Universal Health Coverage Day calls on us to reflect on the progress that we have achieved in providing healthcare for all. As the health and pharmaceutical industries, it is time to question if our strides in achieving healthcare for all are successful and identify areas for improvement. The theme “A Time for Action”, speaks to the urgency of healthcare access regardless of socioeconomic status, age, race or demographic. It is not an ambitious dream and can be attained in our lifetime, writes Bada Pharasi, CEO of the Innovative Pharmaceutical Association of South Africa (IPASA).
Universal Health Coverage (UHC) means access to primary healthcare for everyone. In South Africa, this is referred to as National Health Insurance (NHI). Regardless of its name, the objective remains the same – to ensure that all citizens, regardless of where they live or their socioeconomic status, have access to healthcare.
A 2021 report released at the Africa Health Agenda International Conference (AHAIC) revealed that 615 million, or 52%, of the people in Africa, did not have access to the healthcare that they needed¹. It was also estimated that 97 million Africans face catastrophic healthcare costs, which push 15 million people into poverty every year¹.
The effective implementation of UHC would mean that no person would have to go without appropriate healthcare. It would also mean that no person would have to undergo financial strain to receive treatment for ill health.
UHC covers a spectrum of health needs from health promotion to prevention, treatment, rehabilitation, and palliative care across the life course². In 2015, 193 United Nations (UN) member states agreed on the 2030 Sustainable Development Goals (SDG). These goals are aimed at seeing an end to poverty and a sustainable future by 2030², and ensuring health coverage for all is an integral part of reaching these goals.
The World Health Organization (WHO) believes that UHC can be achieved by using the primary healthcare approach as it remains the most accessible, inclusive and cost-effective method to reach the majority of the population².
Globally, as many as 72 countries have included UHC in their national healthcare systems. The countries where UHC has been the most successful include Canada, Australia, and several European countries, such as Switzerland and Sweden. It is from these countries that we can glean valuable lessons on the importance of strong healthcare systems, well-trained healthcare professionals and a cohesive relationship between governments and the private sector³.
Ensuring a healthier nation may seem like an exorbitant mission. However, when we consider that a healthier population will be beneficial to the economy, it makes for a worthwhile investment. The World Bank adds that UHC allows countries to make the most of their strongest asset: human capital. A nation in good health is one where children can go to school and adults can go to work⁴.
There is a common perspective that for a country’s overall health to improve, its economy must improve first. This idea fuels the understanding of why low- to middle-income countries have such poor healthcare infrastructure. The World Bank offers an alternative perspective, suggesting that when a country’s overall health improves, so will its economy. This as more citizens will be able to contribute to its economic growth and the workplace⁵.
Some of the reasons why the adoption of UHC in African countries has seemed to stall include inadequate financial and technology support, limited pharma manufacturing companies, and unclear policies and regulatory frameworks⁶.
In South Africa, the greatest hindrance to people receiving the healthcare they require boils down to numbers. With a population of more than 60 million people, there is a greater need for healthcare than there is capacity to meet the demand⁷.
At IPASA, we believe that healthcare is a basic right and that citizens in any given country should be given the necessary access to healthcare. We understand that working with key stakeholders, such as the government, is critical to the success of universal healthcare. Our ongoing work with patient advocacy groups ensures we understand what patients need from a treatment perspective.
We recently attended the Access Dialogue conference with patient advocacy groups including Rare Diseases South Africa and Campaigning for Cancer to gain an understanding of some of the concerns faced by patients and share insights on the proposed NHI Bill.
IPASA believes that an adequate supply of medicines is a critical pillar of any healthcare scheme, and the NHI is no different. For the NHI to succeed, it must be backed by a sustainable healthcare sector to ensure the security of healthcare provision and medicine supply.
To this end, the NHI must allow for a flexible, responsive pricing model that includes alternative/innovative reimbursement models to cover the cost of medicines and health products. This allows responsiveness to the needs of geographical areas, quality and levels of care, and negotiations directly with healthcare providers.
Healthcare for all can only be achieved by the joint commitment of the health and pharmaceutical industries, government stakeholders and patient advocacy groups for the benefit of patients. No person should be faced with the obstacle of finance at a time when they need healthcare: providing healthcare for all results in a healthier society and healthier world for us all.
The National Health Insurance (NHI) Bill was approved by the National Council of Provinces today and is due to be signed into law by the president shortly after. The Board of Healthcare Funders (BHF) is deeply disappointed. We are not happy with the various sections of the Bill. Despite submissions to government in this regard, the recommendations of the BHF and other stakeholders have largely been ignored and the bill is being passed virtually unchanged from its originally drafted form.
While the BHF fully supports the concept of universal health coverage (UHC) as defined by the World Health Organization (WHO) and believes that it must be a strategic imperative for all those directly or indirectly involved in healthcare, it does not support the NHI Bill in its current form. The bill restricts medical schemes to the provision of complementary cover potentially rendering them unsustainable, further to which the enormous economic value that medical schemes currently add to the health sector would be lost to South Africa if the bill goes ahead unchanged, BHF strongly believes this section should be removed as well as all references to complementary cover contained in the bill.
Additionally, a number of the Bill’s provisions are unconstitutional. These were detailed in the BHF’s submission to government. South Africa needs a strong, vibrant private health sector because government resources will never be unlimited. . The incredibly wide powers it bestows on the Minister of Health grossly undermine the board of the NHI fund and its accountability. The power of the Benefit Advisory Committee to determine health benefits under NHI similarly undermines this accountability. In addition, the BHF is perturbed by the demonstrated inability of the state to adequately operate national public entities and state-owned enterprises, as well as the endless levels of relentless corruption in the public sector.
Other concerns
The Bill allows the Minister of Health and the NHI fund to issue directives that override all other legislation, except the PFMA and the Constitution, including legislation specifically mandated by the Constitution.
There are proposed amendments to the Medical Schemes Act that unfairly discriminate against pregnant women.
In many instances, the language of the bill creates significant legal uncertainty, which is itself unconstitutional due to the principle of the rule of law upheld by the Constitution. The BHF provided specific examples of this in the body of its submission.
The NHI Bill allows the national sphere of government to encroach on the geographical, functional and institutional integrity of provincial governments. This is not permitted by Section 41 of the Constitution.
The bill tries to dictate to the President in Cabinet (the National Executive) what new legislation must be made or how to amend existing legislation. This is also unconstitutional, as the Constitution itself grants the National Executive its powers. Nothing can change this except an amendment to the Constitution.
The registration system proposed by the bill creates unconstitutional barriers to access to health care that do not currently exist. The certification, accreditation and contracting system proposed by the bill is unwieldy, and it too will create unconstitutional barriers to access to health care that currently do not exist. Both these points are explained further in the body of the BHF’s submission.
Dr Katlego Mothudi, BHF CEO, underscores these serious implications of the bill’s being passed unchanged. “We have consistently given input into this proposed law and are disappointed that our concerns and those of other stakeholders appear not to have been considered or even tested. The bill in its current form will have a negative impact on healthcare access for everyone. There are many areas of uncertainty that have not been clarified, not least with regard to funding and affordability. We are also concerned specifically that the bill may prejudice the rights of women,” he says. “The proposed amendments to the Medical Schemes Act exclude access to pregnancy-related healthcare services for women who are medical scheme members. This means that these women would have to access reproductive health care from the public sector at their own cost, which is in conflict with the provisions of the National Health Act.
“The bill also has the potential for a wider negative economic impact. There is still uncertainty around how the NHI will be funded, but it will very likely be through additional taxation, something that will unavoidably have a detrimental effect on the economy at large – companies, individual employees and the general public – in the form of job losses. This phenomenon has already been discussed in various papers, including one published by the World Bank in 2001. It cited Colombia’s experience in this regard. A 10% increase in payroll taxes resulted in a 4.9% reduction in employment. Those who remained employed experienced a reduction in their disposable income, while the decrease in the overall number of employees saw a reduction in revenue from personal tax. Should the bill pass in its current form, South Africa will almost certainly experience something very similar.
“More specifically, this phenomenon will also impact the health sector. With medical schemes reduced to providing only complementary cover, not only will the schemes industry itself shrink, but all the other private entities it does business with, including hospitals, pharmaceutical companies and health practitioners,” he concludes.
A coherent, achievable path to universal health coverage now imperative
Glaring voids highlighted in submissions on the National Health Insurance (NHI) Bill threaten South Africa’s path to equitable healthcare access for all, cautions the Health Funders Association (HFA). The organisation has voiced its profound concern, emphasising the disconcerting sway of politics over the bedrock mission of prioritising the well-being of our nation within this critical healthcare deliberation.
“The practical barriers to successfully executing NHI as it is laid out in the Bill are hard to ignore, and yet the numerous concerns and suggestions raised in the consultation process have not been considered or implemented,” says Craig Comrie, chairperson of the National Health Funders Association (HFA).
“The clear shortcomings of the NHI Bill in terms of practical funding mechanisms and lack of collaboration with experienced health funders, among other aspects, have been overlooked for the most part, with only the Western Cape so far rejecting the Bill in its current form.”
The National Council of Provinces (NCOP) Committee on Health’s approval of the NHI Bill with insignificant edits does not address the numerous concerns raised in submissions made by the public and informed stakeholders, including the HFA, on behalf of its members.
The HFA is a professional body representing medical schemes and half of South Africa’s medical aid membership.
“There are constructive solutions to address the problems identified in the NHI Bill effectively, and it is not too late to fix the legislation. While the Bill is rushing towards the President’s pen to be enacted, the HFA respectfully appeals to the President to reconsider the wisdom of signing into law a Bill that has no workable funding mechanism while disregarding solutions proposed by private health funders, leading organisations, businesses and other key constituents,” Comrie says.
“We anticipate considerable resistance to the NHI Bill on Constitutional grounds, and as the HFA, we will continue to advocate for a more achievable approach to fulfilling universal health coverage aims.
“The timing of the recent flurry of activity in moving the Bill through the necessary hoops ahead of next year’s election invites the notion of a blunt instrument, an unrealistic election promise rather than a pragmatic solution for the highly complex health challenges South Africa faces,” he says.
Health Funders Association members, including leading lights in the industry such as Bankmed, CAMAF Medical Scheme, Discovery Health Medical Scheme, Fedhealth, Glencore Medical Scheme, Momentum Medical Scheme, Profmed and PPS Healthcare Administrators, to mention but a few, are ready to work with government to develop evidence-based solutions that will help secure access to quality healthcare for all South Africans.
“There is so much opportunity to make the NHI work. Private public partnerships and collaboration have achieved so much good for the benefit of South Africans in other sectors, and there is much our industry can contribute to help make quality healthcare more accessible and sustainable for all,” Comrie concludes.
Photo by Sora Shimazaki: https://www.pexels.com/photo/diverse-anonymous-colleagues-shaking-hands-at-table-with-coffee-and-folders-5673475/
As various players in South Africa’s health arena give input into the National Health Insurance, and the form it should take, they are agreed on one thing: its goal to achieve quality universal healthcare for all South Africans.
The recent COVID-19 vaccine rollout is a good foretaste of what is possible for South Africa’s healthcare system through the power of cross-sectoral collaboration – and a great case study for health systems strengthening in other countries too.
The rollout saw the public and private sectors, trade unions and community organisations pooling their resources and expertise to get the vaccines to South Africans as fast as possible, and the campaign showed that the country has the resources and expertise to provide a better, more equitable healthcare service.
The question is how we take these lessons and embed them in a healthcare system that serves all of a country’s citizens, and does so in a sustainable way, while adhering to best practice standards.
The clear answer is through the power of partnership – which has been demonstrated to work both here and in the rest of the developing world. Promoting public-private partnerships (PPPs), can accelerate access and distribution of innovative medications. By working together, government, originator companies, and funders can ensure that patients benefit from the latest advancements in healthcare.
Rwanda, for instance, has made significant progress in managing non-communicable diseases (NCDs) through community-based health insurance schemes. Brazil has successfully implemented a comprehensive primary healthcare approach. These countries have prioritised prevention, early detection, and treatment of NCDs, which can be adapted to the South African context.
Locally implemented initiatives under the global Making More Health (MMH) programme include training community health workers to provide primary care services, supporting local entrepreneurs in developing innovative healthcare solutions, and partnering with NGOs to improve access to healthcare in rural areas. These initiatives have helped address complex healthcare issues by empowering local communities and leveraging local resources.
MMH is a social initiative from Boehringer Ingelheim in collaboration with Ashoka, which combines business and social values to unleash innovation and achieve economic and social progress in healthcare. The objective of this long-term initiative is to source social innovation around the world, to explore unconventional partnerships and business models, and to encourage Boehringer Ingelheim employees.
We must also turn our attention to NCDs, which are a major health threat. The WHO estimates that globally, they are responsible for 74% of all deaths. Research into South Africa’s NCD states can play a crucial role in health systems strengthening by identifying the most prevalent diseases, understanding their risk factors, and informing evidence-based policies and interventions. This would help target resources more effectively and improve health outcomes.
This requires robust health data, hosted on a digital infrastructure, which would promote data-sharing among healthcare providers, and encourage the use of standardised data collection methods. This would help create a more accurate picture of the population’s health needs and enable better decision-making across the entire health ecosystem.
We also need to make sure we retain our world-class doctors, and address our critical nursing shortage – it’s estimated we need about 26 000 additional nurses to fill the gap. Without sufficient personnel to deliver healthcare, all the best intentions in the world will not deliver universal health coverage.
We must invest in improving the working conditions and incentives for healthcare professionals in the public sector, strengthen primary healthcare services, and promote collaboration between public and private providers. This would help to ensure that the expertise and experience of these professionals is effectively employed to benefit the broader population.
Moreover, increased collaboration with innovator companies in the private sector, many of whom are already involved in initiatives to strengthen the health system, would ensure patients receive the right treatment while expanding reach across the entire population. This would help tackle inefficiencies, streamline processes, and enable better resource allocation.
The fundamentals of health system strengthening in South Africa include adequate financing, a well-trained and motivated healthcare workforce, efficient supply chain management, and strong governance and leadership. Addressing these gaps – through partnership and collaboration – would help build a more resilient and responsive healthcare system and ensure that South African citizens have access to better healthcare.
As the National Health Insurance (NHI) Bill makes its way through the approval process in the National Council of Provinces (NCOP), many actors in various sectors have called on the South African government to carefully consider the concerns raised regarding the proposed bill.
Stressing this point as one of the panellists in the Kwa-Zulu Natal leg of the Frank Dialogue on NHI hosted by media anchor and Leadership magazine editor, Prof JJ Tabane, and his team, recently in Umhlanga, Dr Katlego Mothudi, Board of Healthcare Funders (BHF) MD, acknowledged that both the public and the private sectors were not perfect, but cited that destroying the private sector was not going to accelerate the attainment of the global agenda of Universal Health Coverage. Strengthening a health system requires reform of six pillars; and the National Health Insurance formed part of the finance pillar only. He further noted that the private sector was a national asset to contribute to the success of health reform.
Other participants in the dialogue were the Minister of Health, Dr Joe Phaahla, Dr Kgosi Letlape (former Health Professions Council of SA and SA Medical Association chair), Zwelinzima Vavi (SA Federation of Trade Unions chair), Dr Nicholas Crisp (Department of Health Deputy-Director: NHI), and Nozibele Tshobeni (Sizwe Hosmed Acting PO).
The primary aim of these events has been to facilitate a constructive and inclusive discourse among various professionals in the sector, with the Minister of Health, regarding the proposed NHI Bill.
Emphasising the importance of overcoming several issues before the Bill could be successfully rolled out, Prof Tabane acknowledged that the health crisis in South Africa was of significant concern, rendering the implementation of universal health coverage (UHC) a necessity.
Asked about the future role of medical schemes under NHI, Crisp reiterated that NHI was not about scrapping medical aids, but about the right of all South Africans to access affordable healthcare: “The bill does not abolish or repeal the National Health Act. It merely goes about a different way of financing – a single fund to care for the majority of the health benefits that we need as a nation to strive.
However, Dr Mothudi disagreed with Crisp and highlighting that a multi-payer system was a better model given the south African context that has load of fraud and corruption. “Why not a multi-payer system, as originally proposed in the first NHI Green Paper?” he asked.
“Between now and that point,” Crisp explained, “we need the medical schemes to continue what they are doing but to do it more effectively than they are doing at present. They criticised us in the Health Market Inquiry, saying we did not provide leadership. Now we are providing leadership – we want to have a multilateral negotiating forum, we want to set prices, want to introduce other related measures:
A moot point made by Sizwe Hosmed’s Ms Tshobeni in her concluding remarks was that while she agreed that NHI was “overall, a good idea”, pushing the Bill through was putting the cart before the horse: “How we are going about it is really the problem.
“We are not that far apart in our discussions on this, but where we are drifting apart can be answered by the question ‘why are we here?’” asked Dr Mothudi.
“Going on blaming apartheid etc is not good. The Medical Schemes Act, for example, was promulgated in 1998 – post-apartheid. So, we must take responsibility for these challenges. Secondly, Government must provide stewardship, being responsible for the lives and healthcare of every citizen. Right now, we only have one Department of Health, not one for the public and one for the private sector.”
Also noted was that the private sector “does not run itself”. The National Health Act is there to guide practitioners and establishments how they should behave, while the Medical Schemes Act is enforced by the Council for Medical Schemes under stewardship of Department of Health.
While many views were expressed about the pros and cons of NHI, among the most common once again were, as already mentioned, the wisdom of a single payer system. Contributing his views on this, the BHF’s Dr Mothudi revived the originally drafted concept of a multipayer system for the fund: “A multipayer system was proposed in the first NHI Green Paper but was thrown out! A multipayer system would work in the same way as it did during the COVID vaccination campaign. When standing in the vaccination queue you wouldn’t know who was paying for the service for the person in front of you – employer, medical aid, or government?
“The pricing and service for the vaccine and procedure,” he said, “was set the same for all and for everyone.”
The National Health Insurance (NHI) will further widen the inequality gap, put even more pressure on the already overburdened taxpayer and lead to an outflow of medical expertise should it be implemented. AfriForum has detailed these and other consequences of the NHI in a new research report.
In its report, the organisation details, among other things, the ideological basis of the NHI, the place it occupies in the ANC’s National Democratic Revolution (NDR), the economic consequences of the centralisation of health financing and the vagueness in the bill itself. Furthermore, the report provides an overview of centralised health systems in a number of other countries and how they compare or contrast with the economic and policy environment in South Africa.
One of the biggest issues with the NHI Bill is its funding. According to the report, four possible sources of income are currently being investigated that will have a negative impact on taxpayers – including payroll tax. This option entails that the government will require employers to recover a portion of their employees’ salaries which will then be remitted to the government – this on top of the deductions that are already recovered from employees’ salaries. South Africa’s marginal income tax is already higher than that of most other countries such as Canada, the USA and Namibia. Although this is the same as Australia, Switzerland and South Korea’s marginal income tax, South Africa has little in terms of service delivery to show for it.
The research finds in almost all the areas of investigation that NHI will be harmful to the economy and negative for the well-being of most South Africans and concludes that the bill should be rejected by parliament and opposed by the health sector.
According to Louis Boshoff, Campaign Officer at AfriForum, this report appears at a critical time where the parliamentary battle over the NHI Bill rages on and many misconceptions about it are circulating. “NHI is easily summarized incorrectly with slogans such as ‘free health care for all’, but the report takes a step back to obtain a more sober and objective picture, namely that the policy is expensive, unmotivated and unworkable,” says Boshoff.
The full report is available at www.jougesondheid.co.za, where the latest information on NHI is posted.
It is often enlightening for us at Spotlight to ask how and why certain services differ in the ways they do between the private and public healthcare sectors.
Take something as simple as needing medical help when you have a flu that just won’t go away. As a private sector patient, I’d call my GP’s office and make an appointment. Providing I get there on time, chances are I would at most be asked to wait for 10 or 20 minutes in a comfortable waiting room. By contrast, at many public healthcare facilities, you are not able to make an appointment, and often have to wait for long hours in a poorly ventilated and overcrowded waiting area and will likely end up seeing a nurse rather than a GP.
Some aspects of such differences are understandable, albeit deeply problematic. The shortage of doctors is much more acute in the public sector than in the private sector. There is a moral imperative to address this imbalance, but as previously argued, the current NHI plans are just one way to address it.
Why some public healthcare facilities still do not use appointment systems is harder to explain. Even if some users prefer to queue rather than to have appointments, it is odd that all facilities do not at least have hybrid systems with some appointments and some queueing. Having appointment systems is not rocket science and doesn’t have to cost millions.
There are, of course, other examples. As a private healthcare user, it is relatively trivial for me to get a six-month chronic medication script from my GP and to arrange for the medicines to be delivered to my home. Though there has been significant progress in this direction in the public sector, many people still find it hard to get scripts and collect their medicines.
Of course, differences in available resources are a large part of what is going on here, but it is not the whole story. As a private healthcare user, my needs, my preferences, and my time are generally respected in a way that seems rare in the public sector. To be clear, there are many committed healthcare workers in the public sector who show exemplary respect for their patients, but at a systemic level, as in the decision not to have appointment systems or not to allow for extended medicine refills, people’s time and needs are being disregarded.
Apart from the risk of corruption and mismanagement, much of the middle-class resistance to NHI may well have to do with the fear that people who can now access private healthcare services will become subject to precisely this kind of systemic indifference to their needs. And indeed, while the rhetoric around NHI has often been about ideals like the need for greater social solidarity, we haven’t really seen a vision presented of NHI as offering better, more respectful, and more personalised healthcare.
But, with a bit of flexibility, this could change.
Consider annual checkups. Rather than asking public sector patients to go to overcrowded clinics with long queues for tests, why not give public sector users the option of getting their basic screening tests for HIV, TB, hypertension, and diabetes done at private sector pharmacies along the lines of Discovery Health’s Annual Health Checkup. Of course, data systems will have to be developed to support this and it will have to be budgeted for, but the extra convenience will no doubt make a big difference for many and could help with early detection of these diseases. (We previously wrote about the idea of such an expanded annual checkup programme here.)
Getting the state to pay for such checkups at private sector pharmacies is not exactly NHI as set out in the bill, but the idea certainly shares some DNA.
To be fair, there are at least some exceptions that show such innovation is possible. Maybe most notably, these days many public sector patients can collect their chronic medicines at private pharmacies or other pickup points. Though still a work in progress, the evolution of the public sector medicines distribution system shows that we need not wait for the NHI Bill before taking steps to make things easier and more convenient for users.
In addition, with the NHI pilot projects we have seen at least some awareness that there is a need to try new things and learn from them. Unfortunately, on the whole the NHI pilot projects didn’t meaningfully pilot the key aspects of NHI, and where they did, as with GP contracting, it didn’t go well. And here one gets to the rub. From the outside one gets the impression that those who wanted to run pilots we could actually learn from lost out to those who consider the pilots just another step toward building political support for NHI.
As for the NHI Bill itself, the fact that the ANC and much of the portfolio committee on health, has been intent on reducing almost all discussion on the Bill to a simple for or against shows a clear disdain for meaningful engagement. Indeed, whatever its merits, the ANC’s version of NHI has become fundamentally associated with an overdose of ideology and an absence of curiosity and critical thinking.
But we don’t have to buy into the ANC’s sclerotic thinking.
There are many possible ways to reform and improve our healthcare system. Some will be affordable, some won’t. Either way, it would be foolish to simply turn our backs and pretend they are not there.
For National Health Insurance to succeed in South Africa, a meaningful collaboration needs to take place between private and public health care so as to speed up the implementation of the initiative and overcome major obstacles.
This was the opinion of the five panellists who on the first day of the Hospital Association of South Africa conference in Cape Town spoke of how best the NHI could be rolled out by calling on private health care for assistance.
“’It’s fundamental to the economic growth that we so desperately need in South Africa, and a productive nation needs access to health care. So we do need to address the inequalities, we need to address the gap and do not need to preserve the status quo,” said Professor Roseanne Harris, of Discovery Health.
But a concern she raised is the risk of the introduction of a single funding model reliant on taxes, and the introduction of a monopoly market.
“And one of the implications of the bill is centralisation (of health care). There is a need for planning to ensure that it won’t have an unintended consequence of impacting service delivery and impacting on the rights of the healthcare personnel,” she added.
Harris said that both the private sector and public sector needed to go through a consultative process and that sustainable critical milestones needed to be put in place to hold the process to account.
Another panellist at the event Dr Simon Strachan of the South African Private Practitioners Forum (SAPPF), pointed out that the COVID pandemic showed how public and private health care could collaborate successfully. Here service agreements between the two entities were met and were focused solely on fighting the pandemic.
“So to create the way forward, what we need to be able to do is to have a very clear understanding of what it is we’re trying to achieve, that there is robust trust, and that there is a groundwork for sustainable collaboration,” he explained.
An urgent need for this collaboration he said was the recent introduction of Section 33 of the NHI bill, which in its present form would have health care professionals working for the state at a fee the state sets, with benefits not included.
A second issue he said was the need for a successful funding model that will be acceptable to all South Africans.
Economist Nicola Theron of FTI consulting told the audience that structures already in place and used in the private sector could make for a smoother transition for the NHI. In particular when it comes to issues like the pricing of medicines.
“We are now at a point with the current NHI that there are talks about the lowest possible price at a reasonable return for healthcare providers. There is no indication of what return means,” she said.
“But what we have is an existing system of pricing which has been developed over time, and which should form the basis of pricing going forward,” said Theron.
By not getting the pricing right could lead to investment leaving South Africa, she warned. She suggested in turn that it would be a better model to have multiple buyers that will stimulate competition.
Dr Ali Hamdulay, CEO, Metropolitan Health, said that a way forward would be to implement the suggestions that came out of the Health Marketing Inquiry that took a hard look at both the public and private health care systems, outlining the problems with both.
“So effectively by addressing the recommendations of the Health Market Inquiry you’re actually foster an environment of culture and direction to work towards universal health care,” said Hamdulay.
Barry Childs, of Insight Actuaries, said that while fundraising mechanisms in the public sector needed to be improved, the introduction of the NHI offers a great opportunity to reform the healthcare system.
“As much as we talk about the need for reform of the private sector side, there’s been no meaningful reform of the public sector for many decades. And the NHI is a wonderful opportunity for them to introduce some better, more responsive financing mechanisms.” he said.
But for NHI to ultimately provide the services it promises, Childs said South Africa’s economy needed to improve, and more jobs to be created.
The NHI Bill does not contain any clarity on how South Africa’s large and complex medical schemes and insurance industry will be affected.
Photo by Bill Oxford on Unsplash
By Lenee Green, Partner, Mateen Memon, Associate & Mariam Ismail, Trainee Attorney at Webber Wentzel
On 12 June 2023, the National Health Insurance Bill (the Bill) was passed by the National Assembly and is currently with the National Council of Provinces for consideration. Its laudable aim is to make primary healthcare widely accessible.
The Bill has been closely scrutinised by various stakeholders in the healthcare sector. Concerns have been raised by medical schemes and insurers about the effect the Bill will have on their current businesses.
The Bill, among other things, covers:
who will be able to access health care services;
how these services will be funded;
the establishment of a board and advisory committees to achieve the objectives of the Bill;
general provisions applicable to how the fund will operate;
complaints about and appeals of decisions made by the fund; and
the source of income of the Fund and transitional arrangements.
Clause 33 of the Bill states that once the National Health Insurance (NHI) is fully implemented, medical schemes can only offer complementary coverage for services not reimbursed by the NHI. Clause 6(o) of the Bill allows individuals to purchase services not covered by the NHI through voluntary medical insurance schemes. This means medical schemes cannot cover services already covered by the NHI, potentially jeopardising their existence. This approach may face constitutional challenges related to the right to access healthcare, property rights of medical schemes, and freedom of trade and profession.
It is contemplated that the Minister of Health will introduce regulations limiting benefits to services not reimbursable by the Fund. We have not yet seen any indication when these regulations will be published.
Current regime
Broadly, four main categories of business will be impacted by the Bill:
business of a medical scheme as defined in the Medical Schemes Act 131 of 1998 (MSA);
insurers licensed to conduct insurance business pursuant to the Insurance Act 18 of 2017 (the Insurance Act);
insurers who offer products pursuant to section 8(h) of the MSA (the Exemption Framework); and
insurers who offer products pursuant to the regulations published under each of the Long-Term Insurance Act 52 of 1998 and the Short-Term Insurance Act 53 of 1998 (the Demarcation Regulations).
Medical schemes
Presently, only medical schemes may carry on the “business of a medical scheme” as defined in the MSA. The “business of a medical scheme” involves undertaking liability for the provision of obtaining “relevant health services”, defraying expenditure for “relevant health services” or rendering health services by the medical scheme itself or by any supplier of a “relevant health service” in return for a premium or contribution.
A “relevant health service” under the MSA is very wide. It includes “any health care treatment of any person by any person registered in terms of any law, which treatment has as its object…” The objects include a broad range of medical services, including the physical or mental examination of a person, the diagnosis, treatment or prevention of any physical or mental defect, illness, or deficiency, ambulance services and hospital or similar accommodation.
Insurers
Medical schemes must be distinguished from medical insurance provided by insurers. Insurers may provide medical insurance under, among other dispensations, the Insurance Act. Schedule 2 to the Insurance Act provides for various classes and sub-classes of insurance business for which life insurance companies and non-life insurance companies may be licensed. Schedule 2 allows insurers to provide health and disability benefits under the risk class of business for life insurance and accident and health and travel insurance under the classes for non-life insurance.
Health insurance is provided upon the happening of a health event. A health event is defined in the Insurance Act as one that relates to the health, mind or body of a person or an unborn, other than a disability event. The disability event is defined and includes circumstances where a person loses a limb or becomes physically or mentally impaired. It is apparent that there is an overlap of products provided for in the Insurance Act and offered under the MSA.
The Demarcation Regulations provide for the demarcation between insurance business and medical schemes business. The regulations provide that a benefit that would otherwise have been a medical scheme benefit, but meets the exact requirements (definitions) set out in the tables in the Demarcation Regulations, is classified as an insurance product.
In March 2017, the Counsel for Medical Schemes (CMS) issued an exemption framework for insurers as a transitional arrangement while the development of a low-cost benefit option (LCBO) for medical schemes was developed (Exemption Framework). To the extent that an exemption was granted to an insurer in terms of section 8(h) of the MSA, and subject to the conditions of the exemption, the insurer was permitted to continue to underwrite those products until the expiry of the exemption. On 25 January 2022, the CMS granted insurers that had previously been granted an exemption in terms of the Exemption Framework an extension of a further two years.
The background to the LCBO is that a ministerial task team on social health insurance launched the low-income medical scheme consultative process in 2005. In 2015, the CMS issued a circular that considered introducing a guideline to allow medical schemes to introduce LCBOs in response to the growing number of working South Africans who did not have medical scheme coverage because they could not afford it. Following various engagement processes, the LCBO Framework Advisory Committee issued a Report in May 2022 (the Report). The Report states that LCBOs still have the potential to “alleviate pressure in the public healthcare system and allow resources to be redirected to the poor”. This process has progressed quite slowly, and it remains to be seen what comes of it if anything.
While the Bill is a piece of framework legislation, it does not provide clarity on what will become of insurance under the current regime. The fate of medical schemes is dealt with in a very cursory manner, without considering the nuances of the current regime.
The LCBO could have been a path to make healthcare more accessible, but the process has become stifled, and it may never come to fruition. What is left in the wake of the Bill is a great deal of uncertainty. Industry participants and stakeholders will have to keep abreast of the process and ensure that their comments are taken into account as the system evolves.
Recently, in a major feat for transparency and accountability, the North Gauteng High Court ordered that the public must have access to COVID-19 procurement contracts – details of which, until now, have been kept away from the public eye as the government cited confidentiality clauses.
The Health Justice Initiative’s – who brought the court application – victory is a crucial one given the staggering size of public procurement contracts in the health sector.
According to Zukiswa Kota, South African Programme Head at the Public Service Accountability Monitor (PSAM), this judgement deserves celebrating “as it deepens the case for transparency in public procurement and effectively challenges the many reasons often used to evade publication”. “Ultimately, what we need is proactive disclosure that is built into procurement legislation and – more importantly – is adhered to by government,” said Kota.
“It is inconceivable,” she said, “that in 2023 there continues to be limited transparency around fairly basic info – in this case COVID-19 vaccines. “The fact that there is no explicit transparency is an indictment and something we need to reflect on.”
The need for transparency has also been affirmed in the HJI judgement. “Non-disclosure of any of the records sought means that a shroud of secrecy is placed over the entire negotiation, procurement, and payment process – the very mischief our Constitution and legislation such as Paia seeks to address,” the judgement states. S217 of the Constitution states that public procurement by any state organ must be “in accordance with a system which is fair, equitable, transparent, competitive and cost-effective”.
The case for transparency
The call for open contracting and to strengthen public procurement legislation is not a new one. It is also not confined to COVID-19 vaccines, but all public procurement, also in the health sector.
Dominic Brown, director at the Alternative Information & Development Centre (AIDC), also recently during a webinar on the launch of a report on pending legislative and regulatory changes in the healthcare sector made the case for transparent procurement. The Rural Health Advocacy Project compiled the report that also provides several recommendations for procurement reforms.
“The level of public procurement in the country is approximately 25% of GDP and the majority of government’s involvement in the economy is through this procurement, so it’s no small issue. It’s of extreme significance,” said Brown.
He said that in 2016, the former chief procurement officer in National Treasury estimated that between 30 to 40% of the country’s procurement budget is lost to inflated prices and fraud by the private sector. At the time, this amounted to R230 billion.
“At the moment, our procurement budget is about R1 trillion, which means that we are losing between R300 and R400 billion each year as a result of corruption linked to public procurement and this has major detrimental impacts on service delivery.”
Putting this impact into perspective, especially as it pertains to the health sector, RHAP’s director, Russel Rensburg during the same webinar said that provinces can spend up to 30% of their health budgets on the procurement of goods and services, which can run into billions. “Contrast this with the huge chunk spent on employee costs (often between 60 and 65% of health budgets), and growing inefficiencies and waste due to non-compliance to legislative prescripts – the pool of money remaining for health services is limited,” he said.
“Lack of compliance with financial management policies, particularly around supply chain monitoring policies, has resulted in the deterioration of several financial management indicators. We’ve seen an increase in qualified audit opinions of health departments and an increase in irregular and wasteful expenditure – amounting to R6 billion in the last financial year,” said Rensburg. “Competent financial management is essential to ensuring that maximum value is achieved from the resources deployed.”
The need for this “competent financial management” in the public sector was highlighted again last week when the Gauteng Department of Health’s Annual Report for 2022/23 was tabled in the provincial legislature. The report showed irregular expenditure to the value of over R2 billion, which means legislative prescripts were not followed in the procurement of goods and services, among others. In the Auditor-General’s (AG) report, she flagged the irregular expenditure stating that there were no effective and appropriate steps taken to prevent it. “The majority of this irregular expenditure,” the AG stated, “was caused by the department’s failure to invite competitive bids” when procuring goods and services.
Legislative reforms and procurement
Currently, in Parliament’s National Assembly, MPs are set to deliberate on the Public Procurement Bill. The bill provides for far-reaching reforms in public procurement. In Parliament’s National Council of Provinces, deliberations on the National Health Insurance Bill are underway. This bill also provides for far-reaching reforms to how health services will be structured and funded.
Both pieces of legislation have major implications for procurement in the health sector.
Yet, with these legislative reforms underway in Parliament, some stakeholders say that neither bill in its current form, will be a silver bullet to address all shortcomings in public procurement in the health sector. Questions also remain if these bills will ultimately result in real consequences for errant public officials in supply chain management or overreaching political office bearers.
Added to this is the overlap between provisions in the two bills, several provisions that lack clarity, and some areas of conflict between the bills that may lead to confusion down the line.
The case for alignment between the bills
The Public Procurement Bill aims to standardise and create a uniform regulatory framework for all procurement by government departments and entities. The NHI Bill, in turn, if passed will transform how publicly-funded health services are organised and delivered. The bill provides for a NHI Fund that will “strategically purchase healthcare services on behalf of users”.
Rensburg explains this fund must transfer funds directly to accredited and contracted central, provincial, regional, specialised and district hospitals based on a global budget or Diagnosis-related Groups. The bill also provides for an Office of Health Products Procurement (OHPP), he said, but the exact scope of this office’s mandate is not yet clear.
According to the bill, this office (OHPP) will be responsible for “the centralised facilitation and coordination of functions related to the public procurement of health-related products”.
According to Yana van Leeve, from the law firm ENSafrica, the NHI fund will be a S3A public entity so the procurement bill will apply to that entity. S3A public entities under the Public Finance Management Act can be defined as a public entity with the mandate to fulfil a specific economic or social responsibility of government and they depend on government funding and public money.
Van Leeve was also a panellist during the RHAP webinar.
She explained that section 217 of the Constitution will also apply to this process of acquiring services because the NHI Fund will be engaging in public procurement when it engages healthcare service providers and health establishments in both the public and private sectors. Van Leeve said that it is not clear in the NHI Bill, however, that “there is an appreciation that this dimension of the scheme will amount to formal procurement and will thus be subject to normal procurement law”. “The implication would then be that one of the prescribed forms of procurement, for example, quotations or open bidding must be used to secure the services of these health service providers.” According to her, the NHI Bill, however, creates the impression that there is a different type of arrangement to be considered for the acquiring of such services. In section 39 of the NHI Bill, for example, accreditation of health service providers is required.
The procurement bill, in turn, provides for a Public Procurement Office that must create and maintain a database of prospective suppliers. Departments or other public entities may only procure from suppliers listed in this database. This may result in some practical problems as the requirements to be added to the existing central supplier database of National Treasury may differ from what the NHI Bill requires from suppliers. For example, to get on the database, National Treasury may consider a legitimate entity as one with a valid tax certificate, but, said van Leeve, “If you are procuring health products, for example, you may need other things to accredit a potential supplier, which treasury does not necessarily look at when it builds its database”.
“So, immediately you can see there will be tension between what the NHI envisage for creating its services and products lists versus what the public procurement office will develop in terms of the national supplier database. So, on the one hand, NHI is creating a special procurement system for health and providing for units and committees that will be responsible for identifying health services and buying health products and it’s not clear how these two pieces of legislation are going to interact.”
Van Leeve did say, however, that it is possible that the Minister of Finance “can differentiate between institutions and categories of procurement, but nothing in the procurement bill currently requires the minister to do so and there is no guidance on the considerations relevant to differentiating between categories of public institutions”.
She said it is possible for the bill to still make clear provision for the minister to make exemptions from the procurement bill. Currently, section 56(b) of the bill, for example, only provides – “the Minister may, with or without conditions, by notice in the Gazette, exempt a procuring institution from any provision of this Act, if— (a) national security could reasonably be expected to be compromised, or (b) the procurement is to be funded partially or in full by donor or grant funding and such exemption will benefit the public in general or a section of the public”.
But van Leeve insists that one way or the other, “It will be important – certainly in the way in which the NHI and procurement bills become operationalised for there to be comity between the bills.”
The RHAP report also recommends that “the relationship between health authorities and the public procurement structures proposed in the draft Public Procurement Bill must be clarified. The Public Procurement Bill makes no specific reference to health procurement as a special type of public procurement. At the same time, the NHI Bill contemplates a very particular regime in respect of health procurement. These two draft Bills will have to be aligned.”
According to the report, “the tension between the decentralised nature of public finance management in South Africa under the PFMA and Municipal Finance Management Act on the one hand and the highly centralised nature of public health services spending under the proposed NHI on the other hand, will have to be addressed”.
The shadow of politics
There are also other considerations besides overlapping provisions in the two bills – the shadow of politics through the blurring of the administrative and political interface often becomes a problem.
Rensburg highlighted, among others, it is still not clear how compliance with procurement policies will be audited and how often, or what the different sanctions will be for those not complying. “We see, especially with emergency procurement, that managing procurement functions is open to a lot of different kinds of pressures, he said. “The procurement bill does create frameworks for public office bearers to not be involved in the procurement process and for subject matter experts to be involved in procurement decisions, but there are a lot of things happening in the shadow that you can’t explicitly link to involvement of political principles in administrative processes,” said Rensburg.
“There is an added complexity,” Brown said, “when you hear, for example, of ANC tender committees, or when there is a tender chairperson who then can determine who gets and doesn’t get various contracts. This is deeply rooted in the state – from local government all the way up to national level, and across state-owned enterprises.”
Case in point, in the public health sector, the Digital Vibes scandal epitomised this “complexity” when then-Minister of Health, Dr Zweli Mkhize was implicated in tender irregularities and subsequently resigned.
Another criticism of the Public Procurement Bill is that it leaves a lot, arguably too much, of the detail of how procurement will actually work up to regulation rather than setting it down in primary legislation. This, suggested Caroline James and Sam Sole in a recent Daily Maverick article, leaves the door open to political interference.
Corruption Watch’s executive director, Karam Singh, during a different webinar in August on the procurement bill by the Special Interest Group on Public Procurement Law, also flagged some gaps in the definitions in the procurement bill, especially around issues like conflicts of interest and politically exposed persons.
In terms of chapter three of the procurement bill that deals with procurement integrity and prohibition of certain practices and debarment, anybody who is involved in the procurement process – that is from the accounting officer, bid committee, or tribunal – must comply with the prescribed code of conduct, failing which will constitute misconduct. According to Singh, however, the bill falls short of stipulating who must issue the code of conduct, how it would be updated, and where it would work, as well as where or when it must be made available. “There is very little detail on how misconduct would be handled,” he said, “and so there is a gap between understanding what this code of conduct would be, how it would come about and if it will be presented for public participation and public comment.” He said it is also unclear what would be the enforcement mechanism which would stand behind the code of conduct to make it effective.
Responding to concerns over tender corruption risks
In June this year, during a briefing by Dr Nicholas Crisp, Deputy Director-General in the National Health Department on the NHI Bill to MPs in the NCOP, concerns were flagged over the risk of tender corruption in the NHI Fund. Later, in August during a briefing to MPLs in the Western Cape provincial legislature, the same concerns were raised.
At every point, Crisp insisted, “The NHI Fund will handle very little by way of tender. The accreditation is not a tender process. It’s voluntary registration by a service provider – public or private – as long as they meet the criteria. The prices will be fixed and the way services are delivered will be fixed when it comes to the procurement.”
According to Crisp, when it comes to the procurement processes for goods, particularly health products, the NHI Fund is only involved in the first stage. “The Fund would not go about the logistics of purchasing anything. The providers needed to purchase once those prices were set. There was far less vulnerability in the Fund than first thought when one looked at the Bill,” he said.
Spotlight followed up with Crisp for further clarification in lieu of the RHAP report and the implications of the procurement bill for the NHI Bill. Crisp said, that according to the NHI Bill, the Fund will determine the Formulary that it will pay for and will establish the prices of the items in the Formulary. “It is the intention that the NHI agency will not buy any ‘health products’ and will not have storerooms and warehouses since the agency (the NHI Fund) is not a provider of services. The providers will buy what they need to deliver the benefits that they are accredited to provide. Accredited providers (public and private) will buy at the approved NHI prices and this is how the health department works now,” he said. “The provincial health departments do the buying and storing, etc.”
He stressed that the Fund will not go on tender for healthcare providers. “The bill in s39 says that providers will be accredited and all accredited providers will be paid for the benefits that they deliver. So, it is intended to not be exclusionary.”
On the implications of the Public Procurement Bill for the NHI Bill, he told Spotlight the department is still studying the procurement bill and these issues (as raised in the RHAP report and through various stakeholders) are being considered. He also noted that according to the NHI Bill, “If any other law, except the Constitution or PFMA, conflicts with the NHI Bill then the NHI bill prevails. But we will want to engage with the intentions, merits, and any potential challenges with Treasury,” he said.
Have your say
Members of the public have until 15 September to make written submissions on the version of the NHI Bill currently before the NCOP. Meanwhile, National Treasury this week briefed MPs in the Standing Committee on Finance on the Public Procurement Bill. The deadline for written submissions is 11 September.
