Private healthcare an ‘uncontrollable expenditure’
Health Minister Aaron Motsoaledi says private healthcare services have become an “uncontrollable expenditure” that affects every aspect of South African life.
He made the remarks at a Monday briefing on the Health Market Inquiry.
Motsoaledi updated the media on the progress in implementing the inquiry's recommendations to the private healthcare sector.
This follows the release of the report in 2019.
He said the continued above-inflation increases in the private healthcare sector have far-reaching implications for the economy in general.
"In our country, it is generally agreed that the cost of private healthcare is now beyond the reach of most South Africans. We would be right to assert that it has become an uncontrollable expenditure. Needless to say, this affects every aspect of South African life. It definitely affects the medical Price Inflation, which eventually influences the Consumer Price Index.
"Even before that, it affected medical aid premiums, which became a big factor in salary negotiations between employer and employee, particularly between the government and state employees. Many blame the state for having done nothing to put these runaway costs under control. The blame often arises when the debate on the National Health Insurance starts getting hot, with much finger-pointing."
Motsoaledi added that South Africa is one of only two countries where people still pay cash for healthcare services, also known as “fee-for-service”.
This practice, the minister said, is one of the drivers of inflation.
"It is for this reason that since 2009, the World Health Organisation declared the US and South Africa as outliers, and the two outliers are now fighting at the moment. The World Health Organisation said you are doing what other countries are not doing, meaning relying mostly on cash to pay for health.
"The HMI noted that fee-for-service, which means cash payment for every service received, is the main driver of volume and cost inflation. The HMI hence recommended that FFS as a payment mechanism for health services must be eradicated as far as possible, to be replaced by a progressive movement towards alternative reimbursement mechanisms."
-Private Healthcare Sector-
Speaking at the same briefing, Trade, Industry, and Competition Minister Parks Tau said the inquiry recommended the urgent establishment of a regulator to oversee the supply side of the private health sector, including tariffs for health services.
"The recommended regulator would establish a multilateral negotiating framework to facilitate collective tariff determination. Given the urgency of addressing the pricing practices in the sector, the HMI recommended alternative interim measures as the government considers long-term solutions for the sector, either through the Supply Side Regulator or within the National Health Insurance.
"Given the urgency of addressing the pricing practices in the sector, the HMI recommended alternative interim measures as the government considers long-term solutions for the sector, either through the Supply Side Regulator or within the National Health Insurance.”
Tau added that the country's three largest private hospital groups account for about 80% of private sector beds.
This has, in turn, led to South Africans overpaying for private healthcare.
"The HMI found that the private health sector is characterised by high and rising costs of healthcare and medical scheme cover, declining benefits and significant overutilisation of health services, without stakeholders having been able to demonstrate associated improvements in health outcomes.
"The HMI also found that the lack of tariff determination framework, amongst other factors, has led to these inefficiencies. Importantly, given the lack of a structured price determination framework, the HMI found that there has been abuse in the pricing of prescribed minimum benefits, as well as non-prescribed minimum benefits, in the form of overutilisation of services and co-payments, thus driving up the cost of healthcare.
"The HMI further found that the commission's phasing out of collective negotiations in 2003 led to an imbalance of market power and unsustainable pricing practices."
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