Low-cost healthcare solutions are vital to hit sustainable development goals

As UN member states gather in New York for the 74th UN general assembly this week there will be a renewed focus on sustainable development goals (SDGs). Particular attention will be paid to the goals regarding universal health coverage, and to preventable noncommunicable disease mortality.

A global alliance of think-tanks is calling on member states to remove government-erected barriers that hamper access to medicines. The think-tank statement, “Accelerating Access to Medicines: Policy Recommendations for Achieving the Health-related SDGs”, contains several low-cost steps governments could take immediately, including cutting red tape, slashing taxes on medicines and increasing access to a properly functioning healthcare insurance market.

The SA government often uses the goal of universal health coverage as a justification for a centrally controlled and administered system it calls National Health Insurance (NHI). However, as World Health Organisation (WHO) director-general Tedros Adhanom Ghebreyesus states, “All roads lead to universal health coverage [but] ... countries take different paths — using either public or private providers — though public finance will always need to provide social protection for the poor, to improve equity and so no-one is left behind.”

Given the significant amount of financial and human resources in the private health sector, the continuation and expansion of this sector is vital to the country’s overall health, welfare and ability to achieve universal health coverage. Yet the latest NHI Bill seeks to restrict medical schemes to complementary cover and prohibits them from covering anything in the yet-to-be defined NHI package of benefits. The bill also suggests that medical scheme tax credits will be removed.

In combination, these two proposals have the potential to destroy the private medical scheme market. As private medical schemes are the main vehicle for accessing private healthcare services, without financing the healthcare sector will be severely affected.

Dominic Montagu, an epidemiologist at the University of California, says: “The idea that involving the private sector is antithetical to universal health coverage is bizarre ... more than two-thirds of all Organisation for Economic Co-operation and Development (OECD) countries rely mostly on private outpatient care and some of the best-performing countries also deliver the majority of inpatient care through private hospitals.”

All these countries have achieved universal health coverage and high levels of patient satisfaction. Moreover, Montagu, says, “the private sector also provides up to 80% of health care in many developing countries”.

As the WHO also notes the importance of public finance to provide social protection for the poor, the government’s main role should be to finance healthcare for the poor. By leaving the private market alone to provide for those able to fund their own healthcare, the government can concentrate scarce taxpayer resources on the destitute, while the private sector can grow, innovate and expand.

Corrupt state

Such a scenario would not only be good for SA’s financial health but would also lead to better health outcomes for the poor, who would otherwise be forced into the government’s failing healthcare system.

Instead of concentrating power in the hands of a corrupt and inefficient state through NHI, a far more reasonable, rational and durable approach to achieving universal health coverage would be to fix the failing public healthcare system that President Cyril Ramaphosa himself has admitted is in “crisis”, and to expand private medical insurance so that people can gain access to quality healthcare.

In laying the foundations for NHI the government has progressively made it more expensive for individuals to take care of their own healthcare needs, while in the process swelling the numbers relying on an already overstretched public healthcare system.

The government artificially raises the price of medical scheme cover by making it mandatory for healthy people to cross-subsidise unhealthy people. A person with a much lower risk of getting sick is charged the same amount as a person with a much higher risk.

The government also compels every medical scheme option to provide a minimum package of benefits, known as PMBs. Every medical aid member is covered for these benefits even if they don’t need the cover. These PMBs cost on average R800 a month to cover, which immediately excludes most of the population from obtaining private cover.

The government has a clear and calculated path ahead of it. If it can destroy the private healthcare financing market it will have no competition for its centrally controlled and administered version of universal health coverage and people will be forced into the failing public healthcare system.

Urgent reform

If the government genuinely wanted to see increased access to quality healthcare it would finance healthcare for the poorest and most vulnerable citizens and let them decide where they want to spend the taxpayer-provided money intended to improve their health outcomes, and allow the private sector to compete for the business.

The government could also greatly improve access to medicines by removing VAT levied on drugs sold in the private sector (the public sector is not subject to VAT on medicines). It makes no sense to tax the most ill and vulnerable members of society.

Another urgent reform would be to overhaul the process of registering a medicine. SA’s drug regulator has a backlog of more than 16,000 drugs that could take more than six years to clear. Many of these drugs have already been approved by an advanced-country drug regulator. Not only do these delays reduce revenues and increase costs to drugmakers that are passed on to patients, they deny and retard patients’ timely access to the medicines. The approval process could be greatly improved by recognising the work performed by other rigorous regulatory authorities.

These are some of the low-cost solutions contained in the global think-tank policy alliance report. If governments are serious about meeting their commitments under the health-related sustainable development goals, these practical solutions should be at the centre of this week’s discussions at the UN.

• Urbach is an economist and Free Market Foundation director

This article was first published on BDLive on 23 September 2019

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