NHI is a Cost-Containing Measure

I recently read an article written by Dr. Nkaki Matlala, who he argues that the increase in public health expenditure from 2001 to 2011 is 277%, while in private hospitals it is 121%, and specialists costs increased by 120%.  This comparison is misleading.    It is meaningful to compare real per capita health expenditure, in other words, the amount spent per person on health.     Over the same decade, the private sector spent R8 000 in 2001 per person and this increased to R9 600 in 2008 while the public sector spent a mere R1 200 in 2001 and R1 700 in 2008.  

Now this increase in the private sector amounts to R1 600 while in the public sector the  increase is a mere R500.   What Dr. Matlala does not say is that the population served in the public sector increased and the disease burden due to HIV/AIDS and TB also increased and the private sector remained serving the same small population with a smaller burden of disease. In fact were in not for the government’€™s medical scheme (GEMS) the population of medical aid users would have remained the same.  

South Africa spent 8.3% of the GDP on health in 2008, placing it in the league of Organization for Economic Co-Operation and Development (OECD) countries such as Ireland, the United Kingdom, Australia, Norway, and Finland; which was slightly higher than the expenditure incurred for health  in Japan and significantly higher than the expenditure in Chile and Mexico. The truth is that of this 8.3%, only 3.6% was spent exclusively in the public health sector. This 3.6% of GDP is equivalent to 39.7% of total spending on health care in the country. When compared to an average spend in public health care of 73% in OECD countries,  one begins to realise that much of the health funding  in South Africa is outside of the public health sector where it is needed most to serve the majority of the population (84% for specialist and inpatient hospital care and 68% of the population for primary care services). From these figures it is clear that there is massive inequity in the distribution of financial resources between the public and private health sectors. This implies that we spend too much on health care to serve the few and too little to serve the majority. This spending is way too high, and that is why the green paper proposes that by 2025 South Africa will only be spending 6.2% of GDP to serve ALL South Africans through the NHI, far lower than the 8.3% we are currently spending on both the public and private health sectors (although there is likely to continue to be some private spending).  This does not mean that the services provided will be reduced and the quality will be compromised. The Department of Health envisages that there will be a new model for service delivery comprising provision of a comprehensive package of care, provided by skilled health workers who use protocols developed based on high standards of care and informed by scientific evidence. It is for this reason that the green paper talks about a Benefit Advisory Committee that advises the Minister of Health based on scientific evidence on what interventions work and need to be integrated into NHI comprehensive service package.

There is certainly a need to contain the cost of health care over time, and NHI is a cost-containing measure because the total spend between public and private sectors is R227 billion to provide care to the population and still leave  according to HSRC research 5.2million struggling to access health care. With the introduction of NHI the country will be able to provide health care to all at a package of about R255 billion even after taking into account population growth and disease burden.

 Another point needing clarification is that the bulk of the R125 billion for NHI in the green paper is already available. The argument that the NHI is costly does not take into account that the state currently spends R112 billion on health in 2011/12 and project to spend R120 billion in 2012/13 even without additional contribution by those who pay tax.   If we use the figures in the green paper on national health insurance, an additional R5 billion is needed in 2012/13. As the economy grows, even with Treasury’€™s conservative real Gross Domestic Product (GDP)   of 4.2% in 2012/13, the proportional spending on health will grow.

Another misleading fact that needs correction is the assertion that the middle class is being asked to  pay for the health of the whole nation. An argument often bandied around is that only 5.9 million people submit tax returns and therefore will be the only ones to finance the rest of the people who don’€™t submit tax return is fallacious.  The fact is that everyone in South Africa contributes to the general revenue because  31.4% comes Income Tax for Individuals, Pay As You Earn, SITE and Provisional Tax, 26.7% from company tax and 24.7% from value added tax. The remainder comes from miscellaneous sources, which is not confined to the 5.9 million people who submit tax returns.   This includes the fuel levy and excise taxes, where even those who ride taxies or buy tobacco or alcohol contribute to tax. In 2009   the total number of individuals who paid personal income tax   was 9.1 million as of SARS data base. My understanding is that the figure has now increased to 13 million in 2011. The varied sources of revenue ensures sustainability for financing large programmes such as the national health insurance.

There is no undue burden for one group to contribute to the shortfall for national health insurance. We as a country already have well more than 90% of funds for NHI; we surely can find the small balance so that we can indeed ensure financial protection for all while providing quality health care for all while we contain the cost of health care in this country.  

There is a need for all South Africans to pool their resources into a single fund to purchase affordable   quality health services for all, young or old, poor or rich, urban or rural dwellers, sick or healthy. We owe it to ourselves to protect one another against catastrophic spending and avoid bankruptcy related to medical care or dying because we could not afford to be treated when treatment actually exists or die prematurely when we know how to prevent the deaths.  

Dr. Olive Shisana, Chair of Ministerial Advisory Committee on National Health Insurance and CEO of the Human Sciences Research Council.


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