A Wealthier SA will be a Healthier SA
Author: Jasson UrbachDate: 6 January 2012

The deadline for submissions on the draft National Health Insurance (NHI) Green Paper is history. South Africa’s healthcare policy is at a critical crossroad as we await government’s response to the views expressed by the people.

Given the lengthy and detailed discussions that have taken place over the years, the Green Paper left me appalled at the lack of detail and the number of unsubstantiated claims it contained. The Green Paper insinuates that the private sector is to blame for the country’s failure to address core health care deficiencies. It largely ignores the failures of the country’s own public health system and suggests that its poor performance can be addressed simply by passing legislation! And it totally ignores the reams of evidence obtained from other countries with socialised health systems that these systems are inefficient, expensive, lack sophisticated medical equipment, have long waiting lists for medical procedures and appointments with specialists, do not provide equal access to and equal treatment for all citizens, provide lower quality health care than private systems, control costs by rationing care and medical technology, and fall far short of attaining their lofty ideals.

According to the Green Paper, government is disturbed by the rapid growth of the “uncontrolled commercialisation” of private health care. But, private health care is already heavily regulated. To imply that it is “uncontrolled” suggests that government imposed laws and regulations are ineffectual. Substantial market movements have taken place in response to government regulations, which display compliance with regulations. Contrary to the views expressed within the Green Paper, the existence of the private health care sector greatly benefits the people of South Africa, including the poorest members of the population.

What the Green Paper does not address, is the root cause of the poor performance of the overall South African health care sector, which, according to international surveys, are the inefficiencies and inadequacies of the public health sector. The Health Department has misdiagnosed the problem. The proposed NHI cannot and will never address South Africa’s health care deficiencies.

The Green Paper states, “The South African health system is inequitable, with the privileged few having disproportionate access to health services. There is recognition that this system is neither rational nor fair”. Did the compilers of the Green Paper recognise that a host of people, including government Ministers, Members of Parliament, senior government officials, and others supported by taxpayers, are among the “privileged few having disproportionate access to health care”? Does government recognise that these same people are among “the privileged few having disproportionate access to” superior transport, housing, food, clothing, entertainment, and many other privileges? Do we now declare that all of these systems are “neither rational nor fair”, and work out schemes to share all of these privileges with the people who do not have access to them? Or do we get back to fundamentals and recognise that people are entitled to work and to secure for themselves, better healthcare, transport, housing, food, clothing, entertainment and other privileges, especially if they pay for them entirely out of their own resources?

The Green Paper presents the familiar, widely disseminated fabrication about the so-called 84:16 split between the healthcare provided by the public and private sectors. The fundamental error is assuming, rather simplistically, that if 16 per cent of the population is covered by a medical scheme, the remaining 84 per cent must depend on the public sector for healthcare. This is a crude assumption and not a true representation of the facts. A significant proportion of the population does not use public health facilities and chooses to pay out-of-pocket to receive care from private healthcare providers.

Doubly unwarranted is the implication that the private sector is supposedly not “doing its share”.

In fact, “the private sector” pays 100% of the costs of all health care provided in South Africa, part through medical schemes, insurance and out-of-pocket expenses, and the rest though the taxes government uses to provide public health care!

Every free-thinking South African must keep in mind that individuals contribute voluntarily to medical schemes. Under the NHI, certain groups of people will be forced to contribute based on their socio-economic status, or else face prosecution and potentially jail time if they do not. Indeed the Green Paper states, “The intention is that the National Health Insurance benefits, to which all South Africans will be entitled, will be of sufficient range and quality that South Africans have a real choice as to whether to continue medical scheme membership or simply draw on their National Health Insurance entitlements”. This is an extremely audacious statement and disregards the very real choices individuals will have to make with their reduced budgets when a mandatory tax is foisted upon them. To make provision to cover the entire South African population is a totally inefficient use of resources and ultimately will be at the expense of other sectors of society. Increasing levels of entitlement are not sustainable and erode individual freedom.

If given the opportunity South Africans have revealed that they prefer to access private medical facilities whenever possible. Thus meaningful reforms should focus rather on enrolling more individuals in private medical schemes, reducing the burden on public sector healthcare facilities and freeing up scarce taxpayer resources. Government then could focus on purchasing the best available care from privately competing healthcare providers. Instead of marginalising medical schemes, government should therefore be promoting their proliferation because regular small fixed payments to privately competing medical schemes or insurance companies to cover catastrophic events would make intuitive sense, as opposed to the rare but devastating high out-of-pocket payments required when illness strikes.

The proposed NHI is a classic example of putting politics ahead of economic realities. Solutions that bring about sustainable increased economic growth are needed to counter our country’s stark reality of millions of poor individuals. The surest way to increase wealth in a country and therefore that of all its inhabitants is to embark on trade and economic reforms that result in higher levels of economic freedom of which the foundations are personal choice, voluntary exchange, freedom to compete and security of privately owned property. Without voluntary exchange and entrepreneurial activity co-ordinated through markets, modern living standards are impossible. With the right reforms, South Africa will join the ranks of those economically free countries where it is all too evident that people, compared to those living in countries with draconian legislation, enjoy lives that are wealthier and, therefore, a lot healthier.

AUTHOR  Jasson Urbach is a director of the Health Policy Unit (a division of the Free Market Foundation). This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.

HPU Feature Article / 06 January 2012 

Note: See the Health Policy Unit submission to the Department of Health on the NHI, which can be down-loaded at http://www.freemarketfoundation.com/DynamicData/Event_51.pdf