Earlier this month I had the chance to pay a visit to Cape Town’s marvelous floristic kingdom, the tiniest of the six floral kingdoms that divide plant species across the world. It is impressive how different the plants are in that tiny far end of Africa. Now, that was not the first reason of my trip, obviously. Our team is involved in research on Global Health Initiatives’ impact on health systems, with colleagues at University of Western Cape and the South African Medical Research Council. As we advertised recently, the findings have been compiled on a website and we hope this will make it easy for you to find out the interesting results.

In South Africa nowadays (this was before the Rustenburg mine shooting), there is one topic that you cannot escape when you have dinner with a group of South African public health specialists and practicing physicians: the current discussions about the National Health Insurance Schemes are sources of endless debate and disagreements.

As a Belgian citizen born in a country with a well-functioning national health insurance system, I almost ‘naturally’ sympathize with the foreseen reform. Of course, each country needs to follow its own path and no system is better than any other. Also, foreigners and international organizations aren’t the ones that ought to decide (PDF). So I just want to raise a number of arguments on why I think South Africa needs to take decisions on the way it finances its health care system and why national health insurance makes sense in the current South African context.

South Africa needs to act on its health financing schemes. The country’s economy is growing and health care provision has improved for all citizens. However, large inequalities remain. In theory, South Africa is funded on a National Health Service model just like the UK. But in practice, the private spending in the health sector represents more than 60% of total health expenditure. The public health sector is grossly underfunded to cover needs and most South Africans who can afford it will use private services. A large unregulated market of private insurances has emerged that levies a high premium for its members to access a variable range of services. Only the richest part of the population can afford this. The rest relies on either an underfunded public sector or expensive private providers. This, if left unchanged, can lead to a US-like health financing system which is not exactly the most efficient way of financing health care, as we know.

Public Health Authorities need to act on this and it is wise to try to regulate, pool and expand the existing private market while at the same time trying to improve the public sector through payment reforms. A third party payer system could achieve more results than a purely hierarchical model. There is no way the government can abolish the private sector nor can they ask the private sector to provide services for the entire population. However, a national health financing scheme has the potential to gradually soften the discrepancies between underfunded and underused public services and expensive, elitist private services. National health insurance does not imply the disappearance of the private sector. In this regard, the Belgian system is certainly a case in point. But it definitely takes some skills to make everybody at the negotiation table agree.

Needless to say, there are big challenges ahead, notably a large informal sector that contributes to health financing only indirectly, and a private sector that fears losing its financial advantages and the quality of the service provided if the money is drained to the public sector.

South Africa is at a crossroads. In the current fragmented and unequal health financing context, the public health gains of national health insurance are potentially huge for South Africans. The social gains can be even bigger. However, this will only happen if policy makers have the guts to move slowly but firmly towards a fairer health financing scheme.

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5 Responses to South Africa‘s health system financing at a crossroads

  1. Prashanth says:

    Interesting crossroads – would be useful to read this editorial in relation to the previous one I co-wrote on the Indian quagmire. In India too, is a situation of an apparent “plenty” in the private sector and the poverty of the public sector and whether to marry them or to manage them.

    • David Hercot says:

      Hi Prashanth,
      I agree it is interesting to cross read both articles. I see a rhetoric debate all over the world on whether we should go for more public sector or more private sector health systems. Now the reality is that pluralistic health systems exist in most countries. Although far from perfect, national health insurance mechanisms tend to be more adapted to the regulation of a pluralistic reality in my view. From a theoretical perspective you can argue that a National Health Service offering quality and free of charge care for all citizen is the best option but the context matters and reality is a mess out there. What I see is that many countries in their quest to reach Universal Health Coverage tend to be seduced by the songs of the mermaids of national health insurance. Uganda, Thailand Ghana, South Africa, … No judgment there. Just looking.

  2. Vincent Okungu says:

    Interesting piece about a country where more than 60% of total health expenditure benefits barely 20% of the population. The ANC government is currently working on modalities to provide universal health coverage and the good news is that there is very good political will, which is important in achieving UHC.

    • Alan Whiteside says:

      a thought provoking article. We need change but leveling the playing field does not mean cutting the mountains to fill the valleys I hope. we need to improve it for everyone.

      • David Hercot says:

        Dear Alan,
        Thanks for your comment. Indeed, bluntly filling the valleys by cutting the tops seems unwise in the South African context. However, I have had the impression that there was some room for regulating premiums and minimum coverage in the mountains.

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