the nature and state of health care financing and delivery in south africa: obstacles to realising...
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The nature and state of health care financing and delivery in South
Africa: Obstacles to realising the right to health care
Di McIntyre, Health Economics UnitUniversity of Cape Town
Overview
Focus on equity issues & obstacles to Focus on equity issues & obstacles to access:access: Funding - according to ability to payFunding - according to ability to pay Delivery (expenditure) - according to Delivery (expenditure) - according to
relative needrelative need
Public-private mixPublic-private mix
Each sector - key regulatory issuesEach sector - key regulatory issues
Financing flows
General tax LG revenue Employers Households
National Depts.
Provincial Depts.
Local Govt. Depts.
Medical schemes
Insurance
Firms
Households
Public Providers Private Providers
43% 1% 17% 39%
38%
34%
18%
58%42%
4%
>2%
2%
1%
So
urc
es
Fin
an
cin
g In
term
edia
rie
sP
rov
ide
rs
Equitable financing ?
Government revenue:Government revenue: National level general tax - income tax National level general tax - income tax
progressive, but VAT regressive progressive, but VAT regressive proportional tax system?proportional tax system?
Local government - progressiveLocal government - progressive Private sources:Private sources:
Schemes - contributions not income-Schemes - contributions not income-related and coverage limitedrelated and coverage limited
OOP - most regressive form of financing; OOP - most regressive form of financing; level dependent on accessibility & quality level dependent on accessibility & quality of public servicesof public services
PPM in delivery
Expenditure - roughly 60:40 Expenditure - roughly 60:40 private:publicprivate:public
Personnel:Personnel: 3/4 doctors & pharmacists and >90% 3/4 doctors & pharmacists and >90%
dentists & psychologists in private practicedentists & psychologists in private practice Vast majority located in urban areasVast majority located in urban areas
Private hospitals:Private hospitals: Annual growth in beds 9.5% 1989-1994 Annual growth in beds 9.5% 1989-1994
and 8.9% 1994-1999 (despite moratorium)and 8.9% 1994-1999 (despite moratorium) Urban and provincial biasUrban and provincial bias
Medical scheme challenges
0
20
40
60
80
100
120
140
160
83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92 92/93
Rand
Medicines
Hospitals
Specialists
GP's
Dentists
Real expenditure per beneficiary
More recent trends
Sustained annual increases in schemes Sustained annual increases in schemes expenditure and in contributions (private expenditure and in contributions (private hospitals, medicines and administration)hospitals, medicines and administration)
Declining coverageDeclining coverage
Shift of membership to schemes with Shift of membership to schemes with personal savings accounts (limited personal savings accounts (limited cross-subsidies)cross-subsidies)
Increasing co-paymentsIncreasing co-payments
Other private sector trends
Declining coverage by on-site services Declining coverage by on-site services at workplace - growth in unemploymentat workplace - growth in unemployment
OOP payments:OOP payments: ‘‘Schemes gap’ growing rapidly and well in Schemes gap’ growing rapidly and well in
excess of R4 billion per yearexcess of R4 billion per year Non-scheme also growing rapidly and >R2 Non-scheme also growing rapidly and >R2
billion per year (OTC medicines 37%; billion per year (OTC medicines 37%; prescription medicines 11%; doctors & prescription medicines 11%; doctors & dentists 26%)dentists 26%)
Key regulatory issues
Private hospitals:Private hospitals: Certificate of need (including doctor Certificate of need (including doctor
shareholding or other perverse incentives)shareholding or other perverse incentives) Doctors:Doctors:
DispensingDispensing Certificate of needCertificate of need
Medicine pricesMedicine prices Medical Schemes Act amendments and Medical Schemes Act amendments and
related regulations - Addressing key related regulations - Addressing key challenges?challenges?
Public sector funding issues
Overall funding levels:Overall funding levels: Initial increases post-1994; more recent Initial increases post-1994; more recent
stagnation in real per capita fundingstagnation in real per capita funding Loss of local government funding with Loss of local government funding with
narrow municipal health services definitionnarrow municipal health services definition Equitable use of limited resources?:Equitable use of limited resources?:
Spend 12 times more purchasing medical Spend 12 times more purchasing medical scheme cover per civil servant than on scheme cover per civil servant than on public sector services per dependentpublic sector services per dependent
Free care:Free care: Removed some obstacles, created othersRemoved some obstacles, created others
Impact of fiscal federalism
Two key factors in provincial health budgets:Two key factors in provincial health budgets: Allocation of overall resources to provincesAllocation of overall resources to provinces Provincial level budget negotiationsProvincial level budget negotiations
-80
-60
-40
-20
0
20
40
60
80
100
Gauteng Northern Province
Dis
tan
ce
fro
m t
arg
et 1995/96
1996/97
1997/98
1998/99
1999/00
“Equitable shares” ??
0.0
5.0
10.0
15.0
20.0
25.0
Prov
inci
al s
hare
Red bar:
Pre-fiscal federalism expenditure level
Blue bar:
Current allocation from national level using equitable shares formula
Green bar:
Potential allocation if relative provincial deprivation included in equitable shares formula
Geographic distribution
International experience:International experience: High % of health (and other social) service High % of health (and other social) service
expenditure at lower levels funded via expenditure at lower levels funded via special purpose/conditional grants and/orspecial purpose/conditional grants and/or
National policy guidelines or mandatesNational policy guidelines or mandates Norms and standards for SA?Norms and standards for SA?
Absorptive capacity:Absorptive capacity: Recent allowances may assistRecent allowances may assist
Quality of care issues
Key obstacles:Key obstacles: Lack of suppliesLack of supplies Generic medicines perceived as ineffectiveGeneric medicines perceived as ineffective Preference for direct access to doctorPreference for direct access to doctor
But …. private low-cost clinics have But …. private low-cost clinics have nurse as first contact & use generics:nurse as first contact & use generics: Health worker morale and attitudesHealth worker morale and attitudes Shorter waiting time and comfortable, Shorter waiting time and comfortable,
cleaner waiting areas etc.cleaner waiting areas etc.
Level of care reprioritisation
Definite relative shift towards PHC, but Definite relative shift towards PHC, but threatened when budgets cutthreatened when budgets cut Need for focus on hospital efficiency gainsNeed for focus on hospital efficiency gains
Conditional grants constrain shifts:Conditional grants constrain shifts: CGs as percentage of health budget: CGs as percentage of health budget:
Western Cape = 41%, Gauteng = 34%Western Cape = 41%, Gauteng = 34% Balance between stable funding for Balance between stable funding for
‘national assets’ and ability to address ‘national assets’ and ability to address priority service requirements priority service requirements move to move to highly specialised service granthighly specialised service grant
PPM revisited
Some progress, but remaining Some progress, but remaining challenges, in each sectorchallenges, in each sector
But … public-private mix deteriorating But … public-private mix deteriorating and overall health system inequities and and overall health system inequities and inefficiencies is key remaining challenge:inefficiencies is key remaining challenge: Relatively stagnant public funding, but rapid Relatively stagnant public funding, but rapid
growth in scheme & OOP spendinggrowth in scheme & OOP spending Increased demands on public sector - Increased demands on public sector -
declining coverage (unaffordable), main declining coverage (unaffordable), main provider of HIV/AIDS servicesprovider of HIV/AIDS services
Social Health Insurance
Key goals of early proposals:Key goals of early proposals: Address private sector cost spiralAddress private sector cost spiral Extend coverage of population covered by Extend coverage of population covered by
insurance through cross-subsidies (extend insurance through cross-subsidies (extend access to financial and other resources access to financial and other resources currently located in private sector)currently located in private sector)
But, two-tier system; vision of moving to But, two-tier system; vision of moving to national health insurance asapnational health insurance asap
Key question of new proposals:Key question of new proposals: Will they help to address PPM inequities?Will they help to address PPM inequities?
Key issues
Relatively piecemeal policy and Relatively piecemeal policy and regulations on private sector:regulations on private sector: Linkages NB, e.g. restrictions on dispensing Linkages NB, e.g. restrictions on dispensing
by doctors and dispensing fee proposalsby doctors and dispensing fee proposals Need comprehensive view of overall Need comprehensive view of overall
health system:health system: Developments in one sector have knock-on Developments in one sector have knock-on
effects for the othereffects for the other Need clear vision of respective roles and Need clear vision of respective roles and
potential for PPIspotential for PPIs
Early SHI proposals
Expand the pool (SHI)
Medical scheme plus other employed
Increased high- to low-income
cross-subsidy
Covers at least the cost of public
hospital fees
Increased cross-subsidy from
insured to public sector
$$
(Lack of) progress on SHI
Limited high- to low-income
cross-subsidy
SHI fund covers the cost of public
hospital fees
Limited cross-subsidy from
insured to public sector
Medical schemes
Other employed: SHI fund
Two separate pools
$ $
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