Health System Trends and Issues

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Health System Trends and Issues

• Portfolio Committee Health
• 13 March 2001

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Per capita health expenditure/outcomes (WHO)
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South African Health System
Serves 39 million Expenditure R27,2 billion Per
capita R695
Public Sector
Private sector
Total Expenditure R60-R70 billion
Serves 7 million
Per cap R5,714 Per cap tax subsidy R975
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Social Exclusion
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Per Capita Public Health Expenditure 1996/97 to
2000/2001
Source Department of Health (NHA)
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Real Per Capita Costs 1982 to 1997 (i.e. after
removing inflation)

• Professional services 228
• Drugs 543
• Hospitalisation 517
• Administration 283
• Total 351

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Medical Scheme Beneficiary Changes 2000
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Medical Scheme Beneficiary Changes 2000
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Medical Scheme Age Structure Open vs Closed 2000
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Selected Index for South Africa
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Average Claim by Age
Average Claim
0
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
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Medical Scheme Age Structure September 2000
OHS98
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Price adv./disadv. due to risk profile (open
schemes reflecting 90 of membership) 1999
Price disadvantage
Price advantage
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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

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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

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(No Transcript)
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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

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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)

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Budget vs Policy
National Legislature
Decides budget allocations to National
Departments and Provincial Government as a whole
Cabinet (National)
Health MinMEC
Develop policy, but do not determine budgets
Health PHRC
Provincial Legislature
Cabinet (Provincial)
Implement national and provincial policy within
budget allocations
Health MEC
Decides budget allocation to Health
Health HoD
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Relationship to Alternative Sources of Funding
Funds allocated according to draw-down schedule
Provincial Treasuries
Conditional Grant
Fees
Budget but not funds
Unconditional grant
Provincial Health Departments
Contract
Social Health Insurance?
Budget but Not funds
Medical Schemes
Hospitals
Service
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Budget (general taxes)
Medical scheme Contributions (voluntary)
Medical Schemes (risk rated)
Tax subsidy (R6,8 billion) Per cap R975

• Lose cover
• Funded utilisation

Private Hospital fee-for-service
Public Hospital Basic
Private Primary Care
Public Primary Care
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Budget (general taxes)
Medical scheme Contributions (voluntary)
Medical Schemes (community rated, open
enrolment)
Tax subsidy (R6,8 billion) Per cap R975
Funded utilisation (ffs)
Private Hospital fee-for-service
Public Hospital Basic
Private Primary Care
Public Primary Care
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Budget (general taxes)
Medical scheme Contributions (voluntary)
Low Cost Capitated Medical Scheme (voluntary)
Medical Schemes Fee-for-service (voluntary)
Tax subsidy (R6,8 billion) Per cap R975
Ring-fence Allocations?

• Contracted
• Capitated
• ffs

Private Hospital fee-for-service
Public Hospital Basic
Private Hospital capitation
Public Hospital (Private/SHI)
Private Primary Care
Public Primary Care