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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
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