National Health Insurance briefing by Department of Health

Standing Committee on Appropriations

22 August 2011
Chairperson: Mr E Sogoni (ANC)
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Meeting Summary

The Department of Health said National Health Insurance (NHI) would see the introduction of an innovative system of healthcare financing in South Africa that would have far-reaching consequences for South Africans as it would ensure that everyone, regardless of their socio-economic status, had access to health services that was appropriate, efficient and of good quality. This was particularly important as there was widespread recognition that the current healthcare system was neither rational nor fair. The private sector covered 16.2% of the population and had a relatively large proportion of funding allocated through medical schemes, hospital plans and out-of-pocket payments while the public sector covered 84% of the population and was funded through the fiscus. The public sector suffered from poor management systems and oversight, was under-resourced, especially in relation to the size of the population that it served and the burden of disease which resulted in longer waiting times and lower clinical consultation times.

To successfully implement NHI, there needed to be a complete transformation of healthcare service provision and delivery, a total overhaul of the entire healthcare system, a radical change of administration and management and the provision of a comprehensive package underpinned by a re-engineered primary healthcare system. Key challenges facing the health system included the quadruple burden of disease, quality of healthcare, distribution of financial and human resources and high costs of healthcare. Costs within the private health sector were out of control at the expense of the members of medical schemes while costs in the public health sector were escalating at the expense of the fiscus. The principles of the NHI included the right to health access, social solidarity, equity, effectiveness, appropriateness, efficiency and affordability. Its objectives were to:
• provide improved access to quality health services for all South Africans, whether they were employed or not;
• pool risks so that equity and social solidarity would be achieved through the creation of a single fund;
• procure services on behalf of the entire population and efficiently mobilise and control financial resources and
• strengthen the under-resourced and strained public sector to improve health systems performance.

The socio-economic benefits of NHI included
• increased output as a healthy person worked more effectively and devoted more time to productive activities,
• a broader knowledge base in the economy as education gains increased as life expectancy increased,
• increased ‘work life’ and savings as a result of increased life expectancy could result in earning and saving more for retirement.

The NHI would cover all South Africans and legal permanent residents. Short-term residents, foreign students and tourists would be required to obtain compulsory travel insurance. Refugees and asylum seekers would be covered in line with the Refugees Act of 1998.

With regards to the re-engineering of the health system, primary healthcare services would be delivered according to three streams: district-based clinical specialist support teams which would support the delivery of primary healthcare programmes at district level, school-based primary healthcare services and municipal ward-based primary healthcare agents. In terms of the principal funding mechanisms, the sources would come from the fiscus, employers and individuals. It was estimated that by the year 2025, the costs would be in the region of R255 billion.  Medial schemes would continue to exist side by side with the NHI and might also provide top-up cover, with no one being allowed to opt out of the NHI.

The first steps towards the implementation of NHI in 2012 would be through piloting it in 10 districts. In this regard, the Department was currently conducting audits of all healthcare facilities. A Ministerial Task Team would advise on District Specialist Teams led by a Chair of Confidential Inquiries into maternal, neonatal and under-5 deaths. An audit of Community Health Workers had been completed and retraining and re-skilling would be undertaken.

In 2010 there were 150 509 registered health professionals in South Africa, with the period between 1996 and 2008 seeing stagnation in the growth of health professional numbers and a decline in key categories between rural and urban areas as well as private and public sectors. The filling of currently listed public sector vacancies would cost billions. Staffing requirements should instead be based on service plans informed by norms and needs.

Members asked what budget allocation was set aside from the fiscus for preparation towards the implementation of the NHI, who would be funding the piloting process, whether there would be a task team to drive NHI implementation, who was to be taxed and how much would they be taxed, whether contributions to the NHI would have to be made in addition to payments to medical schemes, what additional services it was hoping to offer and whether inflation had been taken into consideration when arriving at the estimated cost of R255 billion.

Meeting report

National Health Insurance (NHI) presentation by the Department of Health (DoH)
In her presentation, Ms Malebona Matsoso, DoH Director-General, said that National Health Insurance would see the introduction of an innovative system of healthcare financing in South Africa. It would also have far-reaching consequences for South Africans as it would ensure that everyone, regardless of their socio-economic status, had access to health services that was appropriate, efficient and of good quality. This was particularly important as South Africa’s current healthcare system was inequitable, with the privileged few having disproportionate access to health services. There was widespread recognition that this system was neither rational nor fair.

The South African healthcare system was two-tiered. The private sector covered 16.2% of the population and had a relatively large proportion of funding allocated through medical schemes, hospital plans and out-of-pocket payments. It provided cover to patients who had purchased a benefit option with a scheme of their choice or as a result of their employment conditions. The public sector covered 84% of the population and was funded through the fiscus. It suffered from poor management systems and poor oversight, especially at hospitals. It was under-resourced, especially in relation to the size of the population that it served and the burden of disease. It had fewer resources than the private sector which resulted in longer waiting times and lower clinical consultation times which, in turn, increased the risk of error.

To successfully implement a healthcare financing mechanism that covered the entire population (such as NHI), four key interventions needed to happen simultaneously. There needed to be a complete transformation of healthcare service provision and delivery, a total overhaul of the entire healthcare system, a radical change of administration and management and the provision of a comprehensive package underpinned by a re-engineered primary healthcare system.

The 2008 World Health Report of the World Health Organisation detailed three trends that undermined the improvement of health outcomes globally: hospital centrism (with its strong curative focus), fragmentation in approaches (which may be related to programmes or service delivery) and uncontrolled commercialism (which undermined principles of health as a public good). The two-tiered South African healthcare system was unsustainable, destructive, very costly and highly curative (hospi-centric).

Key challenges facing the health system included the quadruple burden of disease, the quality of healthcare, the distribution of financial and human resources and the high costs of healthcare. The quality of service delivered in public health facilities was marked by problems to do with cleanliness, the safety and security of both staff and patients, long waiting times, poor staff attitudes and infection control as well as drug stock-outs. Costs within the private health sector were out of control at the expense of the members of medical schemes while costs in the public health sector were escalating at expense of the fiscus. Costs within the public sector were driven by five major identifiable areas: the compensation of employees, pharmaceuticals, laboratory services, blood and blood products and health technology and equipment. In relation to the affordability of medical scheme contributions, a number of medical schemes had collapsed, had been placed under curatorship or merged. The number of schemes had reduced from over 180 in 2001 to 102 in 2009. To sustain their viability, schemes tended to increase premiums at rates higher than the CPIX.

The principles of the NHI included the right to health access, social solidarity, equity, effectiveness, appropriateness, efficiency and affordability. Its objectives were: to provide improved access to quality health services for all South Africans regardless of whether they were employed or not; to pool risks so that equity and social solidarity would be achieved through the creation of a single fund; to procure services on behalf of the entire population and efficiently mobilise and control financial resources and to strengthen the under-resourced and strained public sector so as to improve health systems performance.

The socio-economic benefits of NHI included increased output as a healthy person worked more effectively and devoted more time to productive activities, a broader knowledge base in the economy as the gains of education increased as life expectancy increased, an increased ‘work life’ and savings as a result of increased life expectancy could result in earning and saving more for retirement.

In relation to considerations for achieving universal coverage, the current pooled funds needed to be extended to those who were not covered while the services which were covered needed to be extended to include other services. The NHI would cover all South Africans and legal permanent residents. Short-term residents, foreign students and tourists would be required to obtain compulsory travel insurance. Refugees and asylum seekers would be covered in line with the Refugees Act, 1998.

With regards to the re-engineering of the health system, primary healthcare services would be delivered according to the following three streams: district-based clinical specialist support teams which would support the delivery of primary healthcare programmes at district level, school-based primary healthcare services and municipal ward-based primary healthcare agents. The district-based clinical specialist support teams would assist in addressing the high levels of maternal and child mortality and improve health outcomes. These teams would be based in districts and be made up of a principal obstetrician, gynaecologist, paediatrician, family physician, anaesthetist midwife and primary healthcare professional nurse. The roles of these teams would be to provide clinical support and oversight, particularly in those districts with a high disease burden. School health services would be delivered by a team headed by a professional nurse. These services would include health promotion, preventative and curative health services that addressed the health needs of school-going children, including those who had missed the opportunity to access services such as child immunisation services during their pre-school years. Municipal ward-based primary healthcare agents would see a team of at least 10 primary healthcare agents being deployed in every municipal ward. Each of these teams would be headed by a health professional, depending on availability, while each member of the team would be allocated a certain number of families. These teams would also collectively facilitate community involvement and participation in: identifying health problems and behaviours that placed individuals at risk for disease or injury, vulnerable individuals and groups and implementing appropriate interventions from the service package to address such behaviours or health problems.

In terms of the principal funding mechanisms, the sources would come from the fiscus, employers and individuals. In terms of costing, it was estimated that by the year 2025, the costs would be in the region of R255 billion.  Medial schemes would continue to exist side by side with the NHI and may also provide top-up cover, with no one being allowed to opt out of the NHI.

The first steps towards the implementation of NHI in 2012 would be through piloting it in 10 districts. In this regard, the Department was currently conducting audits of all healthcare facilities. The criteria for choosing these 10 districts would be based on the results of these audits, the demographic profiles and key health indicators as well as the following factors: health delivery performance, management of health institutions, income levels and social determinants of health and compliance with quality standards. Regulations were to be drafted to define levels of hospitals and the appropriate skills requirements to manage hospitals and/or public health facilities. A Ministerial Task Team would advise on District Specialist Teams led by a Chair of Confidential Inquiries into maternal, neonatal and under-5 deaths. An audit of Community Health Workers had been completed and retraining and re-skilling were to be undertaken.

In 2010 there were 150 509 registered health professionals in South Africa, with the period between 1996 and 2008 seeing stagnation in the growth of health professional numbers and a decline in key categories between rural and urban areas as well as private and public sectors. The filling of currently listed public sector vacancies would cost billions. Staffing requirements should instead be based on service plans informed by norms and needs. South Africa had a nurse-based healthcare system (nurses made up 80% of health professionals) and had considerably fewer doctors, pharmacists and oral health practitioners per 10 000 population than other comparable countries. Education output for most health professions had been stagnant over the past 15 years.  

Additional districts would be determined on an annual basis for inclusion in the roll-out. Aspects for inclusion in this regard would include re-engineered primary healthcare streams, basic infrastructure, compliance with standards and functionality of districts and facilities, including appropriate management. NHI would be phased in over a period of 15 years. It would also include piloting and strengthening the health system in the following areas: management of health facilities and health districts, quality improvement, infrastructure development, medical devices (including equipment), human resources planning, development and management, information management and systems support and the establishment of the National Health Insurance Fund.

Discussion
Ms B Ngcobo (ANC) asked what the budget allocation set aside from the fiscus would be for preparation towards the implementation of the NHI.

Ms Matsoso answered that a budget of R110 billion had been allocated over the MTEF period for the improvement of the health system. This allocation was made by the Minister of Finance in recognition of the failures of the system as well as the burden of disease.

Mr Anban Pillay, DoH Acting Deputy Director-General: Health
Planning and Monitoring, added that the estimated budget included the public health sector budget.

Mr N Singh (IFP) asked who would be funding the piloting process. Would there be a task team that would drive the implementation of the NHI?

Ms Matsoso answered that the Department was working together with National Treasury on a proposal to look at how funds in this regard were to be structured. There was a need for such a task team and it should be made up of those looking at issues such as ethics, the law, and financing.

Mr M Swart (DA) asked who was to be taxed and how much would they be taxed. Would contributions to the NHI have to be made in addition to payments to medical schemes?

Ms Matsoso answered that there were innovative ways in which this could be funded. In certain European countries, for example, airport taxes had been introduced in order to fund certain initiatives.

Mr Pillay answered that the Department foresaw many of the private sector service providers participating in the NHI.

Mr M Waters (DA), Member of the Portfolio Committee on Health, asked what additional services it would be hoping to offer. Was inflation taken into consideration when arriving at the estimated R255 billion? Social solidarity was already in existence in South Africa as the rich were currently supporting the poor through the payment of taxes, so what was the need for mentioning this? What was needed rather was a more efficient spending of this money. Why was there the need for a central fund?

Mr Pillay answered that the figure did take inflation into consideration. The NHI was aimed at having South African society as a whole managing the costs of healthcare, thereby ensuring social solidarity. At present the healthcare system was fractured and involved different pools of money. As many of the financial questions were not the Department’s area of expertise, such questions would be better answered by National Treasury.

Ms Matsoso added that there was a need to ask whether it was fair that poor people had limited or no choice when it came to the kinds of healthcare they could access. The Department had looked at such models in other countries and found that it was best to separate the funder from the provider.

Mr M Mbili (ANC) commented that many of the issues raised, particularly that of there being no clarity as to the exact number of doctors, were as a result of poor management. The Department should have addressed these issues. Was the proposed state pharmaceutical company a policy or was it being discussed at Department level? How was the estimated figure of R255 billion arrived at?

Ms Matsoso answered that this was not an issue of poor management but rather one related to planning. The exact number was difficult to assess as there were, as an example, nurses who, although they were working abroad, were registered in South Africa. There was therefore a need to clean up the current records in order calculate accurately the number of doctors and nurses in the country which, in turn, would allow the Department to plan more effectively. To this end, it would be working with statutory councils. There was also a problem around the number of doctors not having increased. This was seen largely as a result of an inappropriate model for the training of specialists. The Department was working on finding the best model for the training of registrars. It was also working together with universities on programmes which would see the number of doctors qualifying from these institutions increasing. The state pharmaceutical company issue was outside the Department’s mandate and could therefore not be adequately responded to.

Mr Pillay added that the Department had based its estimate on the public health system. This was an indicative cost and would adjust once more information was gained from the pilots.

Mr B Goqwana (ANC), Chairperson of the Portfolio Committee on Health, said that the discussion was too hospital-centric and needed to move more towards issues around primary healthcare. The debate should not move away from the issues of greatest importance. Many of the matters raised would need to be discussed during public hearings into the matter.

The Chairperson agreed that some questions were not the right ones to be discussed at the meeting and therefore need not be answered in great detail within the meeting, but should instead provide the Department with food for thought.

Ms Matsoso said that the Department would appreciate a future opportunity in which to present the Committee with the results of the audits it was undertaking as well as the results which would be yielded by the teams being sent out.

The meeting was adjourned.

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