Auditor-General from 2000 to 2008.

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