Social Health Insurance Policy Development: briefing

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25 June 2002
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Meeting Summary

A summary of this committee meeting is not yet available.

Meeting report

25 June 2002

: Mr L V Ngculu (ANC)

Documents handed out:
Inquiry into Social Security Aspects of South African Health System
Social Health Insurance Policy Development Powerpoint Presentation

The Committee learned with consternation that the World Health Organisation had rated South Africa at position 175 out of 200 countries sampled world-wide on the budgetary allocation to the health sector. This rating was attributable to high inequalities that existed between the private and public sector medical provision. The public sector with a budget of R30 billion serviced 37 million people whilst the private sector with a budget of R40 billion served seven million people. The Committee felt that this rating was due management problems as witnessed during oversight visits to provinces.

Presentation by Brenda Khunoane, Director Social Health Insurance
Ms Khunoane informed the Committee that the Government had commenced charting out the policy process by setting up four committees namely; the Finance Committee (1994), the National Health Insurance Committee (1995), Departmental Task Team (1997) and the Social Security Committee of Inquiry (2000).

Ms Khunoane explained that the National Health Insurance Committee proceeded on the understanding that the Constitution provided that everyone has a right to access to health care services including reproductive care. The Constitution obligates the State to take reasonable legislative and other measures, within available resources to achieve the progressive realisation of these rights and that no one may be refused emergency medical treatment.

On the current policy context, Ms Khunoane pointed out that the public and private sector need to enter a joined venture to solve inequalities that exist between them. She said that the former with a budget of R30 billion services 37 million people whilst the latter with a budget of R40 billion serves a mere 7 million people.

Ms Khunoane noted that the budget in the public sector has been on a steady decline and that there were internal deficiencies where policy is designed at the national level but implementation depends on the Provincial priorities. She added that centralisation of policy decisions caused disincentive for the Provinces to undertake certain projects in hospitals.

Ms Khunoane pointed out that the Committee Report had identified specific problem areas in the health sector. She explained that these areas included the link between policy and implementation-centralised responsibility and accountability and a flawed user fee system. She added that the fee system was such that it created the wrong perceptions among the populace that hospital services were free which should not be the case. The other area is the declining budget for the public health system, which had caused the quality of service in this sector to plummet. The other aspect identified as problematic was the fact that it had become impossible to address inequality due to the foregoing challenges hence the central issue of inequality had been relegated to the very periphery.

Ms Khunoane continued that with regard to the private sector, the report noted cost increases and an unjustified tax subsidy that rose with every new scheme. She added that the report had noted the existence of some discriminatory practices in medial schemes and that there was a structural difficulty in linking these schemes to the public sector. She pointed out that the report had further noted that the development of a low-cost market was limited due to high private hospital costs and that there were other intermediary problems like the broker's code of conduct which need to be addressed.

Ms Khunoane reported that a study carried out by the WHO on 200 countries on budgetary allocation for the health sector had placed South Africa at number 175 only next to Brazil. She lamented that this poor performance had everything to do with the glaring inequality in the health system. She noted that the amount of money spent on public hospitals had been declining rapidly in recent years and this phenomenon has only been matched by the stead growth of the private sector. This scenario, she explained, could only mean that there had been more money going into the private health sector than what goes to the public sector.

Ms Khunoane pointed out that Research findings had proposed a conditional support for a contributory scheme to ensure that additional funding goes to health and there is adequate injection of funds into the public system to improve public efficiency and structural systems in hospitals. It was further proposed to effect differential amenities and not clinical services to improve these products but that care must be taken to ensure that those unable to pay do not get low quality services.

Ms Khunoane stated that the key objectives of the proposed reforms was to attract additional resources to social risk pools and entrench systems of cross subsidy while reinforcing the public provider system and restructure the budgeting system at the same go. The proposals were such that the public sector would remain the provider of last resort and that key determinants of policy must be restructured to achieve policy synergy at both national and provincial levels.

Ms Khunoane pointed out that the upshot of all these measures was to develop an enabling environment that would prepare the public health budget system. This would ensure a centralised health budget and the creation of units to manage conditional grants. She explained that these measures would prepare the public health hospital system to manage decentralisation and create coherent enhanced amenities in the policy regime. She added that all these would require the injection of financial resources to improve public services and that concomitantly minimum norms and standards must be created in addition to the improvement of human resource management.

Ms Khunoane admitted that this process was a huge task, which would not happen right away but that it was a process that would require a systematic approach. In the meantime, however, preparatory reforms would be implemented to introduce a risk equalisation fund and the implementation of the revised tax subsidy. She also alluded to the possibility of a mandatory cover for civil servants and some kind of a state sponsored medical scheme whose character would be such that the state would not necessarily fund but that such entity would be self-sustaining.

On the question of the implementation of the statutory mandates, Ms Khunoane explained that this would empower medical scheme membership to only apply to high-income groups and implement voluntary cover for low-income groups. She added that as a result there would be a move towards a pre-paid system for public hospitals, which allows access to enhanced amenities but that non-contributors would be entitled to free services.

The Chair pointed out that some of the issues ventilated in the report had been discussed at length during the provincial budget vote in particular the question of conditional grants, conditions of hospitals and the code of conduct for brokers. The Chair noted that upon return from the short recess the very first item on the agenda would be to amend the medical schemes Act in order to make provision for the code of conduct for brokers.

The issue of provincial budgetary inequities came out more starkly during the budget vote and that it is a cause of great concern to the Committee. He added that there was a great deal of work to be undertaken in the area of hospital revitalisation noting that it came as no surprise that the country was poorly rated by the WHO in the budgetary provision for medical services.

Mrs Mnumzana (ANC) acknowledged the fact that the presentation was a comprehensive in-put noting that members would require time to plough through the report to get sense of what was addressed therein before engaging the Department meaningfully. She added that what has become clear was the direction the Department was taking to address the recurrent problem of inequity in the health system.

Mrs Mnumzana (ANC) associated with the Chair's viewpoint that the budget presentations had uncovered disturbing incidences of outright inequity in the health system. She noted with approval the proposal to centralise budget disbursements in order to create synergies in policy implementation.

Dr Robinowitz (IFP) congratulated the presenter for her excellent grasp of the issues at hand. She however criticised the report for presenting no options to the suggested solutions. She also faulted the proposal to centralise budgetary disbursements, which she said was not an answer to the perennial problem of conditional grants.

Dr Robinowitz applauded reference to minimum norms and standards, which she said was a better approach than just looking at norms and standards generally.

Dr Cachalia (ANC) pointed out that the question of poor management and inadequate human resource must be addressed urgently. He urged the Department to find ways and means to register more civil servants into the medical cover schemes. He expressed the view that the medical industry lacked efficient overseeing and that incidences of high management costs, high costs of drugs and high cost of medical cover were rampant.

Ms Mathibela (ANC) observed that medical schemes and brokers had maintained structures, which made it very difficult for people to appreciate the importance of a medical cover. She added that many people knew very little about medical schemes and pointed out that perhaps centralising may be the only solution. She urged for a culture of responsibility to be inculcated among the populace by encouraging everyone to pay for medial services be they poor or rich.

Ms Khunoane pointed that most issues members had raised were covered in the report. She agreed with members that the question of budgetary inequity was a major problem but was quick to assure members that the Department was seriously and urgently tackling the problem.

Ms Khounane said that the issue of centralisation was challenging and explained that the current set up was such that responsibility vested in the national office but without the requisite power to ensure implementation of the mandate upon which responsibility vests. She gave the example of implementing the problematic inter-provincial equity, which is impracticable in a situation where the control of the provincial budget vested with the provinces.

Ms Khunoane concurred with sentiment expressed by Dr Cachalia that the issue of inadequate human resources called for urgent intervention. Eleven pilot projects had been set up to provide hospital management with support systems. The government had ordered an evaluation of performance of all areas of management to take stock of developments.

On the question of high administration costs, Ms Khunoane said that the registrar was in the process of looking into this issue. She agreed with Dr Chachalia that the cost of essential drugs had increased substantially and pointed that the Department was trying to move away from branded drugs but that this was still under consideration. The Department was encouraging accredited medical schemes to enter into an agreement to purchase drugs together with the government in order to reduce the costs to consumers.

Dr Luthuli cautioned that the Department must tread carefully on the issue of centralisation noting that this might turn out to be a source of debilitating bureaucracy. She concurred with the Chair that the poor rating of the country by the WHO came as no surprise since the committee had witnessed a great deal of management problems during its oversight visits to provinces.

The Chair agreed with Ms Luthuli that the question of centralisation must be explained thoroughly and put in its proper perspective for members to comprehend the context within which it is set. He added that in his view, measures are put in place to address the immediate concerns regarding the health system in so far as how well and first to arrive at redressing the vexing question of inequity.

The Chair encouraged members to thoroughly acquaint with the report during the recess period so as to absorb its depth. He pointed out that the report would inform the Committee's deliberations in the next session.

The meeting was adjourned.


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