Public and private health care remain broken as we await grandiose NHI

Laura du Preez | 23 May 2023

Laura du Preez has been writing about personal finance topics for more than 20 years, including eight years as personal finance editor for two leading media houses. 

Key regulatory interventions that would make private healthcare stable, well-governed and more affordable are being obstructed because the government believes National Health Insurance (NHI) will replace medical schemes, a medical scheme conference heard this week.

Professor Alex van den Heever, the chair of social security systems administration and management studies at Wits University, says the reason why the government is not taking recommended reforms forward is “bizarre”, because NHI is “1000 years away and we will be dead before anything like that will be implemented”.

Van den Heever was addressing the annual Board of Healthcare Funders conference for medical scheme trustees, administrators and other private healthcare service providers held in Cape Town last week.

We have to work with what we have now, and the government should be working on fixing problems in both the private and public healthcare systems that could be addressed within two years instead of focussing on a grandiose scheme to merge the two in the false belief that it will fix all the problems, he said.

Instead of pursuing the paper-based best-practice policy, we should look for the best fit for the capability of the health care at this point and what will move us forward, Van den Heever said. There are many issues that need to be addressed and we need to prioritise what comes first, he said.

Inquiry findings not implemented

Mapato Ramokgopa, divisional manager at the office of the Commissioner Competition Commission, told the same conference she could not envisage a smooth transition to NHI without the key recommendations that came out of the commission’s Health Market Inquiry being implemented.

No legislative changes have been proposed to implement the inquiry’s 2019 recommendations and Ramokgopa said the commission was not empowered to enforce them.

The Competition Act was amended months after the inquiry, giving the commission the power to enforce its recommendations, but this was too late to help South Africans paying for private health care through medical schemes

Van den Heever said it is clear the National Department of Health is not prepared to take the inquiry’s recommendations further. The proposed reforms address the need to equalise health risks, social reinsurance, price determination, a licensing framework for private hospitals and a quality and information regulation. That is a real problem, he said.

Pricing medical services

Ramokgopa said the commission is working on a proposal on how tariffs can be set for health services, and it hopes to release a position paper in the second half of this year.

The establishment of a regulator to oversee a negotiating forum that could set the prices of the prescribed minimum benefits (PMBs) that medical schemes must provide was a key finding of the inquiry. Read more: What is a prescribed minimum benefit?

This would entail the introduction of a proper tariff setting system that would include a review of the clinical codes that healthcare providers use to determine how they charge and guideline tariffs for non-PMB health services.

Without this, consumers are at a disadvantage as they do not know what their treatment will cost.

Ramokgopa said tariff setting also applies to the public sector and ultimately the NHI, which will contract with private providers.

PMBs not serving members

Both Ramokgopa and Van den Heever highlighted the need for the PMBs to be reviewed so scheme members can understand and easily access these benefits.

Van den Heever said currently members are left “dangling” between their schemes and providers when it comes to getting PMBs paid, and schemes default to treating payments as non-PMBs and paying them out of their medical savings accounts if they are not coded correctly. Read more: What is a medical savings account?

Schemes do not negotiate proper contracts to ensure members are provided with the PMBs correctly, and the reviews of these benefits are not happening every two years as they should, he said.

Ramokgopa said the commission is investigating cases to ensure that when schemes appoint designated service providers for PMBs, they do not make it more expensive for medical scheme members to get benefits because they have to travel far.

The commission is also investigating some cases of excessive pricing of pharmaceuticals.

Commission advocating reforms

Ramokgopa said the commission has been meeting with the Department of Health and the Council for Medical Schemes to encourage them to implement some of the inquiry recommendations that do not require legislative reform.

Besides a mechanism to determine prices, Ramokgopa said urgent reforms included:

  • The simplification of medical scheme benefits to a single standardised benefit of PMBs and top-ups to ensure that consumers can understand them and compare them;
  • A move away from charging fees for each service as it leads to overservicing and the introduction instead of global prices for, for example, procedures or health events; 
  • A pathway of referrals from one level of care to another, preventing consumers from accessing higher specialist care unnecessarily, but also assuring them that they will be referred to specialists when necessary; and
  • A way of measuring outcomes of treatments and other health services so that schemes can contract efficiently.

NHI bill in parliament

The NHI Bill is currently before parliament and Health Minister Joe Paahla told the conference he expected it to be approved within weeks and then to go before the National Council of Provinces.

However, he also said it was likely that if parliament approved the bill it would be challenged by groups within parliament, and beyond it, for being unconstitutional.

The bill’s proposal that medical schemes be prevented from providing health care services that the government will provide through an NHI fund is one of the key proposals that is likely to be challenged.

Paahla said if the bill was challenged it would be unfortunate as South Africa needs universal health coverage and huge resources in the private sector could be used to cross-subsidise such a system and close the gaps between haves and have nots, the rich and poor.

NHI out of step

Van den Heever said the NHI proposals are completely out of step with the public health system’s very low capacity to do what it should – a capacity that has been declining systematically over the years.

There are also problems in the private healthcare sector. You can’t propose to completely change two health systems and merge everything into a third system that has never existed and assume you will eliminate all the problems, he said.

And while the government is proposing the impossible, it is not investing in improving the capability and the systems that are workable but lack the correct investment, Van den Heever said.

The public sector is in a terrible state due to inherent corruption and large parts of it are not accountable. This results in people who are compassionate being suspended or fired and those who do the wrong things being kept in their positions and protected, he said.

Van den Heever says:

  • The public sector needs better governance and accountability but not a top-down command system as the NHI bill proposes.
  • The public sector needs information for planning and the NHI proposals need evaluation and feasibility analysis.
  • The public sector needs a coherent human resources plan to ensure training and staffing of facilities is not chaotic. Nothing has happened with the plan drawn up in 2013.

There has not been any legislation addressing the many structural problems since 2003, Van den Heever said.

“We are waiting for NHI to somehow magically solve all the problems. It will not."

Specialist knowledge is required to solve the problems in different areas, and to engage with the correct dialogue requires highly capable task groups, Van den Heever said.

“Most systems need incremental adjustment through regulation and legislation – roughly every two years – to address problems as they emerge because health systems are complex. Instead there is complete structural neglect,” he said.