The Universal Health Care Access Coalition (UHAC), an affiliation of health professionals, founders, and advocacy groups, argues that the government’s focus on pricing alone will not reduce the high cost of private healthcare.
The coalition was responding to the government’s announcement last week of measures being adopted to implement recommendations made by the Health Market Inquiry to address the high prices in the sector.
Why this matters
The cost of private healthcare in South Africa has long been under the spotlight. Health minister Dr Aaron Motsoaledi has repeatedly said that addressing this issue is a pre-condition for the National Health Insurance – the mechanism by which South Africa plans to roll out universal health coverage. “The rising cost of private healthcare is an uncontrollable expenditure that impacts the entire South African economy,” Motsolaedi said last week.
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The 2019 Health Market Inquiry report into price-setting practices and competition within the private health sector found that it’s characterised by high and increasing expenditure, and excessive use of resources without any credible corresponding measure of improved health outcomes.
To fix the problem the Inquiry recommended, among others:
- The creation of an independent supply-side regulator to oversee health facility planning, licensing, and practice codes.
- Phasing out the current model of cash payments for healthcare services which drives cost inflation.
- Creation of a multilateral negotiation forum to facilitate price negotiations in the private sector.
- The establishment of a national data repository to collect and disseminate reliable health information.
- The implementation of health technology assessments to provide evidence-based insights that guide policy, regulation, and resource allocation in the healthcare system.
Last month Minister of Trade, Industry and Competition Parks Tau gazetted the draft block exemption for public comment. The proposed regulations would allow private health actors to set prices as a collective, which is currently prohibited by the Competition Act. Tau said the exemption would make private healthcare more affordable by improving competition in tariff-setting, strengthening regulatory oversight and addressing market inefficiencies.
Why is this a problem?
Speaking at a media briefing on Thursday, Professor Alex van den Heever, Chair of Social Security Systems Administration and Management Studies at Wits University says the block exemption is not related to health, and some of the provisions in the draft regulations would likely not stand up to legal scrutiny.
“The regulations gazetted by Minister Tau not only provide for price setting but also introduce a framework to assess treatment protocols and quality of care that are self-evidently beyond the scope of the Competition Act,” explains Van den Heever, who is also a member of the UHAC steering committee.
“These are health policies which fall under the jurisdiction of the health minister and have nothing to do with trade and industry,” he argues.
In addition, Van den Heever says; “There are historical failures in tariff regulations, requiring structured reforms.”
Furthermore, it is not clear whether the final tariff produced through the gazetted framework will be binding on any party. Dr Mvuyisi Mzukwa, the chairperson of the South African Medical Association and UHAC steering committee member, says the block exemption approach is flawed and must be scrapped.
What needs to happen instead
“The government should take immediate action to implement the full recommendations of the Inquiry. These provided a detailed evidence-based roadmap for addressing healthcare pricing and market distortion,” Mzukwa says.
Van den Heever says it’s important to understand that prices cannot determine the overall cost in the system.
“The quality of service provided and the pricing should make up the total cost. The problem in the health sector particularly in an environment funded on a fiscal service basis means that patients don’t make decisions based on prices.”
He further criticised the government’s focus on private health prices.
“The Minister of Health is silent on all the other measures recommended by the HMI, such as the need for a risk equalisation framework, processes for regulating hospital licensing, quality assurance and measuring the outcomes of patient care, and ensuring the independence of supplier regulation and tariff-setting bodies in order to guard against political interference.
“These are all key elements of a structured approach to managing private healthcare. Without those, even if a price regulatory framework were to work, capping prices on its own would have no effect on costs because the supplier-induced demand that the HMI identified would not be resolved without the other systematic interventions,” Van den Heever says.
Final word
The coalition says the reality is that only about 15% of South Africans are members of a private medical scheme, and even if prices decrease significantly, the majority do not have sufficient income to pay for healthcare in any form, regardless of price.
“The majority are always going to be catered for by a tax-funded free public healthcare service, not through medical schemes. The only possible framework for the South African context is for both systems to work together to ensure universal healthcare access for all levels of income and non-income earners,” Mzukwa says. – Health-e News
