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Health System Trends and Issues

Health System Trends and Issues. Portfolio Committee: Health 13 March 2001. Per capita health expenditure/outcomes (WHO). South African Health System. Serves 39 million Expenditure = R27,2 billion Per capita = R695. Public Sector. Private sector. Total Expenditure R60-R70 billion.

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Health System Trends and Issues

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  1. Health System Trends and Issues Portfolio Committee: Health 13 March 2001

  2. Per capita health expenditure/outcomes (WHO)

  3. South African Health System Serves 39 million Expenditure = R27,2 billion Per capita = R695 Public Sector Private sector Total Expenditure R60-R70 billion Serves 7 million Per cap = R5,714 Per cap tax subsidy = R975

  4. Social Exclusion

  5. Per Capita Public Health Expenditure 1996/97 to 2000/2001 Source: Department of Health (NHA)

  6. Real Per Capita Costs 1982 to 1997 (i.e. after removing inflation) • Professional services: + 228 % • Drugs: + 543 % • Hospitalisation: + 517 % • Administration: + 283 % • Total: + 351 %

  7. Medical Scheme Beneficiary Changes 2000

  8. Medical Scheme Beneficiary Changes 2000

  9. Medical Scheme Age Structure: Open vs Closed 2000

  10. Selected Index for South Africa

  11. R4 500 R4 000 R3 500 R3 000 R2 500 R2 000 R1 500 R1 000 R 500 R 0 Centre for Actuarial Research Average Claim by Age Average Claim 0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88 Age of Beneficiary

  12. Medical Scheme Age Structure: September 2000 & OHS98

  13. Price adv./disadv. due to risk profile (open schemes reflecting 90% of membership) 1999 Price disadvantage Price advantage

  14. Key Factors Affecting the Year Ahead • Policy directions • Consolidation of the Act • Social Security Committee of Inquiry • End of Amnesty Period • Expect growth in membership: initial figures at the Office already suggest this • Aggressive competition for members • Still dominated by anti-competitive strains resulting from broker involvement • Some cost-containment and new business models starting to feed through

  15. Key Factors Affecting the Year Ahead • Economic growth slow • Decline in restricted membership schemes • Consolidation of open scheme market (largely due to broker behaviour) • Development of regional strategies in moves away from fee-for-service • Governance of schemes likely to begin influencing intermediary behaviour (this will be enhanced through further policy changes) • Increased transparency

  16. Compatibility with Public Hospital System • Cannot retain revenue at source • Costs do not equate to revenue • Requires fee-for-service billing • Alternative contracts very difficult to implement • Budget principles have not been defined • Redistributable portion • Retained portion

  17. Explicit Policy Decisions • Public hospitals will not be free for higher income groups • Medical schemes, and private sector as a whole, will have to be compatible with public sector goals and cannot undermine the public sector • The health system will ultimately be funded from a system of: • General taxes • Earmarked taxes • Medical schemes • Other social insurance funds (RAF, COIDA)

  18. Budget vs Policy National Legislature Decides budget allocations to National Departments and Provincial Government as a whole Cabinet (National) Health MinMEC Develop policy, but do not determine budgets Health PHRC Provincial Legislature Cabinet (Provincial) Implement national and provincial policy within budget allocations Health MEC Decides budget allocation to Health Health HoD

  19. Relationship to Alternative Sources of Funding Funds allocated according to draw-down schedule Provincial Treasuries Conditional Grant Fees Budget but not funds Unconditional grant Provincial Health Departments Contract Social Health Insurance? Budget but Not funds Medical Schemes Hospitals Service

  20. Budget (general taxes) Medical scheme Contributions (voluntary) Tax subsidy (R6,8 billion) Per cap = R975 Medical Schemes (risk rated) • Lose cover • Funded utilisation Public Hospital Basic Private Hospital fee-for-service Public Primary Care Private Primary Care

  21. Budget (general taxes) Medical scheme Contributions (voluntary) Tax subsidy (R6,8 billion) Per cap = R975 Medical Schemes (community rated, open enrolment) Funded utilisation (ffs) Public Hospital Basic Private Hospital fee-for-service Public Primary Care Private Primary Care

  22. Budget (general taxes) Medical scheme Contributions (voluntary) Ring-fence Allocations? Tax subsidy (R6,8 billion) Per cap = R975 Low Cost Capitated Medical Scheme (voluntary) Medical Schemes Fee-for-service (voluntary) • Contracted • Capitated • ffs Public Hospital Basic Private Hospital fee-for-service Public Hospital (Private/SHI) Private Hospital capitation Public Primary Care Private Primary Care

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