New NHI White Paper gets A for effort, but F for funding
Overall, the National Health Insurance white paper is a great theoretical overview of the ideal healthcare system … except that it won’t happen
Health Minister Aaron Motsoaledi delivered a rousing address at the launch of the National Health Insurance (NHI) White Paper at the Department of Health yesterday. From a rhetorical point of view, he must achieve top marks. The paper itself is also undoubtedly an improvement on the previous attempt.
Criticism of lack of detail in the previous draft was addressed thoroughly, with a much more comprehensive overview of service delivery in the NHI. The paper contains a detailed account of how the minister intends to provide access to quality healthcare for everyone, free of charge. The question remains whether the affluent truly need free healthcare, as they are clearly in a position to pay for access, but that is not raised in the White Paper.
From a philosophical and academic view, the White Paper would achieve good marks. There is a detailed description of the primary focus of the system — districts and clinics will be granted more authority to deliver services and contracting units for primary healthcare will be established, similar to Thailand. Users of the system will be channeled and referred from primary care to the hospital system, as required. The only co-payments in the system will be for not following the referral path.
Further detail is provided on how providers will be paid in the system, with risk-based capitation models being the preferred choice in primary healthcare facilities and diagnosis-related groupers being the model of choice for hospital payments. There is somewhat less information on the massively advanced actuarial processes involved in costing these type of payments, or where in the state this untapped actuarial capacity currently lies, along with the enormous data required to do the analysis.
There will also be processes of contracting-in to state facilities and contracting-out to private facilities for provision of services to all patients in the system. The single-purchaser model will be utilised to selectively contract services as required. Overall, it’s a brilliant theoretical overview of the ideal South African healthcare system … except that it won’t happen.
The crucial missing element is the costing of the proposed system. The costing element in the White Paper is still the same 2010 costing figures that were used in the 2011 Green Paper. R256bn is still the magical number being used as the requirement to deliver services to all South Africans. This number is based on 2010 state-sector spend, with annual increases. Even if all the cost-saving measures in the White Paper are meticulously implemented, SA still cannot afford that figure.
The fact that more than 50% of South African healthcare spend is voluntary contributions to the private sector is ignored, and the assumption is made that quality services can be delivered to all South Africans at half the current total spend. GDP growth projections of 2%, 3.5% and 5% are still used to work out the funding shortfall. There is mention of the 2016 GDP growth figures of 0.3%, but these are not used in the projections.
The funding shortfall at 2% GDP growth will be R108bn in 2025, using 2010 monetary values. These values have also not been adjusted to keep pace with the recent and upcoming credit ratings downgrades and their effect on the local currency and inflation. We are thus looking at an actual funding shortfall of well above R150bn to implement the system. Achieving this would mean at least an additional 42% in personal income tax being collected by SARS annually to fund only healthcare.
There is, of course, still the chosen single-payer method that has not been reconsidered. This single NHI Fund will be the state entity with the single largest budget in the South African fiscus. Despite the current horrendous governance performance of Eskom, the SABC, SAA, the Road Accident Fund, the Compensation Fund, PetroSA, Transnet, ACSA, Sanral and a legion of other state bodies, the proposal for a single payer was still kept as the intended plan. Governance failure is not considered and yet, when it happens, you could face the collapse of service delivery in the entire health system, with unimaginable harm potentially affecting millions of South Africans.
The proposed service delivery model would probably achieve the aim of universal healthcare, but there is no way to fund it and failure to do the costing will result in what happened in Ireland, where NHI had to be scrapped four years after the release of the White Paper when the costing was finally done.
One cannot propose that the basket of services be reduced to the bare minimum to fit into whatever budget is available, as that would lead to massive reductions in access to South Africans that do currently have access to a wider variety of services in both the private and public sector. A healthcare system cannot be costed and built solely on primary healthcare access. The latest version is a marked improvement by the Department of Health, but is unfortunately still an unimplementable solution.
• Dr Serfontein is a senior healthcare consultant and Free Market Foundation health policy unit member