University of Cape Town Making NHI affordable Di McIntyre Health Economics Unit University of Cape Town

Health warning !! P S L T R C

Background note Take as given that public health sector: Faces enormous challenges Requires major interventions Focus today is on NHI, and more specifically, the private sector in relation to NHI

Views on NHI General agreement across stakeholders: Universal access to health care Reduce differentials between public and private health sectors Private sector stakeholders: Public sector is the problem “Private sector needs to be seen as part of the solution” … not as part of the problem

cannot be part of the solution until it acknowledges that it is My view Remember the TRC: Private health sector cannot be part of the solution until it acknowledges that it is part of the problem

Speaking of affordability McIntyre 2009

Also relative to wages 30% 20% 14% 7% McIntyre 2009

Analysis of IES by John Ataguba Affordable solution ? 30% of average formal sector wages Ability to extend cover to low-income workers ? SHI – at lower cost benefit packages but cover all dependents Analysis of IES by John Ataguba

SHI era 30% 20% 14% 7%

LIMS process LIMS investigation: LIMS conclusion: LIMS solution: Demand and distribution issues (utilisation, willingness- and ability-to-pay) Benefit design, governance & regulation Supply-side issues (cost of services) LIMS conclusion: Single greatest barrier - affordability LIMS solution: Formalise three tier system

Health sector TRC Different actors’ willingness to change: Pharmaceutical companies – cheaper for LIMS (voluntary basis and limited time) Private hospitals – lower cost for LIMS Medical schemes – prevent ‘buying-down’ No willingness to introduce real change: Protect current business and get more Time for real efforts to address problems facing private health sector

Key affordability issues Administrative efficiency: Fund collection If NHIF, clear demarcation of relative responsibilities and restructure DoH for reduced and different responsibilities Pravin Gordhan for CEO !!! Purchasing power: Large integrated pool of funds (for the majority of services)

Key affordability issues Address quality perceptions: Primary care providers Generic medicines Primary care gatekeepers: Improve prestige, remuneration and responsibilities of primary care providers Provider payment mechanisms: Fee-for-service only for very specific purposes

Key message Not just about whether or not a NHI can be affordable Is the current South African health system affordable ? The greatest affordability challenge currently relates to the private sector Private health sector cannot be part of the solution until it acknowledges that it is part of the problem