28 August 2018
HMI report says nothing new but careful timing supports Motsoaledi’s contentious NHI Bill
The preliminary findings of the Competition Commission’s Health Market Inquiry (HMI) into the private healthcare sector, the National Health Insurance (NHI) Bill and the Medical Schemes Amendment Bill have all been published for public comment. At a media briefing held at the Free Market Foundation on 15 August, Michael Settas said these Bills give the Health Minister unfettered powers over health resources while effectively nationalising the private health sector into the NHI. NHI is unaffordable, unworkable and will destroy the private healthcare sector, leaving a failed public health service in its wake.
Dr Johann Serfontein said that the Minister of Health’s hopes that the Inquiry would prove that excessive pricing is responsible for increasing healthcare costs have largely been dashed. Instead, the report points to high utilisation rates driven in part by providers administering unnecessary and expensive treatments. Evidence points to some excessive profits by scheme administrators but failures in government regulation are cited as a major factor in rising costs.
Serfontein said, “The NMI has not revealed anything that we didn’t already know about the private healthcare market. The report produces few surprises but many concerns and several aspects which are likely to be challenged.”
The findings can be summarised into three key areas: Regulatory failure issues in the funder environment, and competition failures and over-capacity issues in the practitioner and hospital markets. Cost increases are not entirely due to increased utilisation – new technology and more expensive medicines also add to the costs. While the financial costs of new technology are easy to compile, there is limited collection of outcomes data, making a cost/benefit analysis in the South African market difficult. SA has high utilisation rates for certain procedures when compared with other OECD countries but Serfontein said that this finding might be partially flawed by inconsistencies in the analysis while some findings on surgical rates have already been questioned by healthcare professional societies.
Settas questioned the timing of the NHI Bill ahead of the 2019 elections and the absence of any significant technical or funding details. The promise of free, quality healthcare is a powerful political tool and open to political abuse. Critical details are missing in the NHI Bill, including:
- What will be in the NHI benefit package?
- How will the public sector improve quality of care?
- How will scarce providers be retained in SA?
- How will NHI be funded?
“The facts must be interrogated and myths confronted and refuted,” Serfontein said. A key fallacy being presented in justifying the need for NHI is that the public sector heavily subsidises the private health sector. Yet income tax deductibility on medical scheme contributions has been substantially reduced under the relatively new medical tax credits. Subsidies for state employees, funded through taxes, have ballooned to R31bn annually and VAT is levied on all private medical service provider charges. Most significantly, there is a substantial overlap between taxpayers and citizens who purchase their own private health cover, so essentially, it’s the same minority of citizens who fund both the public and private health sectors.
The perception also exists that the public sector is underfunded yet a comparison with peer countries shows that SA’s annual per capita spending on public healthcare of +/-$280 is significantly higher than the African average spend and comparable to many other developing countries that deliver better quality of care.
Settas said that SA faces extraordinary challenges in the burden of disease – it ranks 19th out of 193 WHO member states and faces serious shortages in service providers. The 2016/17 Inspection Report from the Office of Health Standards Compliance (OHSC) showed that 62% of the public facilities that it inspected were non-compliant (36%) or critically non-compliant (26%). These dire circumstances have barely been mentioned in the white paper that has led to the drafting of the NHI Bill.
Settas said that the R254bn (in 2010 prices) price tag estimated in the white paper for NHI will impose an impossible burden on the taxpayer. He said that there has been no technical analysis on NHI and there could be Constitutional issues concerning the denial of the right to private insurance and nationalisation of the private health sector. Also, there is a policy contradiction in both Bills – while the NHI Bill allows for citizens to opt-out (s12) and use private providers, the MSA Bill can prevent this (s34).
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