Health Minister Aaron Motsoaledi is hellbent on turning South Africa’s health system into a National Health Insurance (NHI) scheme.
A charitable interpretation of his motives would say he believes this is the most efficient means of providing health care to all of South Africa’s citizens.
Many of his critics are not so charitable, but I will only attempt to answer the question: What is the most effective and efficient type of medical system? I will not delve into any technical arguments but rather look at international experience.
First, the most important empirical fact: The number of years added to the average citizen’s life by a country’s medical system is mainly determined by how much it costs. Other aspects of the system matter a lot less but still do matter.
Using statistical techniques, I estimated how many years each country’s medical spending adds to the life of an average citizen. Then I estimated the efficiency of that spending by calculating years added per unit of spending. Finally, I looked at the average years added, and average efficiency, for each type of medical system.
The general drift of my findings accords well with international opinion on health provision, but there were surprises.
The main one is that the health system of the United States tops the list and adds more than 19 years to the average American’s life. In one sense this is not a surprise because the US spends a great deal more on health than any other country.
On the other hand, their life expectancy is noticeably lower than that of other wealthy countries. This can all be true at the same time because the US has an extremely unhealthy lifestyle, and more violent and accidental deaths, than other wealthy countries.
Those circumstances give medicine more opportunity to save lives because healthy and safe environments leave fewer forgone years to save. Even adding many years to the average citizen’s life expectancy may not make up for the cost of the health challenges entirely.
Then countries like Russia, Ethiopia and Afghanistan (before 2019) have surprisingly effective medical systems.
Life is so risky
On the other hand, the medical systems of some countries, like Israel and Singapore, are not making as much difference to lifespans. I interpret these findings to mean that life is so risky in some places that medical help has more room to change things, while in others good lifestyles are already doing much of the work.
Efficiency is simply the years of life added divided by the log of health spending per capita.
Why log of spending instead of the dollar amount?
It is much more difficult to add further years to life expectancy after plucking the low-hanging fruit, so each extra year added will require a bigger jump in spending than the last. To add an additional year of healthy life expectancy requires spending 2.65 times as much on health as the last year.
Each additional unhealthy year of life added thereafter requires spending 6.47 times as much on health. A single unit of the log scale represents a ten-fold increase in spending.
In spite of the huge amount America spends on health care compared to other countries it also leads the world in having the most cost-effective medical system. Poor countries can get a lot of milage out of their health spending too. Four African countries make the top ten – Ethiopia, Sierre Leone, Equatorial Guinea and Nigeria.
So, what kind of medical system is most effective or most efficient?
I divided systems into four categories – public, public with substantial private involvement, community and unclassified.
Only five countries, all African, had a community-based system. These provide only the most basic care dealing with low-hanging fruit, but community systems are on average a very efficient way of providing health care to the very poor. Unclassified systems tended to do badly on average but there were some that did well and merit closer study, such as Ethiopia, Sierre Leone or Afghanistan.
Cost-effectiveness
The most relevant difference is between those systems that do or do not have substantial private sector involvement. The public-plus-private systems beat the public systems (like the NHS) for both years of life added (18.6% better) and cost-effectiveness (12% better). It is hard to avoid concluding that it is the private part that provides the improvement.
Indeed, private medicine grew to be a substantial part of health care in many countries because the public systems were not delivering decent health care. Ireland and SA, which are now high up on the lists, are prime examples. Private health spending also allows the people to use their knowledge of their personal priorities to decide how much of their resources to devote to health. Bureaucrats do not know what these priorities are so the allocations they make end up creating inefficiencies.
SA’s current mixed public-private system is one of the world’s most effective and cost-efficient medical systems.
It is 28th on the added years list and 18th on the efficiency list. The government wants to replace the current system with a public NHI system that international experience suggests will be 10% to 16% worse. Our own experience of public health was bad enough in the past to motivate the development of the private enterprise solution that the government wants to destroy. That is just bad government and will not do any favours to those it is meant to serve.
This article covers just the conclusions of a big study. Considerably more detail is available on a number of estimates per country and on methodology for any interested party.
[Image: Akram Huseyn on Unsplash]
The views of the writer are not necessarily the views of the Daily Friend or the IRR.
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