Transcript No Slide Title

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
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
Providers Financing Intermediaries Sources
Financing flows
General tax
43%
LG revenue
1%
National Depts.
4%
Provincial Depts.
34%
Local Govt. Depts.
>2%
Employers
17%
Households
39%
Medical schemes
38%
Insurance
2%
Firms
1%
Households
18%
Public Providers
42%
Private Providers
58%
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 incomerelated and coverage limited
 OOP - most regressive form of financing;
level dependent on accessibility & quality
of public services
PPM in delivery
Expenditure - roughly 60:40
private:public
 Personnel:

 3/4
doctors & pharmacists and >90%
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
Medical scheme challenges
160
Real expenditure per beneficiary
140
Medicines
Hospitals
120
Specialists
GP's
100
Dentists
Rand 80
60
40
20
0
83/84
84/85
85/86
86/87
87/88
88/89
89/90
90/91
91/92
92/93
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
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 >R2
billion per year (OTC medicines 37%;
prescription medicines 11%; doctors &
dentists 26%)
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?

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
Impact of fiscal federalism
100
80
Distance from target
60
40
1995/96
1996/97
20
1997/98
0
1998/99
1999/00
-20
-40
-60
-80
Gauteng

Northern Province
Two key factors in provincial health budgets:
 Allocation
of overall resources to provinces
 Provincial level budget negotiations
“Equitable shares” ??
Red bar:
Potential
allocation if
relative
provincial
deprivation
included in
equitable
shares formula
15.0
10.0
5.0
0.0
Fr
ee
St
ate
Ga
ute
Kw
ng
aZ
ulu
-N
ata
Mp
l
um
ala
No
ng
a
rth
e
rn
No
Ca
rth
pe
er
nP
ro
v in
ce
No
rth
-W
W
es
es
t
ter
nC
ap
e
Green bar:
20.0
Ca
pe
Current
allocation from
national level
using equitable
shares formula
Provincial share
Blue bar:
25.0
Ea
s te
rn
Pre-fiscal
federalism
expenditure
level
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
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.
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
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
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?
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
Early SHI proposals
Expand the pool (SHI)
Medical scheme plus
other employed
$
Increased high- to
low-income
cross-subsidy
$
Covers at least
the cost of public
hospital fees
Increased crosssubsidy from
insured to public
sector
(Lack of) progress on SHI
Two separate pools
Medical
schemes
Other
employed:
SHI fund
$
Limited high- to
low-income
cross-subsidy
$
SHI fund covers
the cost of public
hospital fees
Limited crosssubsidy from
insured to public
sector