South Africa : National Health Insurance

CABRI HEALTH DIALOGUE – Health Insurance Alternatives July 2012

Presenters: Nomkhosi Zulu and Luisa Hanna | Health and Social Development , Public Finance |

Outline

1. South Africa health profile and health goals

2. Health financing in South Africa

3. NHI proposals

4. NHI characteristics - revenue generation, pooling, purchasing, provision

5. Implementation

6. Challenges and next steps6. Challenges and next steps

2

South African health profile

• South Africa has a ‘quadruple burden’ of disease:

1. HIV and TB: 11% (5.6m) of the population live with HIV/AIDS and >1.7m receive

ART. TB infection rate is amongst the highest in the world, and there is high TB/HIV

co-infection (73%)

2. Maternal and child mortality

3. Non Communicable Diseases

4. Violence, injuries and trauma:4. Violence, injuries and trauma:

• Health care system is fragmented, inequitable. Dichotomised system - weak public

sector in parallel with highly resourced private system and focused on curative care.

• Poor quality of public healthcare system : cleanliness, safety of staff and patients,

waiting times, staff attitudes, drug stock outs, infection control

• Shortage of human resources for health: compared to middle income countries, but

recent doubling of spending, and now >300,000 health personnel

Green Paper on NHI in South Africa, 2011

District Health Barometer, HST, 2011

World Development Indicators , WHO

National health goals: ‘a long and healthy life for

all South Africans’

Outcome Target for 2014, with baseline values from 2009

1 Increase life

expectancy

Increase life expectancy from 54 to 56 for males and 59 to 61 for females

2 Decrease Maternal

and Child Mortality

Decrease Maternal Mortality Rate from 310 to ≤ 270 per 100 000 live

births

Decrease Child Mortality Rate from 56 to ≤ 40 per 1 000

Decrease Infant Mortality Rate from 40 to ≤ 36 per 1 000

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Decrease Infant Mortality Rate from 40 to ≤ 36 per 1 000

3 Combat HIV and AIDS

and decrease the

burden of disease

from Tuberculosis

80% of eligible pregnant women must be initiated on ART at a CD4 count

of

<350 antiretroviral treatment

Increase TB cure rate from 71% to 85%

4 Strengthen Health

System Effectiveness

Re-engineering PHC

Implement National Health Insurance

National Department of Health, Revised Negotiated

Service Delivery Agreement, November 2011

South Africa health expenditure

• Total expenditure on healthcare: R248.6b ($29.6b) = 8.5% of GDP, higher than MICs

• In 2011/12 government expenditure on public health was R122 b ($14.5b), exceeding

private expenditure which was R120b ($14.3) - slide 7

– 14.7% of total government expenditure is spent on health

– Per capita (public health sector) spending amounted to R2 635 in 11/12.

• Donor or NGO contributions to health expenditure: ~ R5-6 b (~ $600m) per annum (2%)

• Rationale for reform: • Rationale for reform:

– Despite spending 8.5% of GDP health outcomes remain inadequate

– The public health sector provides healthcare to 86% of the population, but accounts

for less than 50% of the total national health spending.

– The private sector services the remaining 14% of the population that purchases

private healthcare insurance.

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Composition of health expenditure

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Mandatory pre-payment Voluntary pre-payment Out-of-pocket

Di McIntyre, NHI conference Oct 2011

NHI introduction

• Long history of policy debates on health system reform, dating back to 1928, the

Gluckman Commission in 40s, various post-apartheid initiatives

• Resolution 53 at the ANC’s 2007 policy conference called for the establishment of

National Health Insurance in South Africa

• A Green Paper on NHI was released in August 2011 for public consultation

• A White Paper is expected in 2012 and will be followed by draft legislation and

ultimately a National Health Insurance Act

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NHI characteristics (1)

Key principles

• Inspired by vision of universal coverage, services free at point of delivery, improve access to quality

services and provide financial risk protection

• Proposes phased transition, three phases over a 14 year period

Revenue generation

• Public financing balance of taxes to minimise economic distortions & foster social solidarity

• Available instruments: direct taxes (personal or corporate income tax, surcharge on taxable

income); indirect taxes (VAT, fuel levy, sin taxes), payroll taxes .

• Likely to be a mix of surcharge on taxable income, payroll tax, VAT • Likely to be a mix of surcharge on taxable income, payroll tax, VAT

• Uncertainty on benefits package, pricing, utilisation rates, provider payment etc…

Pooling

• Single National Health Insurance Fund to achieve equity and social solidarity est. at end of the first

phase (yr 5)

• Decentralised provincial offices established at end of the second phase (yr 10)

• 47 District Health Authorities will be strengthened, provincial offices of the NHIF will contract with

each DHA, which will purchase PHC services

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NHI characteristics (2)

Purchasing

• Coverage scope, breadth and depth

– Who? All South Africans and legal permanent residents. Short-term residents, foreign students

and tourists required to obtain travel insurance and provide evidence upon entry into SA

– What? ‘Comprehensive’, ‘cost-effective’, ‘evidence based’ , but benefits package not yet

defined. Likely that current services provided form basis of package, progressively extended

– How much? Co-payments discouraged. Exceptions: services not in accordance with treatment

guidelines, not covered by benefit package, non-adherence to referral system, non-accredited guidelines, not covered by benefit package, non-adherence to referral system, non-accredited

providers

• Reimbursement mechanisms

– Hospitals: global budgets initially, then applying a case-mix and ultimately Diagnostic Related

Groups (already used in the private sector)

– PHC providers: risk adjusted capitation, and possibly following improvements in information

systems, linked to performance mechanism

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NHI characteristics (3)

Provision

• Re-engineering of primary health care (PHC) as foundation for health system:

– District-based clinical specialist support teams

– School-based primary health services

– Municipal ward-based primary health care agents

• Strengthening of public health services

– Infrastructure improvements for public sector hospitals

– Human resources: doctors and other scarce professionals

– Public hospital management and systems, financial management in provinces, supply chain

improvements

– Doubling numbers on ART from 1.7 m to 3.4 m, earlier detection & better control of TB

• Mix of public and private provision

– Introduction of some private provision to widen scope and nature of services.

– Phased approach: starting with GP contracting, and pharmacies, over time hospitals

• Quality: Accreditation of health facilities and establish of Office of Health Standards Compliance

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Status of implementation

Pilots

• 10 + 1 pilot districts selected

• Areas to be tested:

– Norms and standards, referral system, PHC package, assess: utilisation, costs, affordability

– Feasibility, acceptability, effectiveness and affordability of contracting with private sector

– Extent of financial protection through district mechanism to fund health services

– Ability of districts to assume greater responsibility, costs of DHA as contracting agent

Health systems strengthening Health systems strengthening

• Hospitals: re-designation, appointment of CEOs. Infrastructure initiatives incl. 6 flagship PPPs

• Quality: public health facility audit of all >3000 facilities completed, improvement teams appointed

• PHC: Appointment of district clinical specialists, ward based PHC teams and agents

• Human Resources new strategy launched and increase in medical intake from training faculties

Financing

• Conditional grant established: R150m in 12/13; R300 m in 13/14; R450 m in 14/15

• NT to publish financing options discussions paper

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Challenges and areas for reform

• Governance, legal and constitutional issues, eg Establishment of NHI Fund,

and District Health Authority

• Affordability and long term financial sustainability, implementation of new tax

instruments

• Appropriate role of private sector and medical aids NHI transition

• Supply side: Systems improvements (infrastructure, HR capacity, supply chain

management), human resources for healthmanagement), human resources for health

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Annex (1): middle income health funding

Country

GDP per capita

(current US$) Life Expectancy

2007 2000 2007 2000 2007 2000 2007 2000 2007 2008

Chile 9 877 3.4 3.6 320 507 6.6 6.2 52.1 58.7 79

Mexico 9 741 2.4 2.7 236 372 5.1 5.9 46.6 45.4 75

Russia 9 146 3.2 3.5 247 512 5.4 5.4 59.9 64.2 68

Turkey 8 865 3.1 3.5 272 467 4.9 5 62.9 69 72

Venezuela 8 252 2.4 2.7 199 324 5.7 5.8 41.5 46.5 74

Uruguay 7 206 6.1 5.9 500 678 11.2 8 54.6 74 76

Brazil 7 185 2.9 3.5 202 348 7.2 8.4 40 41.6 72

Malaysia 7 028 1.7 2.0 159 268 3.2 4.4 52.4 44.4 74

Gov health

expenditure

as % of GDP

Total health

expenditure as a %

of GDP

Gov health

expenditure

as % of total

health expenditure

Per capita gov

health

expenditure

(PPP int $)

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Argentina 6 604 5.0 5.1 452 671 9 10 55.5 50.8 75

Botswana 6 545 2.7 4.3 218 568 4.4 5.7 61 74.6 54

South Africa 5 933 3.4 3.6 223 340 8.5 8.6 40.5 41.4 51

Costa Rica 5 891 5.0 5.9 360 656 6.5 8.1 76.8 72.9 79

Namibia 4 216 4.2 3.2 174 196 6.1 7.6 68.9 42.1 61

Peru 3 771 2.8 2.5 134 191 4.7 4.3 58.7 58.4 73

Thailand 3 689 1.9 2.7 89 209 3.4 3.7 56.1 73.2 69

China 2 651 1.8 1.9 42 104 4.6 4.3 38.7 44.7 73

Morocco 2 373 2.0 2.3 32 68 4.2 5 46.6 45.4 71

Nigeria 1 123 1.5 1.7 20 33 4.6 6.6 33.5 25.3 48

India 1 096 1.1 1.1 16 29 4.4 4.1 24.5 26.2 64

Vietnam 804 1.6 2.8 23 72 5.4 7.1 30.1 39.3 74

Low income 1.8 2.2 14 28 4.7 5.3 37.6 41.9

Lower middle income 1.6 1.8 35 76 4.4 4.3 37 42.4

Upper middle income 3.2 3.5 243 419 6.2 6.4 52 55.2

High income 6.1 6.9 1631 2492 10.2 11.2 59.4 61.3

Annex (2): Health expenditure SA public/private

Health expenditure in SA public and private sectorsRand million 07/08 08/09 09/10 10/11 11/12 12/13 13/14 Annual real

change

Public sector

National Department of health core 1,210 1,436 1,645 1,736 1,784 1,864 1,961 2.2%

Provincial Departments of Health 62,582 75,120 88,593 98,066 110,014 119,003 126,831 6.1%

Defence 1,878 2,177 2,483 2,770 2,961 3,201 3,377 4.0%

Correctional services 261 282 300 318 339 356 374 0.1%

Local government (own revenue) 1,625 1,793 1,829 1,865 1,977 2,096 2,221 9.4%

Workmens Compensation 1,287 1,415 1,529 1,651 1,718 1,804 1,894 0.6%

Road Accident Fund 764 797 740 860 980 1,029 1,080 -0.1%

Education 1,833 2,134 2,350 2,503 2,653 2,812 2,981 2.2%

Total public sector health 71,439 85,154 99,468 109,769 122,427 132,165 140,721 5.6%

Private sector

Medical schemes 65,468 74,089 84,863 90,973 98,069 105,718 113,964 3.4%

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Medical schemes 65,468 74,089 84,863 90,973 98,069 105,718 113,964 3.4%

Out of pocket 14,694 15,429 16,200 17,172 18,202 19,294 20,452 -0.3%

Medical insurance 2,179 2,452 2,660 2,870 3,094 3,336 3,596 2.5%

Employer private 1,041 1,172 1,271 1,372 1,479 1,594 1,718 2.5%

Total private sector health 83,383 93,141 104,994 112,387 120,844 129,942 139,731 2.8%

Donors or NGOs 3,835 5,212 6,319 5,787 5,308 5,574 5,852 1.2%

Total 158,657 183,507 210,781 227,944 248,580 267,682 286,304 4.0%

Total as % of GDP 7.6% 7.9% 8.6% 8.5% 8.5% 8.4% 8.1%

Public as % of GDP 3.4% 3.7% 4.1% 4.1% 4.2% 4.1% 4.0%

Public as % of total government

expenditure (non-interest) 13.9% 14.0% 13.8% 14.1% 14.7% 14.7% 14.6%

Private financing as % of total 52.6% 50.8% 49.8% 49.3% 48.6% 48.5% 48.8%

Public sector real rand per capita

10/11 prices 2,131 2,300 2,512 2,635 2,766 2,812 2,816 4.8%

Public per family of four per month real

10/11 prices 710 767 837 878 922 937 939 4.8%

Annex (3): Public and private expenditure - % GDP

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National Treasury, 2011

Annex (4): Pilot districts

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