The nature and state of health care financing and delivery in South Africa: Obstacles to realising the right to health care

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The nature and state of health care financing and
delivery in South Africa Obstacles to realising
the right to health care
Di McIntyre, Health Economics Unit University of
Cape Town
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Overview

• Focus on equity issues obstacles to access
• Funding - according to ability to pay
• Delivery (expenditure) - according to relative
  need
• Public-private mix
• Each sector - key regulatory issues

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Financing flows
Sources
General tax
LG revenue
Employers
Households
43
1
17
39
National Depts.
Medical schemes
4
38
Provincial Depts.
Insurance
34
2
Financing Intermediaries
Local Govt. Depts.
Firms
gt2
1
Households
18
Public Providers
Private Providers
Providers
58
42
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Equitable financing ?

• Government revenue
• National level general tax - income tax
  progressive, but VAT regressive ? proportional
  tax system?
• Local government - progressive
• Private sources
• Schemes - contributions not income-related and
  coverage limited
• OOP - most regressive form of financing level
  dependent on accessibility quality of public
  services

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PPM in delivery

• Expenditure - roughly 6040 privatepublic
• Personnel
• 3/4 doctors pharmacists and gt90 dentists
  psychologists in private practice
• Vast majority located in urban areas
• Private hospitals
• Annual growth in beds 9.5 1989-1994 and 8.9
  1994-1999 (despite moratorium)
• Urban and provincial bias

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Medical scheme challenges
Real expenditure per beneficiary
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More recent trends

• Sustained annual increases in schemes expenditure
  and in contributions (private hospitals,
  medicines and administration)
• Declining coverage
• Shift of membership to schemes with personal
  savings accounts (limited cross-subsidies)
• Increasing co-payments

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Other private sector trends

• Declining coverage by on-site services at
  workplace - growth in unemployment
• OOP payments
• Schemes gap growing rapidly and well in excess
  of R4 billion per year
• Non-scheme also growing rapidly and gtR2 billion
  per year (OTC medicines 37 prescription
  medicines 11 doctors dentists 26)

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Key regulatory issues

• Private hospitals
• Certificate of need (including doctor
  shareholding or other perverse incentives)
• Doctors
• Dispensing
• Certificate of need
• Medicine prices
• Medical Schemes Act amendments and related
  regulations - Addressing key challenges?

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Public sector funding issues

• Overall funding levels
• Initial increases post-1994 more recent
  stagnation in real per capita funding
• Loss of local government funding with narrow
  municipal health services definition
• Equitable use of limited resources?
• Spend 12 times more purchasing medical scheme
  cover per civil servant than on public sector
  services per dependent
• Free care
• Removed some obstacles, created others

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Impact of fiscal federalism

• Two key factors in provincial health budgets
• Allocation of overall resources to provinces
• Provincial level budget negotiations

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Equitable shares ??
Red bar Pre-fiscal federalism expenditure
level Blue bar Current allocation from national
level using equitable shares formula Green
bar Potential allocation if relative provincial
deprivation included in equitable shares formula
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Geographic distribution

• International experience
• High of health (and other social) service
  expenditure at lower levels funded via special
  purpose/conditional grants and/or
• National policy guidelines or mandates
• Norms and standards for SA?
• Absorptive capacity
• Recent allowances may assist

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Quality of care issues

• Key obstacles
• Lack of supplies
• Generic medicines perceived as ineffective
• Preference for direct access to doctor
• But . private low-cost clinics have nurse as
  first contact use generics
• Health worker morale and attitudes
• Shorter waiting time and comfortable, cleaner
  waiting areas etc.

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Level of care reprioritisation

• Definite relative shift towards PHC, but
  threatened when budgets cut
• Need for focus on hospital efficiency gains
• Conditional grants constrain shifts
• CGs as percentage of health budget Western Cape
  41, Gauteng 34
• Balance between stable funding for national
  assets and ability to address priority service
  requirements ? move to highly specialised
  service grant

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PPM revisited

• Some progress, but remaining challenges, in each
  sector
• But public-private mix deteriorating and
  overall health system inequities and
  inefficiencies is key remaining challenge
• Relatively stagnant public funding, but rapid
  growth in scheme OOP spending
• Increased demands on public sector - declining
  coverage (unaffordable), main provider of
  HIV/AIDS services

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Social Health Insurance

• Key goals of early proposals
• Address private sector cost spiral
• Extend coverage of population covered by
  insurance through cross-subsidies (extend access
  to financial and other resources currently
  located in private sector)
• But, two-tier system vision of moving to
  national health insurance asap
• Key question of new proposals
• Will they help to address PPM inequities?

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Key issues

• Relatively piecemeal policy and regulations on
  private sector
• Linkages NB, e.g. restrictions on dispensing by
  doctors and dispensing fee proposals
• Need comprehensive view of overall health system
• Developments in one sector have knock-on effects
  for the other
• Need clear vision of respective roles and
  potential for PPIs

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Early SHI proposals
Expand the pool (SHI) Medical scheme plus other
employed
Increased high- to low-income cross-subsidy


Increased cross-subsidy from insured to public
sector
Covers at least the cost of public hospital fees
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(Lack of) progress on SHI
Two separate pools
Limited high- to low-income cross-subsidy
Other employed SHI fund
Medical schemes


Limited cross-subsidy from insured to public
sector
SHI fund covers the cost of public hospital fees