Global Insight Perspective | |
Significance | The Health Review provides an independent annual insight into developments in the health sector, with 2007 highlighting the increasing health costs affecting medical schemes as attributed to private health services. |
Implications | The private sector accounts for 86% of the health expenditure in South Africa with medical schemes at 40% and out of pocket—which is also largely private sector-based—at 46% of total health expenditure. The split underscores the wider implications of the latest tariff rate increase proposed by private health service providers. |
Outlook | The government is expected to support greater scrutiny of the pricing structure of hospital services and medical schemes, with potential caps introduced for specific income groups. |
Health Review 2007
The South African Health Review 2007 titled The Role of Private Sector within South African Health System has highlighted one of the contentious issues surrounding the health sector—healthcare financing and rising health costs. The annual report—which provides a comprehensive review of the trends, developments, and policy implications of the health sector—has zeroed in on the recent spat between the medical schemes council and private hospital chains over the proposed rise in tariffs affecting the cost of healthcare services. The report outlines some key statistics and recommendations to underscore the level of health financing in the country. These include:
- Health expenditure split: public sector—14%; private sector—40%; out-of-pocket—46%.
- Population accessing health services: public sector for hospital and primary care services—64.2%; public sector hospital services but prefer private sector (out of pocket) for primary care—21%; medical scheme beneficiaries (all private sector)—14.8%.
- Increasing diverging trends in public-private health sector mix with cost escalation and affordability are key issues to be addressed for the private sector.
- Recommendations include tax funding for the public sector, promoting efficiency in private sector, cross subsidisation in overall health financing and expenditure, and imposing regulatory bindings for financing intermediaries to contain costs.
- For Medical Schemes and National Health Insurance, recommendations include co-ordinated healthcare provider legislation, standardised benefit design, creating a comprehensive social security system including elements of mandatory schemes, basic package of services funded by tax and mandatory insurance, implementation of risk equalisation methods, and cost containment through direct controls on supply side of services.
Source: Health Systems Trust
Outlook and Implications
The assessment of the health services sector pertaining to expenditure and costs comes at a time when there are legal recourses sought to restrict private sector tariff rises. The Health Review has managed to address some of the issues of health financing in the country, with considerable emphasis on regulation and overhaul of the private sector. The current statistics suggest a definite tilt towards established presence of the private industry; this is an area the new framework being shaped by the Ministry of Health is expected to focus on. An overhaul of the private healthcare services industry is expected with stringent norms to detail pricing structures and outline the nature of sourcing and supply. In terms of the Medical Schemes Act, the issue of affordability will bring rise to potential cross-subsidisation measures being considered and the risk equalisation fund is expected to complement these efforts. Clarity over the workings and remit of mandatory health insurance is expected through the government proposal, with the focus on establishing an expanding risk pooling and an integrated tax funding and insurance contribution structure. If implemented, a definitive change in the dynamics of the medical scheme industry as well as the private hospital services market is expected in the medium term.
Related Articles
- South Africa: 14 January 2008: South African Health Ministry Discusses Tariff Increase with Private Hospitals
- South Africa: 7 December 2007: Private Healthcare under Scanner as Scheme Costs Rise in South Africa