No taxpayer-funded (national) health system anywhere in the world has ever succeeded in delivering on its promises.
All of them, including those of wealthy countries such as the United Kingdom and Canada – the NHI role models – battle endlessly with escalating costs. Budget constraints limit the number of procedures undertaken annually, and shortages of doctors and nurses are common. Their outstanding characteristic is having thousands of patients waiting months for routine care and even years for specialised medical treatments.
The purpose of South Africa’s proposed NHI Act is to establish a NHI Fund serving as the single purchaser and single payer of health care services. It promises South Africans “quality health care services free at the point of care from an accredited health care service provider or health establishment.”
Yet the best way to provide goods and services is by the free market. When and wherever a government directs, funds, and plans any sector of the economy, the result is inferior products and services and shortages. Health care is no exception.
The alternative to NHI is to enable the private health sector to provide health care to all, rich and poor. The government (taxpayers) helps the poor by empowering them to buy health care from doctors and health care providers of their choice.
Private health care for all
The vision statement for a health system providing care to all South Africans is: A free market in health care providing private health care to all South Africans at the lowest possible prices, while providing a safety net for the poor.
The fully private health system would have the following characteristics:
- Patients: Patients freely choose their doctors, pharmacists, and other health service providers.
- Providers: The private health sector provides all health care. Doctors, specialists, pharmacists, medical establishments (hospitals), medical schools have unrestricted access to the health care market and are free to provide health services in any location of their choice (subject to compliance with local land use regulations).
- Paying for health care: Patients pay doctors and health services providers directly, through medical aid funds, or health insurance policies.
- Safety net for the poor: The government uses its health care budget to fund the needy via smart cards with which they buy health care services and health insurance from private doctors, hospitals, and pharmacies.
- Funding principle: The government funds patients, not the providers. This will relieve the government from building, maintaining, and staffing hospitals and clinics.
- Health insurance: Medical aid funds and health insurers have unrestricted access to the health insurance market. They are free to offer insurance products that consumers will purchase. The government does not mandate what medicines, procedures, equipment, prostheses, and treatments insurance policies must cover.
- Medical education: Universities, private educational establishments, doctors, specialists, and hospitals provide medical education and training. The government does not restrict the number of doctors, nurses, radiologists, pharmacists, physiotherapists, occupational therapists, and other medical staff that may be trained.
- Medical facilities are in private ownership: All medical facilities and establishments (hospitals, pharmacies, pharmaceutical manufacturing, medical education establishments, and training facilities) are in private ownership.
- No limitations on provision of health services: The government does not limit medical services as it currently does. There are no restrictions on the number of doctors, nurses, medical procedures, hospitals, hospital beds, and medical training facilities. There are no Certificate of Need requirements.
- Medical accreditation: Private agencies provide accreditation. The agencies will over time build public trust. Government licensing provides no guarantee of competence.
- Patient protection: Existing laws against fraud and force and misrepresentation protect patients against unscrupulous and fraudulent health care providers. The “do no harm” principle applies to medical treatments and procedures, pharmaceuticals, and medical devices.
- Charity: Charitable provision and support of health care qualify for tax breaks.
- Tax-free health care: All health care services, medicines and medical equipment are tax deductible and tax exempt, (including from import and customs duties, ad valorem, excise duties, and VAT).
Why private health care?
South Africa’s health care problem is the public health system. It does not provide proper care to the millions of poor and unemployed. Hospitals, clinics, and diagnostic equipment are old. Maintenance of buildings and medical equipment is not being done. There is a shortage of doctors, nurses, and medicines, and staff lack training. Millions of people in rural areas travel miles to see doctors.
South Africa’s private health system, which delivers care equal to the best in the world, offers the path to providing health care for all.
Politicians and policymakers argue that private health care is expensive, and that private health care providers profit from human misfortune. They also believe health care is too important to leave to the private sector, as people’s lives are at stake.
The same arguments apply to food, essential to our survival, yet there are no calls for a national food-insurance system.
South Africans will receive better health care if it organises health care in the same way as all other successful economic activities are organised: leaving it to the private sector.
In a private health care system, doctors and health care companies respond to the health needs of patients by setting up practices and building hospitals in areas where there will be enough patients to enable them to run an economically viable practice, clinic, or hospital.
Budget constraints limit the government’s ability to provide health care. NHI will not change this. Budget constraints do not limit the care offered by private providers. If they offer affordable care, patients will buy care from them, which enables providers to expand health services in line with the demand for their services.
The best way to provide health care to all is to build on that which works: the private health system, and to get rid of what doesn’t work: the public health system.
A health system that provides private health care for everyone, rich and poor, will relieve the government of providing health care, building and maintaining hospitals, and training and paying doctors and nurses. The government can then use its health budget to purchase care for the poor from private providers.
Patients will benefit from a growing private health sector in which the latest medical treatments, services and technologies will become available to everyone.
NHI Fallacies
According to the National Department of Health, South Africa, as a member of the United Nations community, has committed itself to implementing universal health coverage, meaning health care coverage for all citizens.
The Department presents universal health care as something new which South Africa does not have. It does not mention that the combination of private and public health care in South Africa already meets the definition of universal health care.
The problem with South Africa’s universal health care system is this: the public part of the health system fails. Making the government through the NHI Fund the only payer for health care does not guarantee that everyone will get the health care they need. The health bureaucrats and politicians will decide what health care and how much care you may get.
Comprehensive and free health care
NHI promises comprehensive and free health care for everyone. No country on earth has achieved this.
All national health systems, including those of wealthy countries such as the United Kingdom and Canada, battle endlessly with escalating costs: budget constraints limit the number of procedures undertaken annually, and shortages of doctors and nurses are common. Their outstanding characteristic is thousands of patients waiting months for routine care and even years for specialised medical treatments. The information is not secret – it is readily available online.
In Australia, a wealthy country, where about half the population has private health insurance, public system waiting times between seeing a GP and a specialist can be months. Public health system patients wait months, and sometimes more than a year for surgery.
In Europe, the countries with the highest patient satisfaction ratings are those having a range of insurance organisations not linked to health care providers. In these countries, health insurers do not discriminate between health care providers. Patients choose from different insurers and among for-profit, non-profit, and public providers. These include Switzerland, the Netherlands, and Norway.
Single-payer health systems, such as the NHI system proposed for South Africa, have the lowest patient satisfaction ratings. In these, which include the UK, the government funds health care through taxes. Patient satisfaction is the lowest in Poland, Hungary, Romania, Bulgaria, and Albania, which have single-payer systems.
Patient satisfaction is higher in countries with private health insurance and private care.
The cost of health care
The government says it will use the NHI Fund to buy medical services from health care providers in the public and private sectors. It claims this will make health care more affordable by reducing the cost of health care.
The Department, on its website, describes NHI as acting “… like a medical aid for everyone, and all of us will contribute to this fund through taxes and special contributions in line with what we can afford. It will ensure that everyone is entitled to free health care when they need it.” It also says: “There will be no fees charged at the facility because the fund will cover the costs of care.”
These statements do not explain how NHI will lower the cost of health care. Making health care free does not reduce its cost. There is no evidence anywhere that governments can provide goods and services of equal quality more cheaply than the private sector.
If the government wants to lower the cost of health care, it can do so overnight by scrapping all taxes (VAT, import taxes and duties, etc.) on health care services, medicines, medical technologies, diagnostic services and equipment, and doctor consultations.
To encourage citizens to purchase private health insurance, the government should allow full deduction of the individual’s health insurance and medical costs from the individual’s income tax payable. It should introduce tax concessions for private providers that provide care to the needy.
Simpler and cheaper
The National Department of Health claims South Africa has a complicated and expensive health system. It believes NHI will make the delivery of care simpler and cheaper.
The extent to which South Africa’s health care system is complicated and expensive is a result of the regulatory environment that the government imposes on it.
Most South Africans do not know that the delivery of medical services and hospitals is subject to complicated and time-consuming application processes. The government uses the regulations to limit the number of doctors, nurses, medical schools, types of health services, hospitals, and hospital beds in the country. Regulations and licensing requirements delay and even prevent the construction of new hospitals and clinics or expanding them.
Patients do not see when health care is not provided because a provincial health department refuses an application for the establishment of a hospital or clinic, or limits the number of doctors, nurses, and hospital beds.
The proposed Certificate of Need requirements will introduce even more obstacles to providing care. The production of medicines and medical devices is also subject to lengthy approval processes that delay their availability and raise costs.
A simpler and less expensive health system requires removing all the regulatory obstacles to delivering health care.
Health care when you need it
NHI promises the health care you need when you need it. The reality is that the amount of money available in the NHI Fund will limit the extent and type of health care, as happens in all national health systems. There is no guarantee that you will get the care you require when you need it.
Funding all health care through NHI will further politicise health care. When the government provides and/or pays for care, politicians and bureaucrats allocate health resources where they think they will get the most public support. South Africans will get the care the health bureaucrats and politicians think you need, not the care they really need.
Private health care for all
The best way to provide health care to all is a free market in health care, providing private health care to all South Africans at the lowest possible prices, while providing a safety net for the poor. This cannot happen overnight.
Millions of South Africans are unemployed, depending on taxpayer-funded welfare grants for their survival. In the end, health care for all requires a growing economy that creates jobs which enable people to pay for housing, food, and health care.
To grow the economy, the government must eliminate laws, regulations and taxes which restrict economic activity, job creation and the production of goods and services. People need jobs to pay for food, housing, and health care. Only this can fulfil the promise of health care for all.
[Image: fernando zhiminaicela from Pixabay]
The views of the writer are not necessarily the views of the Daily Friend or the IRR.
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