Health System Trends and Issues
Portfolio Committee: Health
13 March 2001
Per capita health expenditure/outcomes (WHO)
55.0
60.0
65.0
70.0
75.0
80.0
85.0
90.0
95.0
200 300 400 500 600 700 800 900
Per capita health expenditure (US$)
He
alt
h in
de
x
South Africa
Croatia
Mexico
Poland
Namibia
Brazil
Costa RicaColumbia
Kuwait
PanamaSeychelles
Dominica
Venezuala
Lithuania
Barbados
Malta
Singapore
TongaMauritius
Cook Islands
EstoniaHungary
Czech Republic
ChileSlovakia
Lebanon
Palau
Suriname
Nauru
Oman
South African Health System
Private sector
Public Sector
Serves 39 millionExpenditure = R27,2 billionPer capita = R695
Serves 7 million
Per cap = R5,714Per cap tax subsidy = R975
Total Expenditure R60-R70 billion
Social Exclusion
Factors inducing stress
•Economic change•Socio-demographic change•Changing welfare regimes•Segregation processes
Elements of social exclusion
•Exclusion from participation in civil society (legal exclusion)•Exclusion resulting from a failure of supply of social goods and services•Exclusion from social production (de-legitimization)•Exclusion from normal social consumption (economic exclusion)
Affected groups
•Unemployed•Ethnic minorities•Homeless•Pensioners•Lone parents•Disabled/long-term sick
Affected indicators
•Unemployment•Poverty•Income inequality•Homelessness•Alcohol and drug abuse
Source: Shaw et al, 1999, p.224
Per Capita Public Health Expenditure 1996/97 to 2000/2001
0
100
200
300
400
500
600
700
800
EC FS G KZN M NW NC NP WC
1996/97 2000/2001
Source: Department of Health (NHA)
Real Per Capita Costs 1982 to 1997 (i.e. after removing inflation)
• Professional services: + 228 %
• Drugs: + 543 %
• Hospitalisation: + 517 %
• Administration: + 283 %
• Total: + 351 %
Medical Scheme Beneficiary Changes 2000
5,550,000
5,600,000
5,650,000
5,700,000
5,750,000
5,800,000
5,850,000
5,900,000
5,950,000
6,000,000
Ja
n-9
9
Fe
b-9
9
Ma
r-9
9
Ap
r-9
9
Ma
y-9
9
Ju
n-9
9
Ju
l-9
9
Au
g-9
9
Se
p-9
9
Oc
t-9
9
No
v-9
9
De
c-9
9
Ja
n-0
0
Fe
b-0
0
Ma
r-0
0
Ap
r-0
0
Ma
y-0
0
Ju
n-0
0
Ju
l-0
0
Au
g-0
0
Se
p-0
0
Medical Scheme Beneficiary Changes 2000
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
Ja
n-9
9
Fe
b-9
9
Ma
r-9
9
Ap
r-9
9
Ma
y-9
9
Ju
n-9
9
Ju
l-9
9
Au
g-9
9
Se
p-9
9
Oc
t-9
9
No
v-9
9
De
c-9
9
Ja
n-0
0
Fe
b-0
0
Ma
r-0
0
Ap
r-0
0
Ma
y-0
0
Ju
n-0
0
Ju
l-0
0
Au
g-0
0
Se
p-0
0
Open Closed
Medical Scheme Age Structure: Open vs Closed 2000
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
<1 '1-4 '5-14 '15-24 25-34 35-44 45-54 55-64 65-74 >75
Open Closed Overall
Selected Index for South Africa
0
0.5
1
1.5
2
2.5
3
3.5
>1 '1-4 '5-14 15-24 25-34 35-44 45-54 55-64 65-74 75-84 85+
Male Female
R 0
R 500
R1 000
R1 500
R2 000
R2 500
R3 000
R3 500
R4 000
R4 5000 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88
Age of Beneficiary
Ave
rag
e C
laim
Average Claim by Age
Centre forActuarial Research
Medical Scheme Age Structure: September 2000 & OHS98
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
20.00%
<1 '1-4 '5-14 '15-24 25-34 35-44 45-54 55-64 65-74 >75
Overall OHS98
Price adv./disadv. due to risk profile (open schemes reflecting
90% of membership) 1999
-50.0%
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
% p
rice
ad
van
tag
e/d
isad
van
tag
e
Open Closed Market
Price disadvantage
Price advantage
Key Factors Affecting the Year Ahead
• Policy directions– Consolidation of the Act– Social Security Committee of Inquiry
• End of Amnesty Period• Expect growth in membership: initial figures at
the Office already suggest this• Aggressive competition for members
– Still dominated by anti-competitive strains resulting from broker involvement
• Some cost-containment and new business models starting to feed through
Key Factors Affecting the Year Ahead
• Economic growth slow• Decline in restricted membership schemes• Consolidation of open scheme market
(largely due to broker behaviour)• Development of regional strategies in moves
away from fee-for-service• Governance of schemes likely to begin
influencing intermediary behaviour (this will be enhanced through further policy changes)
• Increased transparency
Public sector Private sector
Cover •Indigent (pop. growth)•Low-income (pop. growth)
•High income (no change)•Good risks (no change)•Poor risks (decrease)
Burden of disease
•HIV/AIDS•Infectious •Communicable•Chronic
•HIV/AIDS (limit cover)•Infectious (na)•Communicable (na)•Chronic (reduce cover)
Finance •Total•Per capita•Tax subsidy
•Total•Per capita
Providers •Medical•Nursing•Pharmacy
Compatibility with Public Hospital System
• Cannot retain revenue at source– Costs do not equate to revenue
• Requires fee-for-service billing– Alternative contracts very difficult to
implement
• Budget principles have not been defined– Redistributable portion– Retained portion
Explicit Policy Decisions
• Public hospitals will not be free for higher income groups
• Medical schemes, and private sector as a whole, will have to be compatible with public sector goals and cannot undermine the public sector
• The health system will ultimately be funded from a system of:– General taxes– Earmarked taxes– Medical schemes– Other social insurance funds (RAF, COIDA)
Budget vs Policy
Cabinet (National)
National Legislature
Health MinMEC
Health PHRC
Provincial Legislature
Cabinet (Provincial)
Health MEC
Health HoD
Decides budget allocation to Health
Decides budget allocations to National Departments and Provincial Government as a whole
Develop policy, but do not determine budgets
Implement national and provincial policy within budget allocations
Relationship to Alternative Sources of Funding
Provincial Treasuries
Provincial Health Departments
Hospitals
Conditional Grant
Unconditional grant
Medical Schemes
Service
Contract
Fees
Budget but not funds
Budget butNot funds
Social Health Insurance?
Funds allocated according to draw-down schedule
Budget (general taxes)Medical scheme
Contributions (voluntary)
Medical Schemes (risk rated)
Private Hospital fee-for-servicePublic Hospital Basic
Private Primary CarePublic Primary Care
•Lose cover•Funded utilisation
Tax subsidy (R6,8 billion)
Per cap = R975
Budget (general taxes)Medical scheme
Contributions (voluntary)
Medical Schemes (community rated,
open enrolment)
Private Hospital fee-for-servicePublic Hospital Basic
Private Primary CarePublic Primary Care
Funded utilisation (ffs)
Tax subsidy (R6,8 billion)
Per cap = R975
Budget (general taxes)Medical scheme
Contributions (voluntary)
Low Cost Capitated Medical Scheme
(voluntary)
Medical Schemes Fee-for-service
(voluntary)
Private Hospital fee-for-service
Private Hospital capitation
Public Hospital Basic
Public Hospital (Private/SHI)
Private Primary CarePublic Primary Care
Tax subsidy (R6,8 billion)
Per cap = R975
Ring-fence Allocations?
Contracted•Capitated•ffs
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