Speech for the Deputy Minister of Health, Dr Molefi Sefularo at the Board of Healthcare Funders (BHF) Southern African Annual Conference, Sun City

30 Aug 2009

"Healthcare in South Africa - a new dimension"

Programme Director
Mr Tom Borrill, Chairman of the Board of Healthcare Funders (BHF), Trustee, FedHealth
All the directors on the BHF Board present
Dr Humphrey Zokufa, Managing Director of BHF
MECs of Health present
Dr Andrew Donaldson, Deputy Director-General: National Treasury
Professor Di McIntyre, University of Cape Town
Dr Olive Shisana, CEO Human Sciences Research Council (HRSC)
CEOs of various medical schemes and administrators
Representatives from industry stakeholders
Local, regional and international healthcare executives, policy makers and regulators
Distinguished guests
Ladies and gentlemen

I would also like to acknowledge a contribution to this Conference by Professor Gavin Mooney from University of Sydney to be made via video link. I am both privileged and grateful to give an address to this distinguished gathering of the Board of Healthcare Funders' annual conference.

I would like to congratulate the organisers of the event for having been able to attract, I am told, more than 900 delegates from the healthcare industry, including local, regional and international healthcare experts, policymakers and regulators.

I also commend the BHF's proactive and constructive approach in its engagements with the national Department of Health through creating internal structures that enable it to effectively analyse regulatory interventions and propose position papers on a number of key public policy issues.

In my observation, this has allowed the organisation to influence policy through effective lobbying on health policy issues that affect the funding industry. The BHF has recently come out in full support of the need to create a National Health Insurance (NHI) system that is based on the principle of universal coverage for all South Africans. This is indeed a laudable position that the organisation has adopted.

It is very important for the private sector to embrace the introduction of the National Health Insurance and for all of us to try to find a middle-ground on the NHI debate, because it extends beyond the issues of economics and political ideology.

While knowing that the concept of universal coverage enjoys the support of most people, I am also aware that finding a model which will suit the South African environment will not be any easy task. However, we should not reject the National Health Insurance outright, by listing various reasons why it won't work in South Africa.

This attitude seems to suggest that the present private sector health system is good, acceptable, affordable and sustainable. We all do know that this is not true – in fact the current private healthcare system is heading for demise because it is not sustainable.

Recognizing the important role that the private sector has to play not only in the process of public consultation but also in the processes of the National Health Insurance implementation, let us move away from trying to protect the current system.
Let us instead embark on activities that are aimed at improving and changing the current system. The National Health Insurance from government's perspective is one of those interventions. It would therefore be helpful for the private sector to come up with helpful proposals on how to make the National Health Insurance work in South Africa, how we can make it affordable, and how we can preserve what is good in the current system and destroy what is bad.

It is not the first time that a National Health Insurance is advanced for funding healthcare in this country. As you all might know, the National Health Insurance policy was adopted by the African National Congress (ANC) prior to 1994, and is contained in the ANC Health Plan to guide the transformation of the health sector. Medical schemes were re-engineered to support broad health policy objectives that of making private healthcare affordable.

In 2002, a Committee of Inquiry into various aspects of the system of social security in South Africa proposed that the country moved toward a National Health Insurance system over time that integrates the public sector, and medical schemes environment within the context of a universal contributory system.

What caused departure from gradualist approach? The answer will be varied and various. What we do know is that the gradualist approach has led to a situation where healthcare costs continue to increase at a rate that is higher than the Consumer Price Index (CPIX).

The benefits are shrinking and there is no growth in the membership of medical schemes. We are now faced with a situation where the whole private healthcare sector may be unsustainable going forward. The major reason for this is in the healthcare financing model. The National Healthcare Insurance therefore seeks to change this model so that the trend that is there now is abated and arrested.

We all have to understand that it will take time. Experience elsewhere has shown that if implemented carefully, it could safeguard solidarity and universal coverage, as has been the case in many other countries and the National Health Insurance provides benefits for both contributors and non-contributors in a universal system.

We therefore, as government remain committed to a National Health Insurance system as the end goal. How we get there is still a subject for debate a debate that should continue even here at this conference. South Africa is in the second Decade of Freedom from the time when our public health sector faced considerable challenges in relation to healthcare financing and expenditure.

There were large disparities in the allocation of healthcare resources between and within provinces resulting to a major burden of ill-health and premature death from potentially preventable diseases. This democracy comes with the responsibility to continue the acceleration of the programme of action to improve the quality of life of all the people; to persist with this transformation even against the backdrop of the high cost of health provision, hence the National Health Insurance which is also one of the department's 10 priorities.

The Constitution guarantees the right of access to health care through the National Health Act, which is intended amongst other things, to address the inequities of the past in the distribution of health care and to create a patient-centred national health system.

To ensure adequate provision of funding, we are in the process of consulting colleagues in Cabinet and relevant government departments to prepare a submission on the NHI for the approval of the National Cabinet. Once approved, the document will be released for public debates and consultations. Current consensus is that the NHI be implemented in a phased manner to allow for consultation, policy making, and legislation review.

Since the document is not yet on the table for discussion, I would like to draw your attention to the need for the private sector to constructively engage in dialogue and discussion for rational and equitable distribution of health services.

The legacy of inequality both in relation to income distribution and in access to social services is still being felt 15 years later. A range of studies have detailed the major equity challenges facing the public health sector even today.

The total amount of resources available to the South African government has a major impact on health care financing. Although user fees generate some income, the revenue is returned to the provincial treasury and is thus not an adequate source of finance for public health services. The reliance therefore on a single source of finance for the majority of public sector health services constrains the ability of health authorities to restructure health services and respond to the changing and growing needs of the population.

There is no doubt in my mind that there is an urgent need for alternative financing sources if we are to make dramatic and rapid progress towards achieving the goal of universal access to health services. This, we must address as a matter of urgency. It has already been established that it is the financing of health care in South Africa that contributes to the inequity. In the face of the current stagnant medical scheme coverage and a growing population, more people are relying on the public health services for healthcare. The result has been significant pressure on the public health budget.

While allowing the private sector to survive, we also need to protect the interests of the general public and their right to access health care. We need to ensure that these resources benefit the majority of people who require health care so that we get the best value for each rand we put into health. I would like to acknowledge that the South African health system faces the challenge of balancing the need to provide universal access to health care services with ensuring affordability and sustainability of the health financing systems. While the international experience has great value and provides important lessons, ultimately we must find a solution that is appropriate for our South African circumstances, bearing in mind that the limitations we face in this Continent are much more pronounced than those of the developed world.

It is critical that we have a basic package of care that is properly costed to an affordable level to ensure that the majority of South Africans have adequate cover that is affordable. We can reduce inequities in health care financing by improving income and risk-related cross-subsidies, while improving access of lower income groups to quality healthcare. This way, we will be addressing the dual challenges of providing universal access to all, while obtaining payment from all those who have the means to pay, while some proportion continue to use private facilities and thus reduce the burden on public services.

The Department of Health has the responsibility to deliver on its mandate. Plans are afoot to address the challenges of the public sector by looking at parallel and sequential processes both in the public and private sector to improve the country's healthcare system to the benefit of all the people who live in South Africa.

We acknowledge that the medical aid scheme industry has been providing cover for its members, and administering various aspects of what it offers as benefits. This expertise is required in the National Health Insurance environment.
We also do acknowledge that the medical aid scheme industry is aware of the pitfalls, the problematic areas, and challenges that are prevalence in the private healthcare sector. They have developed expertise that is aimed at handling those challenges and pitfalls. This is also required in the National Health Insurance environment.

The experience, the resources, the competence, the expertise that is there in the medical aid scheme industry is required in the National Health Insurance environment. We want you to therefore come up with proposals on how you can make the intellectual, financial and technical resources available so that they serve as a template to take the National Health Insurance forward. Let us know how you see yourselves as part of this process.

It is our hope that through this conference, you will gain a more comprehensive understanding of the proposed changes and will be in a better position to play a meaningful role in the new system.

Together, we can do more!

Issued by: Department of Health
30 August 2009
Source: Department of Health (http://www.doh.gov.za)