Health Reform in South Africa– some perspectives

IRF ConferenceAlex van den Heever

September 2010

Corruption and health and education outcomes...

“The empirical analysis shows that a high level of corruption has adverse consequences for a country’s child and infant mortality rates, percent of low-birthweight babies in total births, and dropout rates in primary schools. In particular, child mortality rates in countries with high corruption are about one-third higher than in countries with low corruption; infant mortality rates and percent of low-birthweight babies are almost twice as high, and dropout rates are five times as high. The results are consistent with predictions stemming from theoretical models and service delivery surveys.”

Gupta et al, 2000.

Performance relative to benchmark countries?

0

100

200

300

400

500

600

700

050

100150200250300350400

Average Median South Africa

Rate

per

100

,000

live

bir

ths

Per C

apita

Exp

endi

ture

US$

Per capita Gov Exp on health (PPP int. US$), 2005Maternal mortality ratio (per 100 000 live births), 2005

South Africa Compared to Peers (15 above and below per capita GNI in PPP US$): Government Expenditure on Health and Maternal Mortality

Maternal mortality is an indicator of service quality rather than socioeconomic need

Health systems need to distinguish between...

• Goals– Improving health status– Income protection

• Rationing imperatives– Supply-driven– Demand-driven

Decreasing social returns for additional

protection provided by Government

Decreasing social returns for additional

protection provided by Government

Lowest Income Groups

Lowest Income Groups

Highest Income Groups

Highest Income Groups

STRATEGIC GOALS:

INCOME PROTECTIONAND

MINIMISE AVOIDABLE SOCIAL REVERSALS

STRATEGIC GOALS:

INCOME PROTECTIONAND

MINIMISE AVOIDABLE SOCIAL REVERSALS

Low income High incomeLow income High income

Strategic Goals...

SUPPLY rationing

DEMAND rationing

LowHigh

High

Low

Base systemBase system

Discretionary insurance and OOP

Discretionary insurance and OOP

Rationing approaches are very different

Rationing approaches are very different

Creates entitlements to

reimburse conditions and services leaving supply to adjust

Creates entitlements to

reimburse conditions and services leaving supply to adjust

Creates service access entitlements but limits the availability of services

The more supply is increased, the more it approximates the access of demand-driven

entitlements

Creates service access entitlements but limits the availability of services

The more supply is increased, the more it approximates the access of demand-driven

entitlements

Shifting toward self-funding –

consequently demand is related to ability to pay on an OOP basis

(i.e. no rationing)

Shifting toward self-funding –

consequently demand is related to ability to pay on an OOP basis

(i.e. no rationing)

NHS/NHI

Ancillary system

Ancillary system

Social insurance

Income cross-

subsidies

(vertical equity)

Risk cross subsidies(horizontal equity)

LowHigh

High

Low

Tier 1Tier 1

Tier 2Tier 2

Tier 3Tier 3 Tier 4Tier 4

Tiers 1 and 2 can converge over time with economic

growth and reduced income inequalities

Contributory

Non-contributory

Finance: Subsidy options

Finance: Subsidy options

Degree of Compulsion

Degree of Centralization

Tier 3bTier 3b

Tier 2aTier 2a Tier 2bTier 2b

Tier 3aTier 3a

LowHigh

High

Low Tier 4Tier 4

Tier 1Tier 1

Central pooling and provision

Central Pooling but

decentralized provision

Institutional options: delivery

Institutional options: delivery

The logic of health insurance...

Self-insurance even if funded through a medical scheme

True insurance possible

Risk pooling needed only where large unpredictable (at the individual level) variations in claims occur

Government induced risk-pooling needed where large predictable variations in claims occur – Community rating, PMBs

No risk pooling possible where claims are small and at the discretion of the beneficiary

Ancillary system

System for achieving

universal access

Voluntary SystemNHS

NHI?

Decentralized operationsDecentralized operations

Accountability

Responsiveness

Competing models ?

Base SystemRedistributive funding

(universal access)

Resource allocation

Macroeconomic Constraints

Prioritised on basis of relative

social return

Rationing

Budget and Reimbursement

Ancillary System

Social Pooling

Minimum package+

Non-discriminatory contributions

+Income cross-subsidies

+Integration of multiple pools

+Default state fund

Minimum package+

Non-discriminatory contributions

+Income cross-subsidies

+Integration of multiple pools

+Default state fund

What needs to be done...• Base system– Population and patient focus through governance and

accountability reform (downward accountability)– District and hospital system must be implemented– Restructured financial model– Providers able to access multiple revenue sources

• Ancillary system - – Stabilise risk pooling– Stabilise costs– Stronger governance and accountability

• Universal access to common standard of accident-related emergency care

THANK YOU