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SHIELD project: Strategies for Health Insurance for Equity in Less Developed Countries

Modelling the resource requirements for universal coverage: A case study of South Africa. SHIELD project: Strategies for Health Insurance for Equity in Less Developed Countries. Di McIntyre Health Economics Unit University of Cape Town. Background.

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SHIELD project: Strategies for Health Insurance for Equity in Less Developed Countries

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  1. Modelling the resource requirements for universal coverage: A case study of South Africa SHIELD project: Strategies for Health Insurance for Equity in Less Developed Countries Di McIntyre Health Economics Unit University of Cape Town

  2. Background • Proposal to introduce universal coverage in South Africa: • Heated debate with particular concerns about ‘affordability’ • Modelling useful to explore likely implications of different financing reforms: • Resource requirements (and impact of key design features) • Revenue potential

  3. Broad approach used • Identified the key scenarios: • What kind of financing reforms are being considered, proposed, or might be feasible? • Resource requirements: • Population x utilisation x unit costs (Excel spreadsheet model) • Absolute amount and relative to GDP • Revenue: • Health sector share of government budget; additional tax or mandatory contributions

  4. Reform scenarios • Status quo: • Limited growth in private insurance (<20% of population); limited improvement in public sector • Extended schemes: • Mandatory extension of private insurance to all formal sector workers and dependents (<40%) • Universal system: • Core of substantially improved public services; access to all; mainly tax funded including additional payment by formal sector

  5. Core methods and assumptions

  6. Excerpt of model

  7. Coverage and utilisation

  8. Total expenditure as % GDP

  9. Public expenditure as % GDP

  10. Public funding requirements • Status quo: • Will decline to 10.5% of government budget • Extended schemes: • Will decline to 9.4% of government budget (but increased costs of covering civil servants) • Universal system: • Increase share of government budget to 15% plus • Proportional income tax of 4% (2% employer & 2% employee) • Or, progressive income tax of 1.2% to 6%

  11. Conclusions • UC is lowest cost option in SA, but places greatest burden on public funds and requires: • Increased allocations for health in line with Abuja target, and • Additional taxes • Modelling illustrates likely resource requirements for reform scenarios, but also provides insights into reform design (sensitivity analyses)

  12. Pre-conditions for success • Cost containment: • Minimise unit costs, careful purchasing from non- government providers • Minimise administration costs: avoid fragmentation • Contain utilisation: strengthen primary & community services; improved gate keeping • Need for ongoing M&E, refine model with updated data

  13. SHIELD partners Funding: European Commission and IDRC For more informatonvisit: http://web.uct.ac.za/depts/heu/SHIELD/about/about.htm

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