SAHR 2007 - Health Systems Trust

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Health Care Financing and Expenditure 3 ➤ How is it that this growing group of private providers were able to generate what they considered as an acceptable level of income? In the 1980s, there was relatively ‘tight control’ on provider fees, with most private providers adhering closely to the Representative Association of Medical Schemes' (RAMS) tariff schedule in order to secure direct and full payment from medical schemes. Although it has been difficult to document due to data deficiencies, there has been an increase in utilisation (e.g. higher number of doctor visits and hospitalisations per medical scheme beneficiary). A clear trend that was documented was the number of doctors registered to dispense medicines, which nearly doubled between 1988 and 1993. 12 This coincided with a dramatic increase in spending on medicine within medical schemes, strongly suggesting that many doctors had begun selling medicines as a mechanism to ensure that they were able to reach their income goals given that they were not able to do so purely from consultations. In relation to hospitals, there are considerable perverse financial relationships between specialists and private hospitals. 17 Private hospitals have invested in technology to attract specialists, and then place specialists under pressure to utilise this technology in order to recoup the expenses incurred in the purchase of technology. Thus, in the initial phase of the growth of private sector providers, the key response to a relative over-supply was to promote increased utilisation (supplier-induced demand). ➤ Over time, the balance of power in relation to influencing prices has shifted away from medical schemes and in favour of private providers, particularly in relation to hospitals. This has been fostered through the increased concentration of private hospital beds within three major groups and concerted action by doctor and other professional groupings to act in unison in charging higher prices. The Competition Commission’s decision that each scheme should negotiate prices with each provider has also contributed to this shift in the balance of power. These factors have contributed to the unconstrained cost spiral in the private sector, which has resulted in a rapidly widening gap in the public-private sectors. While per capita expenditure in medical schemes was five times greater than public sector expenditure in 1998, this had increased to 6.6 times greater in 2005. Concerns about the public-private mix are compounded by the fact that limited tax resources are devoted to supporting the expensive private medical scheme system. This occurs in two ways. Firstly, the tax deductibility of medical scheme contributions significantly reduces government tax revenue. In South Africa, this was estimated to be over R8.2 billion in 2001 (which is equivalent to nearly 30% of total government spending on health in that year) and had increased to R10.1 billion by 2005. 19,20 Despite recent revisions in the regulation of tax deductions of medical scheme contributions, these benefits are inequitably distributed, with higher income earners receiving a much greater share of the tax benefits. Secondly, the largest single employer in South Africa is the government, and a substantial sum of tax resources is devoted to purchasing medical scheme cover for civil servants. For example, in early 2000 the South African government spent 12 times more for medical scheme cover per civil servant than it spent on funding public sector health services per person dependent on these services. 14 This raises serious equity concerns about the use of limited tax funds. The existing public-private mix suggests that a key challenge within South Africa is to find a way to promote cross-subsidisation (between healthy, younger and wealthier population groups and the sick, elderly and poorer groups) in overall health care financing and expenditure. Ways of improving cross-subsidies are explored in the chapter on Social or National Health Insurance. Conclusion The analyses presented in this chapter indicate that while public sector health care expenditure has been relatively stagnant in real per capita terms over the past decade, expenditure in the private sector has continued spiralling at rates far exceeding the rate of inflation. Inequities in the public-private health sector, in terms of the financial and human resources available in each sector relative to the population served have rapidly grown more severe. It is critical that these diverging trends be urgently addressed, both through increased tax funding of public sector services and efforts to promote improved efficiency within the private health sector. 45
References 1 McIntyre D, Thiede M, Nkosi M, Mutyambizi V, Castillo- Riquelme M, Gilson L, et al. A Critical Analysis of the Current South African Health System. Cape Town: Health Economics Unit, University of Cape Town and Centre for Health Policy, University of the Witwatersrand; 2007. URL: http://web.uct.ac.za/depts/heu/publications/SHIELD_WP1_ only_report_SA_final.pdf 2 National Treasury. Provincial Budgets and Expenditure Review: 2002/03-2008/09. Pretoria: National Treasury; 2006. 3 United Nations Development Programme. Human Development Report 2005. New York: United Nations Development Programme; 2005. URL: http://hdr.undp.org/reports/global/2005/ 4. National Treasury. 2007 Budget Review. Pretoria: National Treasury; 2007. URL: http://www.treasury.gov.za/documents/budget/2007/ review/isbn.pdf 5. Council for Medical Schemes. Annual Report, 2005-6. Pretoria: Council for Medical Schemes; 2006. URL: http://www.sapma.co.za/assets/attachments/0334_ Council_for_Medical_Schemes_Annual_Report_2005-6.pdf 6 Cornell J, Goudge J, McIntyre D, Mbatsha S. South African National Health Accounts: The Private Sector. Pretoria: National Department of Health; 2001. URL: http://web.uct.ac.za/depts/heu/publications/dimac_9_ 1.pdf 7 National Treasury. 2003 Budget Review. Pretoria: National Treasury; 2003. URL: http://www.treasury.gov.za/documents/budget/2003/ review/foreword.pdf 8 National Treasury. 2004 Budget Review. Pretoria: National Treasury; 2004. URL: http://www.treasury.gov.za/documents/budget/2004/ review/ISBN%20page%20rev.pdf 9 National Treasury. 2005 Budget Review. Pretoria: National Treasury; 2005. URL: http://www.treasury.gov.za/documents/budget/2005/ review/ISBN%20page%20rev.pdf 10 National Treasury. 2006 Budget Review. Pretoria: National Treasury; 2006. URL: http://www.treasury.gov.za/documents/budget/2006/ review/ISBN%20page%20rev.pdf 11 Statistics South Africa. Annual Inflation on a Monthly Basis: Consumer Price Index, Metropolitan and other urban areas- Core Index (January 1997 - January 2007). Pretoria: Statistics South Africa; 2007. 12 McIntyre D, Bloom G, Doherty J, Brijlal P. Health Expenditure and Finance in South Africa. Durban: Health Systems Trust and the World Bank; 1995. 13 McIntyre D. Health Care Financing and Expenditure in South Africa: Towards equity and efficiency in policy making. PhD Dissertation. Cape Town: University of Cape Town; 1997. 14 McIntyre D, Doherty J. Health care financing and expenditure: Progress Since 1994 and Remaining Challenges. In: Van Rensburg H, editor. Health care in South Africa. Pretoria: Van Schaik Publishers; 2004. 15 Statistics South Africa. Mid-year Population Estimates, South Africa 2006. Pretoria: Statistics South Africa; 2006. URL: http://www.statssa.gov.za/Publications/P0302/ P03022006.pdf 16 McIntyre D, Valentine N, Cornell J. Private Sector Health Care Expenditure in South Africa. S Afr Med J 1995; 85:133-5. 17 van den Heever AM. Evaluation of the Merger Between Network Healthcare Holdings and Community Healthcare. Pretoria: Council for Medical Schemes; 2007. 18 Council for Medical Schemes. Report of the Registrar of Medical Schemes, 1996/97. Pretoria: Council for Medical Schemes; 1997. 19 McLeod H. Mutuality and Solidarity in Healthcare in South Africa. In: Sessional meetings of the Actuarial Society of South Africa: Actuarial Society of South Africa; 2005. URL: http://www.assa.org.za/scripts/file_build. asp?id=100000419 20 McIntyre D, McLeod H, Thiede M. Comments on the National Treasury Discussion Document on the Proposed Tax Reforms Relating to Medical Scheme Contributions and Medical Expenses. Cape Town: Health Economics Unit; 2005. 46
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South African Health Review 2007 LI
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Foreword The 12th edition of South
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12 Traditional and Complementary Me
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Other Funders for the Health System
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This response raises a number of qu
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Page 39 and 40: Introduction The importance of the
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Health Information Systems in the P
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Authors: Shahieda Adams i Reno Mora
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Health and Health Care in the Workp
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Author: Bettina Taylor i 8 Rationin
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Rationing of Medicines and Health C
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Health Care Delivery 139
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Authors: Haroon Wadee i Farzana Kha
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Human Resources for Health 9 Table
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Human Resources for Health 9 Table
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Human Resources for Health 9 source
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Human Resources for Health 9 Refere
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Authors: Shadrack Shuping i Sipho K
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Public-Private Partnerships 10 Alth
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Public-Private Partnerships 10 Tabl
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Public-Private Partnerships 10 Conc
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Authors: Thulani Matsebula i Michae
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Private Hospitals 11 Table 1: Priva
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Private Hospitals 11 Table 3: Distr
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Private Hospitals 11 Human resource
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Private Hospitals 11 Figure 3: 16 T
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Private Hospitals 11 Figure 4: 2 50
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Private Hospitals 11 Monitoring qua
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Private Hospitals 11 Recommendation
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Authors: Nceba Gqaleni i Indres Moo
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Traditional and Complementary Medic
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Authors: Myles Mander i Lungile Ntu
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Economics of the Traditional Medici
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HIV and AIDS, STI and TB in the Pri
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Indicators 213
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Authors: Candy Day i Andy Gray ii 1
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Health and Related Indicators 15
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Glossary AFA AIDS ALP AMA ANC ART A
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Glossary KZN LFS LIMS LP LPP MAR MC
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Glossary SAPC SARS SASIM SASSA SEP
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Index A Acts (Legislation and Bills
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Index N and O National Health Refer
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