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SOCIAL HEALTH INSURANCE POLICY DIRECTION

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Pillar 2: Social health insurance. Pillar 3: Voluntary medical schemes ... State medical insurance. Taylor Committee proposals. Risk equalisation ... – PowerPoint PPT presentation

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Title: SOCIAL HEALTH INSURANCE POLICY DIRECTION


1
SOCIAL HEALTH INSURANCE POLICY DIRECTION
  • AIDS LAW PROJECT
  • 10 February 2004

2
Presentation
  • Brief context
  • Taylor Committee proposals
  • Departmental position
  • SHI Description
  • Work plan

3
Policy Context cont.
  • SA - Health System 2002/2003

Public sector R33.2 billion
Serves 37.9 m
Serves 6.9 m
Private sector R43 billion
Pcap R875.98 R72.99 pm pp
Pcap R6231.88 R519.32 pmpb
4
Policy Context
Public sector Private sector
Cover Indigent (pop. growth) Low-income (pop. growth) High income (no change) Good risks (no change) Poor risks (decrease)
Burden of disease HIV/AIDS Infectious Communicable Chronic HIV/AIDS (limit cover) Infectious (na) Communicable (na) Chronic (reduce cover)
Providers Medical Nursing Pharmacy
5
Key Strategic Challenges
  • Inequity in access to health care
  • Ensuring that public health system remains
    backbone of SA health system care
  • Address systematic cost increases
  • Develop low-cost market address high private
    hospital costs
  • Reduce financial risk to individuals at the time
    of accessing health care

6
Concept of social security
  • Three basic pillars
  • Pillar 1
  • basic social endowment for all citizens
  • Pillar 2
  • contributions from those able to contribute over
    and above pillar 1
  • Pillar 3
  • social security-type benefits that are more
    discretionary in nature

7
Health interventions
  • Pillar 1
  • Free health care for children lt6
  • Free health care for pregnant women
  • Free primary health care services
  • Free health care for disabled
  • Pillar 2 Social health insurance
  • Pillar 3 Voluntary medical schemes

8
Characteristics Of NHI and SHI
  • Mandatory contributions for entire population or
    certain groups like (public sector employees)
  • Usually employment related, payroll deductions
  • Contributions from employers and employees
  • Premiums are income related and benefits are
    standardized
  • Creates large risk pool and avoids adverse
    selection
  • Cross subsidization (healthy and the sick,
    wealthy and poor

9
NHI versus SHI
  • National health insurance
  • Benefits for contributors and non-contributors
  • Cross subsidies, dedicated health tax
  • Social Health Insurance
  • Benefits contributors only
  • Can increase resources available for public heath
    care

10
Key departmental objectives
  • Strengthen public health care system by
    increasing revenue
  • Obtain prepaid contributions from those who can
    pay
  • Reduce inequities in health care financing
  • Improve access of lower income groups to quality
    health care

11
Taylor Committee proposals
  • Four key policy proposals
  • Move towards NHI
  • State medical insurance, risk equalisation,
    social health insurance
  • Tax subsidy reform, cross subsidisation
  • Recentralisation of health budget

12
Departmental position
  • We still require significant tax funding for
    public health sector
  • Need to compare progressivity of tax funding
    versus NHI
  • For the medium term,will only commit to SHI

13
State medical insurance
  • Taylor Committee proposals
  • State-sponsored medical scheme
  • Low cost for low income earners
  • Sets benchmark price for minimum benefits
  • Benefits in differentiated amenities in public
    hospitals plus private primary care

14
State medical insurance
  • Taylor Committee proposals
  • Civil service medical scheme cover
  • Dedicated low cost restricted scheme
  • Compulsory under employer mandate
  • Benefits similar to state-sponsored scheme
  • Could evolve into state-sponsored scheme

15
State medical insurance
  • Taylor Committee proposals
  • Risk equalisation
  • Below average risk schemes contribute above
    average risk schemes receive
  • Enlarges risk pool, schemes compete on cost and
    quality rather than risk selection
  • Aims to stabilise medical scheme market

16
Mandatory medical scheme cover
  • Taylor Committee proposals
  • Mandate to begin with high income earners
    /qualifying employers
  • Voluntary membership for others
  • Out of pocket fees for public hospital treatment
    in basic amenities abolished
  • Low income mandates after high income mandate

17
Department response
  • Endorse general approach
  • One state scheme, should evolve from civil
    service scheme
  • Support SHI, not ready to commit to NHI
  • Accept abolition of out of pocket fees, except
    possibly bypass fees

18
Departmental response
  • We endorse
  • SHI plus tax funding
  • Incremental mandates for medical scheme
    membership
  • Civil service medical scheme as starting point
  • Civil service scheme to evolve to state-sponsored
    scheme

19
Departmental response
  • Basic minimum floor of benefits should be
    established
  • Mandatory benefits Prescribed minimum benefits
    plus primary health care services

20
SHI in SA context
  • Government mandated health insurance
  • Income cross-subsidies among contributors
  • Risk-related cross-subsidies among contributors

21
Risk Related Cross subsidies
  • MSA requires all schemes to provide PMB for all
    scheme members
  • Scheme have different risk profiles, resulting in
    different cost structures
  • Research done by CARE found that price of PMB in
    one scheme was 17 cheaper while for another
    scheme 130 more expensive than industry average,
    just because of different age profiles
  • Clearly, schemes have incentive to risk rate in
    order to reduce their costs

22
Risk Related Cross subsidies
  • Risk equalisation should ensure that all medical
    scheme members face the same community price for
    PMBs
  • It should
  • remove the incentives for medical schemes to
    select preferred risks, by ensuring that each
    scheme must bear the cost of a risk profile equal
    to the risk profile of all covered lives.
  • Create incentives for schemes to improve its
    efficiencies and cost controls, by not
    incorrectly penalising efficient schemes.

23
Income Cross subsidies
  • In most countries with social insurance systems,
    contributions tend to be based on income
  • High income earners cross-subsidise low income
    earners
  • In SA, medical scheme contributions are community
    rated
  • Income related cross subsidies difficult to
    achieve
  • Need to change tax subsidy to improve income
    cross subsidies

24
Income Cross subsidies
  • Tax deductions on medical scheme contributions,
    and the tax deductions on medical expenses in
    excess of 5 of income estimated at R7,8 billion
  • Impact is regressive b/c of link to contributions
  • Out of pocket expenditure may be more
    progressive, but depends on submission of tax
    returns
  • Need to restructure this subsidy to achieve
    greater subsidies for lower-income earners

25
Income and risk-related cross subsidies
  • Support restructuring of tax subsidy, but with
    greater subsidies for lower-income earners
  • Support risk equalization to stabilize medical
    scheme environment and prevent schemes from
    profiting via risk selection

26
Budget Centralisation
  • Budget centralisation to follow a political
    process
  • Will enlist Treasury support for implementation
    of revenue retention framework in all provinces

27
Supporting policies
  • Preparation of public hospitals
  • Hospital revitalisation project
  • Designated provider network pilot
  • Civil service scheme development
  • Revenue retention policy development

28
Programme of work 2004
  • Sign DSPN contracts with medical schemes 1 April
    2004
  • Finalise technical work on Risk Equalization and
    income cross subsidy issues
  • Support DPSA process to implement civil service
    medical scheme
  • Obtain Treasury support for revenue retention
    enforcement
  • Finalise policy decision on phasing of mandatory
    cover
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