National health insurance: there is a better cure

“First, do no harm” is an oft-quoted principle in clinical medicine, one of the promises made by newly trained doctors in the Hippocratic Oath. It was sadly forgotten by the drafters of the National Health Insurance (NHI) Bill, under consideration in parliament.

Far from improving access to health care while providing financial protection from its costs, as envisaged in the bill’s stated aim, the “single payer” strategy adopted by the government will unnecessarily raise costs, duplicate bureaucracies, disrupt health financing flows and impose over-reaching control by Pretoria of local health services.

Universal health coverage is an entirely sensible social goal. It is best approached by building on the strengths of existing service delivery and administrative capacity while progressively introducing uniform standards of care, a common benefit package and reimbursement arrangements that can accommodate diverse public and private service providers.

Instead of building on and enhancing our medical schemes and their administration, provincial management capacity and decentralised supply networks, the bill proposes replacing or reducing their respective roles. Medical schemes will be subjected to a complete reversal of their statutory responsibilities. Whereas they are now obliged in law to cover the costs of prescribed minimum benefits, the NHI Bill proposes that they be barred from covering services reimbursed by the NHI Fund. This is an astonishingly aggressive attack on arrangements subject to effective statutory regulation through the 1998 Medical Schemes Act.

The 2019 Health Market Inquiry rightly proposed a different approach: the introduction of a single, comprehensive, standardised base benefit option, which must be offered by all schemes. This is how many other countries have achieved equitable, universal coverage in a multi-payer health insurance system, and it is the obvious way forward for SA with its well-established regulated medical scheme industry.

Instead of expanding coverage through existing administrative capacity, the NHI Bill seeks to eviscerate our established medical schemes by narrowing their role to “complementary” services not reimbursable by the fund. It proposes the establishment of an entirely new state entity to operate a national health patient registration system, disburse a consolidated health budget, reimburse service providers and purchase health services for everyone. Or not quite everyone. The bill will not apply to members of the defence force or the state security agency.

In respect of provincial health services, the NHI Bill is similarly destructive. Instead of collaboration with provincial departments and the office of health standards compliance to tackle identified administrative shortcomings, a new category of national entities called district health management offices will be established, together with “contracting units for primary health care” that will manage disbursement of funds to public and private health service providers in demarcated subdistricts throughout the country. The tertiary referral hospitals that are the flagship health facilities of provincial departments will become national government components.

The NHI Fund will establish an office of health products procurement with responsibility for purchasing medicines, medical devices and equipment, operating at district level through the district health management office. No role of provincial health departments is envisaged.

The costs of all this bureaucratic re-engineering will be extensive — and then there is the terrifying prospect of a monopoly state fund taking over a large but unquantified share of the reimbursement flows that medical schemes administer.

There is much that could be done to improve competition, reduce costs and streamline administration in our private health sector and its financing arrangements. But instead, the NHI Bill proposes that the Competition Act should not apply to “any transactions” concluded in terms of its provisions.

If competition is not envisaged in price determination, a structured process of negotiations between purchasers and providers has to be governed by law. This relates not just to tariffs, but to question of value, risk sharing and outcomes measures, on which the Health Market Inquiry offered several suggestions. But the NHI Bill takes a simpler view. The minister will appoint a health-care benefits pricing committee. “The committee must recommend the prices of health service benefits to the fund.” Thirteen words, and no more.

The national health department has opted for a highly centralised, costly and impractical approach to promoting universal coverage. The NHI Bill is not grounded in empirical analysis, an appreciation of established capacity, a review of options, or considered engagement between interested parties. It reflects undue confidence in central state capacity, denial of the costs and complexity of comprehensive health services, and an irrational commitment to replace rather than complement, to control rather than partner with, our established health financing institutions.

It should be referred back by the portfolio committee, for consideration by an expert group with both public and private sector health financing experience.

• Donaldson is with the Southern Africa Labour & Development Research Unit at the University of Cape Town.