Government health policy entitles certain categories of patients, including pregnant women and children younger than six years of age, to receive "free" general care, while "free" primary health care is available to every citizen. However, the health care is not free. It is provided to patients at the expense of the taxpayer.
The day after Nelson Mandela, during his presidency, announced that "all pregnant women and children under the age of 6 years" would be entitled to "free" health care; some public hospitals could not cope with the large number of women and children who arrived on their doorstep seeking medical care. The event dramatically demonstrated that if the cost is reduced, especially if it is reduced to zero, the demand increases exponentially. To cope with this demand, government health-care providers have no option but to reduce availability or deny health care to patients.
However, the difficulties that arise as a result of the introduction of so-called "free" care are not limited to rationing – it also means less efficient and more expensive health care. A large bureaucracy is needed to administer a socialised health system, which together with the builtin bureaucratic inefficiencies, add even more to the costs of so-called "free" health care. To control costs, officials oppose the introduction of advances in medical technology. Advanced technologies and procedures such as MRI scanners and the implantation of artificial hearts, are a major threat to their budgets.
"Free" health care is therefore not only, not free, it is expensive, it inevitably denies patients access to the latest medical procedures and technologies, and it is not freely accessible.
There are two very different approaches to the problem of ensuring that people have adequate access to health care. One approach is for the government to attempt to gradually nationalise all health-care services, ultimately ending with fully taxpayer-funded state-owned health services. This is the apparent aim of the National Health Act of 2003 and also of the recently proposed "Health Charter". But economics and world experience tell us that nationalised health care does not work, for three major reasons. The first is that national health systems do not respond to the day-to-day decisions of consumers and therefore fail totally to supply their needs. The second is that they invite unlimited demand, which cannot be met with limited resources. The third is that a relatively poor South Africa cannot hope to achieve success at implementing a system that some of the wealthiest countries, such as the United Kingdom and Canada, have for decades been trying vainly to make succeed.
The other approach is to establish a health-care environment in which private health-care funding and provision can grow rapidly, serving an increasing percentage of the population to the point where all health services are privately provided. This option will work, as the quality and efficiency of the existing private health-care providers have ably demonstrated, as long as they are not burdened with government demands that detrimentally affect their efficiency.
Whichever approach is chosen, one aspect will not change, one hundred per cent of the funding will be from private sources, firstly through taxes, and secondly through voluntary medical aid or insurance schemes and voluntary out-of-pocket payments.
Citizens have the right to expect that the taxes they pay to fund the health care of the poor will be used in a costeffective, efficient and equitable manner. They can rightly demand that government health policy be conducive to the continued growth and development of private health care.
South Africa's health-care challenge will be best met if government exchanges its role in health-care provision for that of funder of health care for the poor, purchasing care from competing private health-care providers. The most effective mechanism to achieve the empowerment of the poor is to provide them with resources to purchase health care directly from service providers of their choice. The implications for health-care reform are that government should:
· Refrain from unnecessarily interfering with and micromanaging private health-care provision and encourage those who can afford to pay for their own health care to do so.
· Direct its resources to ensuring that the poor receive adequate care from providers of their own choice.
· Fund the needy directly through appropriate means such as vouchers, smart cards, or contributions on their behalf to competing medical aid funds, to allow poor patients to purchase quality health care. Encourage the development of health-care insurance products for the emerging market.
· Remove controls that increase health-care costs or prevent the provision of care by scrapping all
requirements for certificates of need, price controls, compulsory community service, registration requirements for medicines already approved in the European Union, the United States, Canada, Australia and New Zealand, and such other countries that meet certain defined standards.
Implementing the above measures would relieve government of the burden of providing health care and would enable it to put substantial financial resources directly in the hands of those who need them most. The essence of the reform programme would be to maximise the role of the private health sector and for government to relieve itself of the liability of providing health care.
The main beneficiaries of such a reform programme would be the poor, who would be given a wide range of healthcare choices. Benefits to the taxpayers would be a more efficient use of taxpayer funds and certainty that tax monies earmarked for funding health care for the poor reaches them directly so that poor South Africans would get more and better health care for the same or less money. State assistance to those who should be self-supporting would be eliminated, allowing greater assistance to those who really need it. A further benefit is that over time, those people who prosper sufficiently to take care of their own health care would be removed from the health-care support list.
The government would have responsibility for a thriving, growing, health-care sector that would be the envy of the developing and the developed world. Health professionals would start returning to South Africa instead of leaving.
AUTHOR: Johan Biermann is a planner and policy researcher. This article is an extract from the book “South Africa's health care under threat” and may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the Free Market Foundation.