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Sunday, June 1, 2008
Minister miss

“It is a concern to us that changes to public health policy might be made using statistics that do not reflect the current healthcare spend in South Africa,” says Graham Anderson, Principal Officer of Profmed.

He was reacting to a speech made in parliament by the Minister of Health during March where she said that the per capita expenditure in the private sector was eight times that of the public sector. She said that this level of inequality should not be left unchallenged, that high costs in the private sector were driving people to the public sector.
“She also used the inequity in healthcare spend between the public and private sectors as a starting point in her argument to justify the regulation of the private sector.”
“There are a number of ways to respond to the Minister and the Department of Health,” says Anderson.
“First of all, one could simply argue that our government should spend more on our public sector health. Statistics from the World Health Organisation show that South Africa spends less as a proportion of its GDP on public health than many comparable middle income countries.
“And iIf you compare the proportion contributed by the government to total health expenditure of countries like Chile, Brazil, Mexico and Columbia, you see that other governments contribute a higher portion to health expenditure than our government,” he points out.
“The second problem is that the 1:8 ratio quoted by the Minister is also misleading,” says Anderson.
“‘We would respectfully suggest that it appears as though the Minister has assumed that medical scheme money, (R57.6 billion in 2006) is spent on 7.1 million people, while R62.7 billion (National Treasury Health budget of 2007) is spent on 40 million people. On a per capita basis, this comes close to the 1 to 8 ratio on which the argument is based (R1.56 spent on each of the 40 million and R8.11 spent on the 7.1 million members of medical schemes).
“However these figures ignore the increasing out-of-pocket spend, spent by both members and non-members of medical schemes on healthcare. Recent Reserve Bank figures indicate that total household spend on medical and pharmaceutical goods and medical services at current prices is R96 billion. This means that using 2006 contributions as a guide, South Africans are spending approximately R36 billion over and above medical scheme contributions on healthcare.
“This is over half the total National Treasury Budget of R62.7 billion. Could it be that increasing numbers of South Africans are choosing to spend their savings on their families’ health in the private sector, rather than use the stretched public facilities?
“The minister suggests that high prices in the private sector are forcing more people to use public facilities, but statistics show that even the very poor are opting to spend their money in the private sector due to the poor quality of public health facilities,” he points out.
“These figures should not be ignored by policy makers,” says Anderson. “Growing out-of -pocket spend must indicate a measure of the lack of confidence in the public health services.
“We would suggest that as healthcare spend figures seem to be a key starting point in the thinking behind the proposal for private healthcare regulation, the Department of Health would be negligent if it failed to acknowledge out-of-pocket spend. The total spend on healthcare should be taken into account before important policy decisions are made to regulate providers,” he notes. 

Footnote: Reserve Bank figures have been sourced from the March 2008 edition of the Reserve Bank Quarterly Bulletin. (available on request). Household expenditure, at current prices, on medical and pharmaceutical products is estimated at R15 201 billion and household spend on medical services is estimated at R80 868 billion.
Latest medical scheme contributions figures are available from the 2006/ 7 Council for Medical Schemes Annual Report and are reported at R57.6 billion. For a copy of this report click on the following link: http://www.medicalschemes.com/publications/publications.aspx?catid=7

Copyright © Insurance Times and Investments® Vol:21.5 1st June, 2008
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