The South African health minister, mr Motsoaledi has unveiled his long awaited universal healthcare plan, called the National Health Insurance (NHI). It has a noble cause – to make the same healthcare available to the rich and the poor. His solution shows that he has not understood the problem though.
According to the website news24.com, Mr Motsoaledi plan envisages one big fund that will act as the single purchaser of health services, and thereby it will “pool funds to provide access to quality health care services for all South Africans, based on their health needs and irrespective to their socio-economic status. He went on to say that “currently the private sector spends 4.5% of GDP on health but only provides care to 16% of the population while the public sector spends 4.2% but provides 84% of the population.”
The public hospitals and health care institutions are in such shambles that something needs to be done about them. A recent example of public healthcare blunders is the life Esidimeni tragedy, that cost the life of 143 helpless patients., which was purely down to bad management decisions. No one has been arrested and held responsible for it.
Mr Motsoaledi insists that, currently, the poor are subsidising the rich, and that needs to be turned around. 16% of the population that currently spend 4.5% of GDP on private healthcare are also the main income tax generators. Thus, they pay taxes, but do not make use of the healthcare provided by the government
Whoever has the means, takes out private health care insurance. It is an indirect tax, because healthcare is something that the government should, but does not provide. Insurance companies offer different packages, because not everybody wants or is able to pay for a full comprehensive package. Health insurances are zero-sum businesses. Essentially, the co-payment required on the cheaper packages can be viewed as the statistical shortfall in previous contributions.
But mr Motsoaledi also wants to eliminate co-payments, forcing everybody who want to be privately insured to take out the comprehensive insurance plan.
. What should be done? The private sector is only able to provide the service because the public sector is not providing it. Maybe the most noble thing to do would be to admit to the current mis-management and commit to make sure that the public institutions are run efficiently and effectively. That would eliminate the urge to go to a private hospital at almost any cost. It would also ignite competition and therefore bring down prices of private hospitals. Lastly, let those who can, take out private healthcare insurance. At least they will not be putting pressure on the public healthcare system. The rich and poor would not compete for the same public health service, rather the rich would subsidise the poor.