National Health Insurance (NHI) Bill: public hearings day 16

Meeting report

The Chairperson gave brief opening remarks.

Mr P van Staden (FF Plus) thanked the Committee for its support of his family in their recovery. 

Submission: Black Pharmaceutical Industry Association (BPIA)

Mr Kingsley Tloubatla, Chairman of BPIA, Dr Eugene Lottering, Deputy Chairman of BPIA, and a representative of the Association, presented to the Committee.

They said the South African market is currently worth R56.4 billion, and black-owned companies constitute less than 1% of the market. The vast majority of active pharmaceutical ingredients (API) -- greater than 95% -- and a significant portion of finished products are imported into South Africa. The country produces 35% of the volume of pharmaceuticals consumed locally, with 65% imported.

This dependence on imports has translated into a negative pharmaceutical trade balance, currently in excess of R28.5 billion in 2019. The pharmaceutical trade deficit totalled R230.3 billion between 1993 and 2017 (Quantec: SA Pharma Trade – Import and Exports). Imported goods are subject to currency fluctuations, as the US dollar is the currency used to trade. This leads to a continuous stream of product shortages (stock outs), especially of products on the essential drug list (EDL), and poses a threat to procurement and the availability of products under the National Health Insurance (NHI).

The Covid -19 pandemic and the breakdown in global value chains, coupled with export restrictions on priority essential medicines and medical consumables by countries like India, has clearly highlighted the threat faced by the nation in securing the supply of medication. Security of supply of medication for all South Africans at the dawn of the NHI, requires the local production of both API and finished goods of the EDL.

Pursuing a strategy of ensuring a greater supply of South Africa’s healthcare needs from local suppliers, presents the country with an opportunity to transform the healthcare sector, as new black-owned enterprises form part of the supply chain. Black individuals were not allowed to own pharmaceutical companies by law legislated by the apartheid government. Only one black company (Be-Tabs) was allowed to operate in 1978 with a special ministerial consent, and to sell their drugs only to black dispensing doctors.

The South African Health Products Regulatory Authority (SAHPRA) does not recognise or use broad-based black economic empowerment (BBBEE) certificates in the registration of product dossiers, as mandated by law. The impact of this is:

• The pharmaceutical private sector, which comprises 80% of the SA market value, continues to trade as per pre- 1994, with no pressure to transform;
• Currently, SAHPRA takes in excess of four years to register a product dossier;
• Local white-owned pharmaceutical companies established pre-1994, and multinational companies, have large existing product portfolios and equally massive product pipelines;
• They can absorb the lost opportunity cost incurred from the delays in product registration. By contrast, black-owned new enterprises cannot endure the latter, as they do not have large product portfolios and product pipelines; this limits new market entrants.
• Key to retention of the status quo is the failure to recognise BBBEE as part of the product dossier registration process by SAHPRA.

Proposed short-term solutions for the registration of product dossiers are that the Department of Health (DOH) should work in conjunction with the Department of Trade, Industry and Competition (DTIC) to enact a health charter covering pharmaceuticals within a stipulated and strict time-frame. The BBBEE scorecard should be made part of the pharmaceutical product dossier registration process at SAHPRA. The registration of products from black-owned companies, defined as companies that have a minimum of 51% black ownership, needs to be expedited. Specifically, BPIA is proposing that SAHPRA must give priority to black-owned pharmaceutical companies in the registration of product dossiers. Under no circumstances should black-owned companies be exempt from the full regulatory assessment of product dossiers to ensure product safety and efficacy. For the sake of clarity, BPIA is only advocating for the administrative addition of the BBBEE certificate in the Screening phase of the current SAHPRA regulatory process.

In the medium-term, within five years, a pharmaceutical hub should be established through the local production of API and pharmaceutical formulations. The capability to manufacture both API and finished goods will be critical to the universal coverage mission of the NHI. Immediate steps should be taken to incentivise the local production of API and finished goods of pharmaceutical products in the EDL. The DoH should implement a forward-looking target of state procurement of 50% of its healthcare needs being supplied from black-owned companies by 2026. The success of a manufacturing enterprise is reliant on consistent, large production volumes, such as will be offered through the NHI.

BPIA is proposing a minimum 30% allocation for black-owned companies of the anti-retroviral (ARV) tender through three tender cycles, beginning with the next tender. This would result in savings of more than R2 billion for the government. The black-owned companies would be obligated to source their API from the local API manufacturer of the respective API for the ARV drug Tenofovir - Lamivudine - Dolutegravir (TLD).

The official 30% allocation by the DoH would be used by the black-owned companies to raise funding for the development of the following an API manufacturing plant in one of the provincial industrial development zones (IDZs) dedicated for/to pharmaceuticals, and a formulation plant with high speed equipment to manufacture the high product volumes.

The BPIA emphasised the following factors for the way forward:

• A Health Charter is crucial – within a stipulated time (July 2022);
• Covid-19 has exposed the danger of reliance on imported products (GBC collapse and restrictions on exports);
• The urgent need for intentional, bold and thoughtful interventions to create health security for the country through expedited registrations, legislated and mandatory procurement preferences encompassing the public and private sector, restricted lists, and directed support at building local API and formulation capability and capacity, working with research institutes and universities

Discussion

The Chairperson asked if BPIA had previously had any contact with the South African Health Products Regulatory Authority (SAHPRA) about the issues raised in the presentation, and if it had any interactions with the Portfolio Committee on Higher Education, Science and Technology in the past.

The BPIA responded that the executive committee of the BPIA had previously had numerous meetings with SAHPRA, and with both the previous and current chief executive officers (CEOs). SAHPRA had stated in no uncertain terms that if it was not legislated by Parliament to implement, and that it could not do anything when it came to the prioritisation of black-owned pharmaceutical products. SAHPRA needed direction from Parliament, and this needed to be enacted by a guideline or law. For the previous four or five years, BPIA had had numerous meetings, two to three times a year, to no avail.

Mr Tloubatla said that BPIA had not had any formal engagement with the Portfolio Committee on Higher Education, Science and Technology. It would appreciate guidance of how to engage with that Committee.

Ms M Hlengwa (IFP) said that the BPIA recommended producing essential medicines locally. It was suggested that this would boost the economy. It was not clear how this would benefit transformation. Was there a proposal on how to protect the health products sector so that disadvantaged groups participated meaningfully and benefited from local production of essential medicines?

Dr K Jacobs (ANC) commented that the BPIA was a group of black persons who had grouped together to form an association in the hope that they would be able to advance their business and opportunities in an environment that had been constrained by previous laws. Those laws made it very difficult to enter into the space. He was fully cognisant and aware that it was a difficult space to enter, as it was controlled by ‘big pharma,’ which had established themselves over a long period of time. Thus, he understood the sentiments of the BPIA. He agreed that because active pharmaceutical ingredients and pharmaceutical formulations were not produced in the country, South Africa relied heavily on other countries, especially India.

He had not seen BPIA make any specific recommendations or suggestions about the NHI Bill. It had requested a minimum obligatory 30% of all government tenders, and in both the private and public sectors. Was it proposing that black-owned companies be exempt from the requirements which were set out for all companies that submitted tender applications? He noted that the Chairperson had asked important questions about BPIA’s interactions with SAHPRA and the Portfolio Committee of Higher Education, Science and Technology. Were the companies large enough? How would the security of supply be ensured if this approach was adopted under the NHI?

Ms A Gela (ANC) asked if the BPIA was of the view that by introducing BBBEE certification requirements at SAHPRA, pharmaceuticals would be registered within shorter timelines. What was SAHPRA’s response to this proposal? How would the proposal improve registration timelines?

Mr T Munyai (ANC) asked if BPIA was part of another trade organisation that represented manufacturers that may have presented to the Committee on another occasion about the NHI Bill. An independent regulatory body, such as SAHPRA, was responsible for product registration based on quality, safety and efficacy. Why should matters of BBBEE arise or be considered when it was based on commercial influence? Should this not be addressed with the Department of Trade, Industry and Competition? SAHPRA was represented by the population demographics of the country. He requested that BPIA clarify why they thought the issue of BBBEE would arise.

He asked about active pharmaceutical ingredients (API). What was the percentage contribution of the API’s in the current account deficit? This would be subjected to currency fluctuations. Why did the BPIA talk only about the stock-outs of finished products of the essential drug list (EDL)? What was its view on the prevention of black-owned pharmaceutical companies having a stake in the supply of pharmaceuticals which were chronically in short-supply in South Africa? Did BPIA want matters of BBBEE and the Preferential Procurement Policy Framework Act (PPPFA) to be introduced into the NHI Bill?

Dr X Havard (ANC) asked what the BPIA’s position was on the NHI Bill – was it in support of the objectives of the Bill?

The Chairperson said that his previous questions formed the basis of what he wanted to ask. The Department of Health, overseen by the Portfolio Committee, would procure products under the NHI. He highlighted that there was a continuous question of why pharmaceutical products were imported from other countries when they could be produced locally. He suggested that such discussions should be taken seriously with the Department of Science and Innovation. The Portfolio Committee on Higher Education, Science and Technology, was engaged in such discussions. The Committee acknowledged the suggestions made by the BPIA, and suggested that it engage with the Portfolio Committee on Higher Education, Science and Technology. It had not engaged on the NHI Bill specifically. He suggested that it seemed as if it wanted an engagement about the APIs so as to produce them locally. The relevant people would be found in the Department of Technology and Innovation.

BPIA's response

Dr Lottering, responding to the question about local manufacturing, said the BPIA endorsed the NHI Bill and thought it was long overdue. It was looking at ways to make it affordable in the long-term and make its operations more seamless – in other words, to reduce the problems currently faced in the system based on the sector being highly reliant on importation. In the process of addressing the needs of the NHI, black economic transformation could be addressed in the sector.

On the local manufacturing side, the BPIA was emphasising APIs. This was because they were the key, the actual medicine. Similar problems would be faced under the NHI, as experienced during the pandemic, where China closed its borders and was not transporting any raw materials out of the country. This meant that India, deemed the ‘pharmacy of the world,’ could not supply. India was dependent on two-thirds of its API supplies out of China. What India had realised during the pandemic was that this reliance resulted in them having shortages of medication. There were shortages of over 50 products. These products were locally manufactured in India, and put in an incentive package for the pharmaceutical sector to get engaged in manufacturing the essential drugs that they were reliant on. South Africa had exactly the same problem. One could not have sustainable universal health coverage if there was an insecure supply of medication. The BPIA was willing to work together with the government to try and transform the sector, and in the process deliver on aspects that were in short-supply in the pharmaceutical sector of the country.

The BPIA was not simply an amalgamation of black-owned businesses trying to push forward specific company agendas. It was made up of people with experience in the pharmaceutical sector that came together to address issues, and at the same time address transformation of the sector. He agreed that it should engage with the Department of Technology and Innovation about matters concerning transformation. However, the Department of Technology and Innovation did not register medication. To change that, BPIA had to engage SAHPRA directly.

The big pharmaceutical companies, mostly white-owned companies, had been able to avoid the Health Charter, started in 1994, that had been abandoned, and therefore they had no need to push forward transformation because the products did not require BBBEE certification. The gateway into the pharmaceutical sector was through the registration of products. It was a misnomer that if one added BBBEE certification it would disrupt security of supply. It would not. The BPIA had tremendous experience in the sector.

The BPIA was trying to promote local manufacturing. It was trying to ensure that black-owned companies increased in the pharmaceutical sector and as such, that black people derived a greater benefit from within the pharmaceutical sector. There was still a tremendous opportunity from local manufacturing of both API and finished goods that could benefit black people in the sector.

He responded to the question about the BPIA ‘advancing business interests,.’ and said it was not just promoting the interests of the member companies. It was a non-profit organisation specifically for the reason of advocating for things that were missing in the pharmaceutical sector. Key to that was transformation of the sector.

Mr Tloubatla responded to the question about the independence of SAHPRA. The BPIA supported the fact that SAHPRA focused on safety, efficacy and quality of products. However, cohesion was needed within government. Most regulatory authorities throughout the world prioritised locally manufactured products. Before 1974, South Africa used to produce more finished products than India. However, because of a concerted strategy and vision that was supported by not only the trade and industry sector in India, a decision was taken to be the ‘pharmacy of the world.’ All the departments in the Indian government had lobbied behind that decision to create not only one pharmaceutical company, which the BPIA wanted to do, but to establish five government-owned pharmaceutical companies. For as long as SAHPRA prioritised products from America that were registered with the Food and Drug Administration (FDA), rather than local products, it would mean that medical professionals would have to go to America and register companies there, to be recognised and prioritised in South Africa.

He responded to the question about the local production of vaccines. Before the dawn of democracy, the Apartheid government had established three government-owned vaccine manufacturing facilities. If they had not closed, South Africa would have been among the leading vaccine manufacturers in the world. South Africa did have capacity. It was simply that South Africa lacked vision and had not focused on this. BPIA believed it was in South Africa’s best interests to ensure that it had the capacity to establish its excellence in manufacturing. He suggested that the registration of products needed to be more efficient. It could not be that a country with such a high burden of disease took such a long period of time to register medicines, which was the case in South Africa.

Mr Munyai commented that the presentation had nothing to do with the Bill. He was sure that the BPIA could find a different platform that spoke to their interests in order to attend to those issues.

Mr Tloubatla responded that the BPIA had made comprehensive inputs on the Bill. He directed the Committee to BPIA’s written submission, where it had dealt with technical issues of pricing, single-exit prices (SEP) and procurement. Central to this was that the country controlled less than one percent of the sector. Transformation was necessary to ensure that the BPIA could participate. The fact that the NHI Bill was quiet on BBBEE was problematic.

A representative of BPIA said that the BPIA was not part of any trade association. For the NHI to succeed, there needed to be a sustainable supply chain. There was only one tuberculosis (TB) plant in Africa, which was based in Pretoria. TB killed more South Africans than Human Immunodeficiency Virus (HIV). There were talks of the plant in Pretoria shutting down. If that TB plant was closed, and there was a high probability of that happening, what would happen if India stopped exporting? What Bill would there be it the supply chain was not sustainable? South African would struggle. The country needed to address the different components to make the NHI successful. This included BBBEE and the prioritisation and support of local manufacturers.

The Chairperson said that the Committee would communicate the relevant contact details of the Department of Science and Innovation and the Portfolio Committee on Higher Education, Science and Technology to the BPIA. The Committee would likely meet with the BPIA again to assess the progress made with locally manufactured pharmaceutical products. He commented that the production of ARVs was also largely done by companies from other countries, and that some had established themselves with productive capacity within South Africa.

Submission: Oticon/Demant South Africa

Ms Bronwen Coleman, General Manager of Demant, presented to the Committee. The company was previously known as Oticon, and was renamed Demant South Africa on 24 March 2020.

She said Demant's products are currently on tender with the government, and government hospitals nationally are supplied with Oticon hearing aids. Oticon prides itself on the projects that it has co-run with the government, including patient advocacy days, training seminars to government audiologists and ear, nose and throat (ENT) surgeons. Oticon also donates a significant number of hearing aids every year to patients that cannot access government services and cannot afford to pay for private services. It also distributes bone-anchored implant systems and cochlear implants under the banner of Oticon Medical, and balance and audiological equipment through Inter-acoustics and MedRx in South Africa

Demant fully supports the concept of NHI and its ideal to accomplish the progressive realisation of the right of access to healthcare services, as set out under section 27 of the Constitution. The Bill’s attempt to bridge the gap between privately funded individuals and individuals accessing healthcare in the public sector is well appreciated, if done in a way where there is progression on both ends. It believes, however, that the implementation of the NHI must be subject to the recognition of the gaps and implementation of the recommendations highlighted by the Health Market Inquiry, the Davis Committee and recommendations made by industry and those contained in the company's submission of 29 November 2019.

Pointing out the prevalence of audiology as a prescribed minimum benefit, Ms Coleman said:

• Over 5% of the world’s population require rehabilitation to address their ‘disabling’ hearing loss (432 million adults and 34 million children).
• It is estimated that by 2050 over 700 million people – or one in every ten people – will have disabling hearing loss.
• Over one billion young adults are at risk of permanent, avoidable hearing loss due to unsafe listening practices.
• Nearly 80% of people with disabling hearing loss live in low- and middle-income countries, including sub-Saharan Africa.
• People with hearing impairment are disabled and therefore vulnerable. However, some of these people can be provided with the opportunity to hear, or improved hearing. Further, detection and treatment at an early age will prevent deterioration and assist with speech. If missed, at the early age, it may result in permanent hearing loss.
• Being provided with the ability to hear through hearing aid devices, such as the ones produced by Oticon, provides quality of life, dignity and the opportunity to be independent and to participate in their communities.
• People with this disability can be empowered to participate in the community, which includes seeking jobs, and doing jobs not previously being able to be done due to the disability. Two-thirds of adults with hearing loss are in the economic prime of their life. Economic participation is very important in South Africa.

Despite these factors, audiology currently has no place in the NHI/the Bill and the Medical Schemes Act 131 of 1998, and it is still considered by both as an optional treatment. Oticon believes that audiology should be included in the NHI and the current prescribed medical benefits (PMBs) as a minimum benefit to provide the hearing impaired the opportunity to hear and have a good quality of life and job opportunities.

Oticon/Demad favours an inclusive approach. Its belief is that having one funder can cripple the health industry of the country and create barriers to access -- the very barriers that the NHI is attempting to breach. An exclusive approach will also limit users’ right to choose. It therefore proposes that there be a multiple funder system in place, which will allow for flexibility and ensure broader and better coverage. It will also provide some level of a risk- equalisation mechanism and appropriate care in higher risk pools.

Prior to the implementation of the NHI Fund, there must be a guarantee that there is capacity to fund the NHI. From the available literature, the evidence is pointing to the fact that funding the NHI is no longer affordable. This was part of findings by the Davies Tax Committee in 2017. Without financial stability and sustainability, the NHI will fail. The failure will leave 100% of the population without funding and therefore no treatment, particularly if it is a single funder system as proposed in the Bill, which we disagree with precisely for this and other reasons. This will be a contravention of section 27 of the Constitution.

With regard to product pricing, Oticon/Demad propose alternative reimbursement models be implemented, as have been proposed by the industry over the years. These models will encourage competition and innovation which will ensure better pricing and outcomes for patients, and this will ultimately breach the access gap. It must also be recognised there is a huge difference between the business model for medicines and devices, which includes differences in training support, post-sale training and support, maintenance etc., and therefore, separate pricing measures must be created for each, considering these differences and more.

Regarding procurement through tender, Oticon is currently on tender to government for the supply of hearing aid devices and consumables and is in support of the tender system being part of the pricing mechanism, provided the measures to ensure that the system is “…fair, equitable, transparent and cost-effective…” and are reinforced, and that processes are reviewed to eliminate any contravention of section 217 of the Constitution.

There is currently no essential equipment list (EEL), whilst there is a list for essential medicines (EML), and the requisite processes to review it. The Bill proposes the development of a formulary for EML and EEL under clause 38(4), but the EEL must be developed and approved prior to such a formulary and prior to the Bill being passed. The company therefore proposes that EEL be developed as soon as possible, as it is not only a requirement under the NHI, but even now there is a need for it. The NHI must also provide adequate resources and structures to review these two lists from time to time.

Ms Coleman pointed out that there were multiple pricing mechanisms:

• Single Exit Price (SEP) is a pricing mechanism envisaged under the Bill, in addition to the tender system.
• Negotiated Pricing: Clause 38 proposes another pricing mechanism.
• Supplier rates: The Bill also provides under clause 41(3) that there will be a rate for suppliers that will be determined annually.

Oticon foresees that these multiple pricing mechanisms will cause confusion, and require costly systems and infrastructure to implement, and transparency may be an issue. It strongly proposes that the tender system remain the pricing system, and that price negotiation take into consideration innovative products and the benefit they provide the patient. In general, iy urges that the tender procurement system must be clear, simple and efficient.

Oticon prides itself in being an innovative company that strives to find solutions to suit individuals with hearing loss. Innovative products such as the ones introduced by Oticon include the first discreet in-the-ear-hearing device (1977), and the first fully digital hearing device (1996). In 2014 Oticon announced that its devices now support the brain making sense of sounds by giving it the conditions it needs to create meaning from sound, instead of overloading it by turning up the volume. While these innovative and beneficial value-adding devices are accessible to privately funded patients, they are not available to state patients due to underfunding, leaving patients with outdated devices, and resulting in the deprivation of a quality of life for a majority of its patients. The devices that are provided to most patients in the public sector are outdated.

Ms Coleman drew attention to negotiating “the lowest price possible,” as envisaged in clause 11(2) of the Bill, “without compromising the interests of the user.” It was unclear to what extent the interest would be protected and whether it includes access to innovative products, or only access to the bare minimum, even if the innovative product is indicated and necessary for some patients. This provision is an indication that innovation and new technology are not a priority in the Bill. Innovative products are more expensive due to the research and development involved, and the technology that most of them use. They provide quality of life and ensure that previously untreated conditions are treated, and they have the ability to reach a wider and more diverse group of patients due to ease of administration and patient compliance.

The Bill must make provision for funding of innovative products to ensure inclusivity and to give effect to the principle of Constitutional equality.

She said formularies and lists (EML and EEL) are accepted as a way to create certainty. However these formularies and lists may cause more harm than good if they are finite -- there is no room for exceptions and alternatives, if what is in the formulary and/or the list is not suitable for a patient, or if what the patient requires is not covered. The Medicines Act Regulations 15H and 15I provide patients with alternatives and exceptions in the above mentioned instances. Clause 38(4) of the Bill does not cover these instances. The result will be that those patients not covered by the formulary and the lists will be left without treatment, and the ones currently covered under the Medicines Act Regulations who are on non-formulary, non-EML and non-tender products will no longer be covered, resulting in no treatment or out of pocket treatment.

It is important that the Bill provide for these circumstances, including continued treatment on clinical trial products.

Regarding the payment of providers and suppliers, the Bill proposes that, “payment to specialists and hospital services be all-inclusive and based on the performance of the health care service provider, health establishment or supplier of health goods, as the case may be.” Oticon is in full support of this approach, but fee for outcomes cannot be effected without an effective system in place. This approach has proven to be complex, and has not been implemented over the years as a result. To this end, Oticon supports the recommendation made by the Health Market Inquiry, for the establishment of an outcomes measurement and reporting organisation (OMRO).

OMRO must be established and up and running prior to the NHI being in effect, in order to avoid uncertainties and unpaid providers and suppliers as a result. “All-inclusive” must be defined, time-lines for payment of suppliers must be set, as is done with any contract, and consequences for non-timeous payments or recourses available to providers that have not been reimbursed, must be established in the Bill.

Payment to providers must not be benchmarked with what the medical schemes are currently doing, as we believe the payment is insufficient due to the fact that these providers have to work in private and public, and rely on medical device profits and professional fees to cross-subsidise offerings in their businesses. This is currently possible for them to achieve due to the multiple funder system, but it cannot be achieved with a single funder system, as envisaged under the Bill, which is not supported.

With regard to supply chain and delivery direct to health facilities in terms of clause 38(6) of the Bill and listing of suppliers in formulary, the following must be considered and addressed:

• There are currently depots with employees around the country who take delivery from suppliers -- what will happen to the infrastructure and employees?
• The direct delivery to 52 health districts, 227 district hospitals and over 4 200 clinics will be at an additional cost to the supplier, and this cost will be added to the price of the product, costing the fund more.
• Listing of suppliers under formulary -- if the listing results in non-listed bidders not being allowed to bid, then the listing will be unfair and anti-competitive, in contravention of section 27 of the Constitution.
• What will happen to data currently on the database of the central supplier database (CSD)?

The procurement systems proposed in the Bill are supported, except where otherwise indicated. Oticon proposes that tender splitting be allowed, to allow smaller suppliers without a national footprint to participate. This will increase competition and ultimately benefit the Fund.

In order to prevent exclusion of certain products from being supplied to the country by multinational suppliers who struggle to achieve the required BBBEE scores in order to participate in tenders, there must be open engagement with these companies by government in order to reach a practical consensus in the interests of the public.

In the area of governance, the Bill proposes various consultations with the Minister by the Fund in a lot of the operational functions, such as the purchasing of health care services, benefit design and development of the formulary, etc. These consultations are not encouraged by Oticon on the following bases:

• The extent and process according to which the Minister will input is not defined.
• The issues are highly operational, and the Board should be qualified, equipped and skilled to deal with without the Minister.
• Consultation will create red tape and potential bottlenecks and unnecessary delays due to the Minister’s numerous other commitments.
• Oticon proposes that principles of good corporate governance be implemented and the board deal with these issues without the Minister. One cannot afford any unnecessary delays in the delivery of healthcare to the people.

In conclusion, Ms Coleman said the NHI is supported by Oticon. It must be implemented in line with section 27 of the Constitution. The progressive realisation of everyone’s right to access to health care will be achieved if those involved:

• Implement a multi-funder system and choice by users;
• Ensure sustainable funding to the NHI Fund prior to implementation of the NHI;
• Implement fair and transparent procurement processes;
• Incorporate and fund innovative products, and utilise Health Technology Assessment  (HTA) in healthcare;
• Provide for a system to support fees for outcomes, and pay suppliers timeously;
• Ensure that SAHPRA is supported, and product approval is efficient;
• Negotiate with multi-national suppliers on entry barriers to promote access to product;
• Promote accountability and good governance, and avoid delays to access.

Discussion

Ms Hlengwa noted that Demant had recommended that there should be negotiations with multi-national suppliers when it came to entry barriers to promote access to products. Nothing was said about enabling local suppliers. There were no recommendations about giving local suppliers the capacity to produce, nor of strengthening the local industry. She asked if Demant had any comment on this.

Mr M Sokatsha (ANC) said that Demant had spoken about progression on both ends after the NHI was in place. What did the presenter mean by ‘both ends?’ Under the NHI, the plan was to focus on the equitable provision of healthcare services to all South African residents and not to further perpetuate a fragmented health system. He asked for clarity on this. He got the impression that Demant focused mainly on treatment interventions. Were there any efforts by the organisation to engage in preventative interventions?-

Mr Munyai observed that Demant was opposed to the single funder, single payer model. South Africa currently had a multi-payer system that did not yield health benefits nor gains for the entire population. Was Demant proposing that the country continue with an inequitable fragmented system and punish the poor and vulnerable, so as to maintain flexibility in health systems?

He asked that Demant elaborate on what was meant by ‘there must be a guarantee that there was capacity to fund the NHI, which would lead to the reallocation of funds in the health sector.’ The State provided no such guarantee. He asked for clarity about the statement made.

Demant had raised a concern about the alternative pricing systems proposed in the Bill – why was this the case? The provision of the comprehensive package to the population required diverse product suppliers, therefore appropriately designed and regulated pricing systems were necessary for a system such as the NHI. Why did Demant deem this to be inappropriate?

Why did Demant think it was necessary for the Bill to include a clause on timelines for the payment of providers? This was already provided for in the Public Finance Management Act (PFMA). There was no intention to override that provision in the PFMA. Why did Demant support the maintenance of the status quo, of the two-tier system, which created inequality in South Africa?

Ms Gela referred to the first slide of the presentation, where Demant stated that they donated hearing aids to some patients who could not access state facilities. Her understanding was that state facilities were accessible to all stakeholders. She requested clarity on that. Was Demant suggesting that NHI policies should not be implemented and the status quo prevail until such time that there was a perfect health system in South Africa? Where in the world was such an approach adopted, especially in countries that had universal health coverage?

Dr Jacobs asked a question about the limitation of choice. The memorandum on the objects of the NHI Bill had considered a lot of barriers to access. The NHI would address this with the aim of creating an integrated pooling mechanism via a single payer system. Was Demant aware that in the British National Health Service (NHS) and the South Korean and Canadian national health insurance systems, there had been no crippling of the healthcare industry?

He responded to the suggestion that the Bill should include a provision for placement arrangements for tertiary hospitals, to alleviate the financial burden on the Fund. Such placement arrangements were used as a market access tool by suppliers – how did Demant think that practice would assist South Africa toward achieving the objectives of the Bill in realising universal health coverage? He referred to slide 17 and 18, where it was suggested that there be performance-based reimbursement. Clause 39(2)(3) provided for how value-based purchasing would be undertaken. Was Demant’s suggestion not duplicating the functions of the NHI Fund and the Office of Health Standards Compliance?

Dr Havard asked if Demant was aware that clause 38 of the Bill explained that the Office of Health Products Procurement would review the formulary annually, or more regularly if required, to consider changes in the burden of disease, product availability, price changes and disease management.

The Chairperson echoed what Mr Munyai had asked. The presentation indicated a challenge with the single payer system --in fact, Demant had suggested a multi-payer system. He asked that Demant expand on their support for the multi-payer system and the challenges anticipated with the single payer system.

Demant had mentioned that the Bill should specifically include audiologists and related services. Was it familiar with what the Department was doing in strengthening the health systems in the country? Nurses visited schools and focused on testing hearing, sight and the dental health of pupils. There was a focus on health services at that level. The White Paper mentioned audiologists eight times. The Bill was not silent on involving general practitioners (GPs), and also referred to ‘other practitioners’ dealing with physical barriers to learning, such as ‘audiologists, therapists etc.’ Was Demant not covered by the Bill’s mention of audiologists? The issue of the PMB package was one that would be dealt with, and should be dealt with by the Council for Medical Schemes.

He said that Ms Coleman seemed to be suggesting in slide 23 that the NHI could not be implemented until an HTA agency was established. Was she aware that HTA was already applied in the sector in many forms?

Oticon/Demad's response

Ms Coleman stated upfront that her legal insights were probably not at the level of the Committee, whose Members had been working closely with the Bill for a long time. She had taken a lot of guidance about various aspects to consider in the Bill. Her area of knowledge and experience was in the audiological sector. She would attempt to answer the questions from that perspective.

She responded to the question about local manufacturing. One of the major challenges in audiology specifically, was the level of technology that went into the devices and how they were assembled on a global scale. Some components were locally manufactured, but local manufacturing focused mainly on end-of-the-line production. This included tailoring products to a patient’s specific anatomy or requirements of the ear. There was some local manufacturing already taking place in South Africa. It would be challenging to expand the manufacturing of some of the technology in the devices which took place from one central site in the world. It was somewhat different to pharmaceuticals in that way.

Demant was owned by a foundation in Denmark, the William Demant Foundation. The Foundation had certain operating philosophies which were written into its constitution. Demant could not operate outside of those written philosophies, some of which impacted on how Demant could operate in foreign countries. This represented a challenge that many multi-nationals faced, where they could not completely localise. In circumstances where they were expected to completely localise, they had to withdraw from the country. This was different for each company.

She responded to the question about progression on both ends. Demant supported the plan for implementation of the NHI. It was aware of the inequality that existed. The inequality was apparent in the different offers it made to the private and public sectors in the country. Demant’s objective was the same as that of the NHI -- to attain equitable provision of healthcare to all South Africans. Demant held exactly the same views. The point about progression on both ends was simply a question of the system eroding value in order to provide value.

There had been reference to the two-tier system in the questions. Demant was well aware of the disparity that existed. It believed that whatever system was implemented should raise the level of healthcare in the public sector, and not reduce it for those that were currently accessing the public sector. Demant acknowledged the risk of a single funder system as a private entity. It worked in both sectors, and the biggest single challenge from a financial perspective, for the organisation, was the extended lead times of payment from the public sector. Demant was dependent on timeous payments to settle debt relating to its operations in reasonable timeframes. If it had to operate only in the public sector, with such delays in payment, it would make the business unviable. Demant needed to be able to be assured of reliable payment of debt. That was one of the primary problems it foresaw with a single funder system - there would be a higher risk. That assessment was based on its current and historical experiences. It had underwritten that by saying that if a single funder system was decided upon, it would need to be demonstrated that the funds were there to support the system. If not, businesses like Demant would cease to exist and would be unable to provide the services expected. A multi-funder system would reduce the risk for companies like Demant.

She responded to the question about preventative measures. From a product perspective, Demant did not produce occupational health products, such as protective hearing devices. It did a lot of education and training of audiologists and ENT specialists, and worked very closely with both public and private sector schools, specifically those focused on the deaf, or hearing impaired. There was a lot of education and training that Demant supported in both the public and private sectors.

Many types of hearing loss were not preventable. There would always be an imperative for people born with a certain degree of hearing loss to be supported. Likewise, support would be needed for people who developed a certain degree of hearing loss because of their work or recreational behaviour.

She responded to the question about the timelines covered in the PFMA. She had not been aware of that, and would look into that for more clarity. It was not Demant’s present or past experience that timelines were being adhered to.

She responded to the question about the donation of hearing aids alleviating costs, and not being a market access tool. In essence, there were economies of scale of the production of hearing aids. If those volumes were being generated through the system and attainable through easier or quicker delivery routes, there would be value that could be derived from Demant’s business. This could be passed on to the Fund. It was in that context that placement and donations would be beneficial for the Fund to consider. In any type of bulk ordering, right through from manufacturing to distribution, there were economies of scale that benefited the organisation. In that context, it would be reasonable to request companies to pass some of that value on. It there was a concern that it would be done to gain market access, then that would need to be addressed separately through legislation that addressed it.

State facilities were accessible to all stakeholders. There were two challenges in the audiology sector in South Africa. The first was that there were too few audiologists in practice placed at the various state facilities, and the second was mobility. The elderly population sometimes could not access the state facilities directly, depending on where they were located and if there was an audiologist available at the relevant facility. The state facilities often had outdated audiological equipment. In terms of mobility, audiologists could not always move around in the communities in which they were operating in order to do house visits, for example. In such instances, where there were challenges for patients to access services, Demant could intervene.

She responded to the question about the limitation of choice, and if there were empirical studies that showed that a single funder system crippled the healthcare system or created barriers to access. She did not have information on studies of other systems. It had a global footprint, and would be able to contribute more meaningfully if required. It could provide information about how systems worked in the UK, and had access to information about systems recently implemented in the USA. Canada already had an advanced system, and Demant serviced that market from an audiology perspective. She offered to get information from Demant’s global headquarters about that.

Regarding the outcomes measurement and reporting organisation (OMRO). Demant’s central point was that performance-based reimbursement, or value-based purchasing, and HTA required expertise specifically in audiology. Audiology was a very nuanced field, and there were diverse ways of addressing hearing loss depending on the type and extent of hearing loss. The technology that was available for hearing loss solutions ranged from entry level technology to high end deep neural networks, which allowed the brain to access sounds which the ear was incapable of hearing.

Demant’s concern was that in all of these environments, individuals with clinical expertise in audiology were required to assess the offerings which were being presented under the NHI. It could lead to a situation where decisions were made based on price and not on what the innovative technology was able to achieve. It would also lead to a situation where certain types of patients, with certain types of hearing loss, could be excluded from accessing the necessary devices needed. That was a consistent concern of Demant’s. At the level where the decisions were being made, there was insufficient representation of audiological specific expertise. Expertise was needed to be able to differentiate between suppliers, based on innovation and technology, and how price and value were being considered from entry-level to high-level solutions.

It was mentioned that there was a school nurse programme being rolled-out to address hearing, sight and dental health. It was stated that audiology was referred to eight times in the White Paper. She was not familiar with the contents of the White Paper. Audiological screening at a school-based level was critical, and Demant was fully in support of that being done. The question was how the Bill would specify the type of equipment and procedures required to conduct audiological screening at a level that would pick-up different types of hearing loss in school age children. Very specific equipment and expertise was required in order to determine types of hearing loss that affected children’s ability to stay focused in class. To her knowledge, she was not aware that nurses or GPs were sufficiently instructed to be able to do that type of screening.

She responded to the question about audiologists in the public and private sectors, and how the single funder system could potentially impact them. There were a number of audiologists within the industry that were operating across both the private and public sectors in order to generate sufficient revenue to remain viable practitioners. The concern was that under a single funder system, if funding was related to current earnings in the public sector or was related to only medical aid reimbursement rates, some of the audiologists would find it impractical and unviable to remain in the profession.

Submission: Professional Provident Society (PPS) Insurance Company and Healthcare Administrators

Ms Ayanda Seboni, Executive: Group Brand, Marketing and Communications at PPS, and Ms Simmi Bassudev, Chief Executive: PPS Healthcare Administrators, presented to the Committee.

They provided a snapshot of a survey done by PPS in mid-2019, using a combination of qualitative and quantitative methods. The variety of answers contextualised personal preferences and illustrated differences of opinion, often contradictions and opportunities for further engagement. Telephonic interviews with medical and general professionals were largely split into positive or negative towards the NHI (30% each), or uncertain (40%).

• 54 percent said NHI would bring benefits to all.
• 43 percent said the hospital staff-patient ratio would improve.
• 41 percent said the NHI was good.
• 60 percent said the government would not be able to implement the NHI.
• 37 percent said the lack of money would impact taxpayers.
• 30 percent said it would not change the current state of healthcare system.

They said funding challenges included tax uncertainty, the need to establish processes for setting the remuneration of health care professionals (HCPs), and claims service level agreements (SLAs) for service providers. Looking at the supply of services, one should take into account that referral pathways affect supply & demand (choice), the conditions of work and professional integrity, and that emigration was always a realistic option for the qualified. The management of human resources (HR) and systems would require sufficient resourcing across the disciplines and country, governance and structures for checks and balances, competitive remuneration and controls to deal with corruption. In the area of administration and information technology (IT) the NHI should use and build on existing systems and best practice, avoid reinventing the wheel, and permit the private sector to help.

In general, the PPS recognises the need to improve health care delivery. On behalf of its members, it wants to engage with policy makers and other role-players to share the knowledge and systems to aid the building of a sustainable health care system. PPS members believe the NHI requires refining and must implemented in a considered, inclusive and sustainable way. They require details of how the NHI will be implemented, and an understanding on how it will impact them as healthcare workers and taxpayers.

Referring to challenges in the health system, the PPS said there were challenges in both the public and private sectors. Significant efforts had been made to improve the quality of healthcare delivery in South Africa, but there were still huge discrepancies in this fragmented two-tiered system. This requires an inclusive and collaborative approach.

Putting forward its position on the NHI proposals, the PPS said the lack of an accompanying paper from National Treasury on the fiscal implications as well as the associated Money Bill was a cause of concern, as there was no full understanding of how the NHI would be funded. Its focus was specifically on three aspects -- governance, the role of medical schemes, and the HMI recommendations

Governance

• Clarity is needed on how delegation of authority will be handled to prevent abuse.
• Limitation of power in critical roles
• Concern about corruption at all levels of the healthcare value chain.

Role of the medical schemes

• Clause 33 of the NHI Bill. This is a significant change from the 2018 version of the Bill
• The limitation on citizens to purchase private healthcare will be globally unprecedented, and open to constitutional challenge.
• Most developing countries with universal health cover allow for a dual system where citizens can pay taxes towards healthcare, and then opt to pay for private healthcare should they wish.

Health Market Inquiry recommendations

• The proposed operational reforms have the potential to enhance efficiencies with immediate benefits in healthcare funding and delivery.
• HMI recommendations are not in opposition to realisation of the ambitions of the NHI Fund. A range of institutional and individual capacities to manage healthcare provision in South Africa can be built.
• Sustainability and affordability would address inefficiencies and market failures.
• Aim to ready the private sector to operate as part of the NHI, enabling the private sector to integrate into the NHI system.

The PPS said it was in support of healthcare reform, but there was a need for clarity on the timeframe of the initial phase, the measures of success, what was in scope and what was out of scope in the initial phases, and what was included in the benefit package. There had to be consistent use of terminology throughout the Bill, with clear definitions, as there was potential conflict between the NHI Bill and the National Health Act. A review of governance structures should include a focus on corruption, fraud etc. There should also be a review of the role of medical schemes (clause 33), with implementation of the HMI recommendations.

Discussion

The Chairperson asked if he was the only one who had picked up on the contradictions between the two presenters. Ms Seboni had referred to the relationship between the public and private sectors, and had stated that ‘government must first fix the existing system before theNHI.’ According to Ms Seboni, there were ‘no shortfalls in the public healthcare sector.’ It was the ‘government’ that needed to fix the existing health systems. In the PPS’s concluding remarks, it was suggested that some clarity was needed about the benefits package. The NHI Bill spoke about a Benefits Advisory Committee. The NHI Bill stated that if there was a need for the National Health Act to be amended, so be it. The Health Act would be amended if it ‘stood in the way’ of the Bill.

Mr Sokatsha noted the PPS’s concern about clause 33 of the Bill. Some of the previous presenters had highlighted that the cost of private healthcare had been increasing, and that medical scheme members were not doing well financially or medically. Many medical scheme users were running out of benefits before the end of the year. There were complaints about serious governance challenges in the industry. These observations were also made by the Health Market Inquiry. Did this situation not threaten the achievement of universal health coverage?

Was PPS aware that that the White Paper provided an analysis of the different roles that medical schemes could play, based on international best practice? What was PPS’s view about people insuring against the same healthcare costs twice – duplicate cover? Did this not lead to inefficient healthcare utilisation? Would this not perpetuate the current inequalities, thereby threatening the achievement of universal health coverage?

 

He asked if the PPS was able to ascertain what percentage of the population was prepared to make a monetary payment toward the NHI and pay for their own medical needs in addition to that. This would potentially perpetuate the current healthcare inequalities in the country. Did PPS support this position? Did PPS understand the difference between a Money Bill and what was outlined in the NHI Bill? In slide 15, there seemed to be confusion between the two. There was no commitment that the NHI could be implemented only with a Money Bill. He asked for clarity on this.

 

Dr S Thembekwayo (EFF) asked how the discussion about research fitted into the NHI amendment. What was the relevance of refining the definition of ‘inclusive sustainability,’ when one did not indicate the clause being referred to? It had been stated that there needed to be consistent use of terminology throughout the Bill. Right at the beginning of the Bill, the schedule indicated the terminology that was used in the Bill. The one presenter had spoken about the need for definitions to precede the research conducted, so as to understand the research properly. Why then was there a need for a repetition of terminology throughout the NHI Bill?

 

Ms Gela said that the PPS had mentioned that developing countries with universal health coverage allowed for a dual system. Was the PPS aware of the challenges of a dual health system? These challenges were outlined in the Green and White Papers. The Committee had been presented with evidence that the dual system was the main contributor to inequity in the provisions of healthcare in South Africa. Did the PPS think the dual system would help the country achieve universal health coverage? She asked that the PPS consider the poor in their response.

 

She referred to page four of the written submission, and requested clarity about the 'right to choose.' Was the PPS threatening legal action on the matter of clause 33 of the Bill? Of all the schemes the PPS worked with, which schemes promoted late joiner fees and waiting periods? Why was this the case, when it prevented the population from joining a medical scheme? It was discriminatory.

 

Mr Munyai asked if it was the PPS’s position that the state needed to implement a multi-payer NHI system, or was it that the state must not take action and keep the fragmented inequitable two-tier system. The presentation stated that the PPS supported universal health coverage, but a number of points were raised, seemingly stating that nothing must be done until some prerequisites were met. He asked for clarity about that. The PPS advocated dual healthcare systems, which currently did not serve the health interests of the majority of South Africans. He asked if he had understood the presenter correctly.

He referred to slide five, where the PPS had made reference to the emigration of health professionals, which seemed to be a threat against the South African health reform project. Was there an indication of which countries the health professionals would go to, and if there was universal health coverage in those countries? Why plan to move to another country that pursued the same healthcare agendas? The PPS had become a successful company from the South African middle and high income groups. It had said that the Bill limited the rights of citizens to purchase private healthcare. This concern was about clauses 8 and 33 of the Bill. Being able to choose medical aid cover was not a human right, and ignored the limitation of access. In addition, in Section 36 of the Constitution allowed for the limitation of rights and the balancing of rights, such as the right to choose versus the right of life. The right to access healthcare for all was stated in the preamble of the Constitution. Was the PPS aware that the Constitution's jurisprudence on dealing with socio-economic rights and the judgments were anti-poverty and pro-poor? Could the PPS provide clarity on its assertion that the Bill would be constitutionally challenged?

Dr Havard said that the issues raised about inefficiencies and market failures were acknowledged. Was the PPS aware that all of these issues were identified in the NHI White Paper? The NHI Bill sought to address these issues for the benefit of all, not just for members of medical schemes. Whose standards did the PPS rely on as an acceptable standard for healthcare? She referred to slide five, where one of the suggestions made was that there should be no re-invention of the wheel. This seemed to imply that the state must fold its hands and let things be when there was irrefutable evidence that the health system required a transformative reconfiguration to be able to meet the objectives of the National Development Plan (NDP) Vision 2030 and the Sustainable Development Goals (SDGs). How was the PPS’s recommendation a practical solution for the country?

Ms Hlengwa said the PPS recommended a dual system in which people had private and public healthcare. This system was the one that was causing inequalities in the provision of healthcare in South Africa at present. Did the PPS want to explain how this would change under the NHI? Where could one draw the line between the freedom of choice and the constitutional duty to ensure equality?

The Chairperson requested more clarity about where the healthcare professionals would go to, and the healthcare systems present in those countries. The Bill spoke to an incremental approach – was Ms Seboni aware of that? The NHI Bill made reference to addressing challenges faced by the majority of people in the country. It therefore became a public good. It spoke about South Africa taking a single-payer approach. Did the PPS have an example of a country that could be modelled for the point made?

The PPS stated that clause 33 of the Bill had changed from what was presented in 2018 and earlier. He noted this. The Department had raised concern about that clause, and it had been improved since consultations had taken place with other stakeholders. Did the PPS prefer the old version? He noted PPS’s comments about the recommendations of the Health Market Inquiry. In the PPS’s view, how far had the Health Market Inquiry considered strengthening risk pooling for the whole South African population? There was a recommendation made by the PPS about mandatory public participation. The NHI Fund recommended mandatory public participation, where everyone would have to contribute financially to the Fund. The NHI Fund would be funded through this mandatory pre-payment system, which aimed to achieve equity, sustainability, affordability and quality for all South Africans. What was the PPS’s view? Even medical aid users faced catastrophic health expenditure when they could not afford additional out-of-pocket expenditure. He suggested that one presenter was leaning toward there being challenges in both sectors, and the other was suggesting that the problems needed to be fixed only in the public sector.

PPS's response

Ms Seboni stated that as a point of clarity, the comment that ‘government should fix things' did not imply that the private healthcare sector was perfect, and imperfections existed only in the public sector. She had suggested that there were already hospitals and a healthcare system that could be improved upon. The pilots had shown this. There were challenges of fraud in both healthcare sectors.

She responded to the question about research and its applicability to the NHI. The research undertaken was a perceptions study. PPS members, as professionals, contributed significantly to the delivery of health services across the country. Their perceptions, whether correct or incorrect, were important in order to get buy-in. The research suggested that there were a lot of misunderstandings and incorrect understandings. That was why the PPS had suggested that there needed to be more engagement and clarity provided. It applauded the Department of Health for the ‘road shows’ that took place to clarify specific aspects of the NHI Bill.

She responded to the question about the dual-system. The PPS was operating in the healthcare business industry and was interested in ensuring that there was sustainability for the business. Beyond that, it supported universal health coverage. With post-tax, discretionary income, people should have the choice to purchase health services, similarly to how one could purchase everything else in the country. That was the PPS’s position -- it was not to state that the current inequitable system should be maintained.

Regarding emigration, the PPS had not asked where the professionals would emigrate to. It had wanted to establish if emigration would be a consideration. It agreed that goal three of the SDGs was access to good health and wellbeing. This was a universal imperative for all countries.

She noted the Chairperson’s comment that there would be incremental implementation. The PPS wanted to understand what ‘incremental’ meant, and how it would play itself out. The Bill had not provided that level of detail. It wanted clarity where there were gaps in the Bill. It did not support the current levels of inequality in the country, and was not suggesting that there should be systems that were anti-poor. The levels of inequality in South Africa were unsustainable and there needed to be solutions that took care of the poor. In taking care of the poor, the voices of professionals needed to be taken into consideration. She did not think the challenges and concerns were insurmountable. It was an issue of needing a better understanding of how things would work in practice.

The PPS was not threatening to take the government to court. It had simply stated that the NHI Bill, as it stood, could be subject to a challenge. It was not the PPS’s position that things should remain the same. It believed that there should be change. The challenge was how fast to implement it, and which resources were at their disposal. There were things that worked very well in both the public and private sectors, the best of which needed to be incorporated and strengthened.

She responded to the question about the benchmark of acceptable standards, and suggested they could come together to establish that. People should have speedy access to healthcare services. Referral pathways were an important aspect to clarify so that people knew exactly how to utilise the system.

Ms Bassudev responded to the question about the Money Bill. The PPS was trying to emphasise that there needed to be an understanding of how the NHI Bill would be funded. It was not questioning the difference between the Money Bill and the NHI Bill -- it was just a request to understand how the NHI would be funded. That was one question that most South Africans seemed to need clarity on.

She responded to the question about the terminology in the NHI Bill. There were some critical terms used in the Bill. An example was in clause 7 that dealt with referral pathways. Referral pathways were critical to understand how the management of the patient would be handled. There was no definition of that in the Bill.

The Health Market Inquiry had shown how imperfect the private sector was. There were challenges in both the public and private sectors. There were areas of good in both sectors – that was where both sectors needed to work together to maximise areas of expertise. If people wanted to pay for additional coverage outside of the NHI, that should be their choice. If quality healthcare could be provided under the NHI in a reasonable timeframe for all South Africans, that would be the ultimate achievement.

She referred to the Presidential Health Compact, and said this brought key stakeholders together from a wide range of professions within the healthcare sector. Both the public and private sectors worked together – there was no difference between the two. Various challenges had been identified, as well as potential solutions to improve healthcare. The Health Market Inquiry had highlighted how expensive private healthcare was in South Africa. Some of the recommendations of the Inquiry spoke about having one benefits package that would be aligned with NHI, which would reduce costs in the medical schemes environment.

She responded to the question about late joiner penalties. This was legislated within the Medical Schemes Act, and had been put there to protect scheme members from individuals who might want to abuse the system, such as by joining a medical scheme and within a month go for an expensive procedure, and then leave the scheme after another month. It was there to manage medical scheme risk. Each scheme chose whether to implement late joiner penalties or waiting periods – there were various types of waiting periods. Generally, employer-based medical schemes would not implement that.

The question about quality was dealt with in the Health Market inquiry – there was no quality measurement process in South Africa. There was nothing fundamental in the public sector. In the private sector, amongst private medical schemes, each administrator or medical scheme managed their own quality. The Health Market Inquiry made various recommendations about that. Medical schemes were working toward greater quality amongst schemes for members.

She addressed the suggestion that there was a contradiction between Ms Seboni and herself about where they needed to start. Both of them had been very clear -- the PPS believed that the public and private sectors should be working together to improve healthcare in South Africa. There was no fixing just one area. It would need to be a phased approach.

Additional question

Mr Munyai referred to slide 15 of the presentation, where a concern was raised that there was no accompanying paper from the National Treasury. When the Department presented the Bill to the Committee, the Department had informed them that section 8 of the Memorandum of Objects had been developed in consultation with National Treasury. Was the PPS aware that clause 49(1) explained that the appropriation of funds was going to be conducted on an annual basis? How did the presenters align clause 49 of the Bill with section 8 of the Memorandum of Objects? What was the PPS’s view that the NHI was needed to respond to some of the issues of expensive medical aid coverage and users running out of benefits, such as in the case of Profmed. 

Ms Gela asked if the PPS knew what percentage of the population was prepared to make mandatory payments toward the NHI and pay additional funds toward private schemes. This would continue the current inequities. She referred to slide five, where one of the suggestions was that there should no reinvention of the wheel. This seemed to imply that the State must fold its hands and let things be as they were. There was evidence that the health system required a transformative configuration to be able to meet the objectives outlined in the NDP Vision 2030 and the SDGs. How were the PPS’s recommendations a practical solution to the country?

The Chairperson asked the PPS to respond to the suggestion that it wanted things to continue as they were as far as payments and private coverage were concerned. What percentage of South Africans did the PPS project would want to continue with private medical scheme coverage, in addition to NHI contributions?

PPS's response

Ms Bassudev stated that she could not respond to the question about Profmed specifically, as Profmed was an independent company. Like all other medical schemes, it offered various options within the medical scheme. Members chose options based on their need and affordability. There was a hospital option, where there was no day-to-day coverage – one was then expected to pay all out-of-pocket expenses. There were also more comprehensive options that covered hospital and out-of-hospital needs. The PPS and brokers generally advised members, when comparing medical schemes, to compare like with like in terms of the options, coverage and cost. The PPS had done that analysis. Profmed was not the most expensive medical scheme. She noted what was said about the Money Bill

Ms Seboni responded to the question about reinventing the wheel, and said she thought she had answered that sufficiently earlier on. The PPS was suggesting that they build on what currently existed between both the private and public healthcare sectors. It could not provide information about how many could afford medical aid after paying for the NHI – the question had not been asked in their study. However, most correspondents had suggested that they would be able to afford this.

Closing remark

The Chairperson said that when medical aids ran out, there was an expectation that one had to make use of out-of-pocket funds or line up in government hospitals. If one could not do that, one had ‘to go home and die.’ Many of those medical aids were exhausted by July/August. One had to continue to pay, but not receive the benefits thereof. Those were some of the things people anticipated the NHI assisting with. It would assist the middle and upper classes who over and above medical aid had to dig deep for out-of-pocket expenditure to access services.

The meeting was adjourned