STUART THEOBALD: UK’s National Health Service sets bar high as Motsoaledi unveils two bills in SA

Posted in: Economics, i-Blog, South Africa on June 25, 2018

This column was first published in Business Day

My wife and I had our first baby earlier in 2018. Words cannot describe the all-encompassing experience, as any new parent will tell you.

But one of the relatively mundane novelties was a first-hand experience of the UK’s National Health Service (NHS). Having grown up in SA in a family able to afford private health insurance, it was a culture shock to enter a system in which the costs don’t even come up in conversation. Even for the well-insured rich in SA, some healthcare decisions inevitably are about money. In the UK, in general, cost has very little to do with deciding what care is needed. Our experience of the NHS before, during and after the birth was outstanding. We felt we were getting the best care in the world and it cost us nothing.

The NHS is the world’s first free (at the point of use) national health scheme and remains one of the world’s best. It is not without its trials — it is chronically underfunded and performance in certain areas is lacking.

You can feel like a statistic more than a person when engaging with it. It is often hard to get a short-term appointment with a GP. Even if you know you need to see a specialist, you have to waste a GP’s time to get a referral (a feature that has been incorporated into the proposed SA scheme). But the system works at a macro level, delivering outstanding national statistics on health outcomes. One of the odd consequences is that it is more often your doctor that contacts you than the other way round, telling you you’ve hit the age or some deadline for a periodic test. This kind of preventative healthcare works by reducing cancer and heart disease or at least catching it earlier and so saving costs down the road.

Health policies are researched and developed to achieve the best national outcomes. The system is pretty uncaring if you want something that is vaguely elective, but on the whole you feel very comfortable that the system works.

Despite the efficiencies that come from a wholistic approach, the NHS is still very expensive. The service costs about 7.1% of UK GDP and taxes that pay for it take a big bite out of taxpayers’ pay cheques. The total budget in 2017 was about £125bn, equivalent to about R2.2-trillion, or 47% of SA’s GDP. The UK’s population is about 14% bigger than SA’s, but the NHS budget is six times our public and private health-care spending combined. As a percentage of GDP, our health spending does look better. At about 8.8% of GDP it is not far off the 9.3% average for Organisation for Economic Co-operation and Development countries (the UK matches the OECD average when private and public health spending are combined). However, SA stands in a small set of countries in which private expenditure is about half of the total, with the US being the other notable outlier. Private healthcare supports 16% of the population, so 84% of the population relies on an amount equivalent to 3.9% of GDP. This is a major inequality in access to healthcare, though it mirrors broader economic inequality.

Minister of Health Aaron Motsoaledi unveiled the National Health Insurance Bill and the Medical Schemes Amendment Bill on Thursday. These remain thin on detail about the financing and minimum care levels. A universal care system funded through some kind of national insurance scheme has the potential to deliver positive outcomes. The evidence is mounting that universal health cover supports better economic performance, though it is a complex causal relationship. However, there are hard decisions about just what will be covered and how it will be funded. So far, Motsoaledi has avoided those, with the bill leaving them to a “benefits advisory committee”. The bill outlines a national insurance scheme, but leaves aside the details on just how much will be deducted from payrolls. As is the case now, the public health sector has to make decisions over how to use its scarce resources, and that will remain the case after NHI too.

There are tricky political issues at the top and the bottom of the income scale. All employees will suddenly have a new amount deducted from their pay cheques. As the Davis tax committee has provocatively suggested, that may go down as well as e-tolls have, as people will suddenly be made to pay for something they currently believe they are getting free.

There are also proposed amendments to how private medical aid schemes will work, largely removing the current tax advantages. The ambition seems to be to make private insurance a top-up for the well-off, covering more elective aspects of healthcare, rather than basic health insurance. It may be impossible to square these two things — the basic NHI scheme is unlikely to cover what privately insured South Africans will consider to be minimum standards. They will therefore add expensive top-ups without the tax advantages they currently enjoy. And if the basic NHI contributions are set with graduated rates based on income, the wealthier could find their costs of healthcare escalate dramatically. Between workers and the well-off there is ample scope for a political backlash.

• Theobald is chairman of Intellidex.

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