# OPINION: 4 pitfalls on the road to the National Health Insurance

- Link: https://dearsouthafrica.co.za/2019/08/10/opinion-4-pitfalls-on-the-road-to-the-national-health-insurance/
- Published: 2019-08-10T11:28:31+02:00
- Author: dearSA

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A look at how well our mothers – and our finances – do in the public health sector
does not bode well for the new NHI Bill. Alex van den Heever takes a look at the
figures and power structures that will shape the future of healthcare in South Africa.

South Africa usefully generates a fair amount of health information each year. While
all the sources are not integrated, it is nevertheless possible to structure the
information to provide a picture of the health system’s capabilities. Let’s consider
two outcomes: First, maternal mortality, or the number of women per 100 000 live
births who die as a result of childbirth, during pregnancy or within 42 days of 
delivery or termination of pregnancy each year.

And secondly, Auditor-General findings. Both measures are indicators that health
facility managers aren’t able to manipulate.

They are also signs of how well a health system is managed.

Let’s start with maternal mortality. Here, the assumption is that poor outcomes 
at facilities are strongly suggestive of overall managerial capability, rather than
just a weakness specific to maternal health services.

South Africa’s

facility-based maternal mortality ratios at provincial and national levels are far
higher than those that occur elsewhere for countries with similar or even lower 
levels of economic development, according to a World Health Organisation global 
analysis of maternal mortality between 1990 and 2015 as well as a 2008 report by
the Development Bank of South Africa.
 Chile, for instance, has an average maternal
mortality ratio of 22 deaths for every 100 000 live births compared to 138 for South
Africa. Even poorly performing countries such as Brazil — with a maternal mortality
ratio of 44 deaths per 100 000 live births — perform better than our best province,
the Western Cape. There, 77 women still each year will die for every 100 000 babies
born alive,

Health Systems Trust 2018 data shows us.
 Our worst performers, the Free State and
the Northern Cape, both have maternal mortality ratios above 200.

How does our financial management fair? As the health function forms roughly 30%
of overall provincial spending, provincial government performance is broadly indicative
of the capabilities of the health functions.

Let’s look at the 2016/17 financial year as detailed in the Auditor-General’s

2018 report. How well provinces did on their audits is broadly in line with their
maternal mortality ratios: The Western Cape achieved an 83% result with the next
nearest province Gauteng at a relatively paltry 52%.
 No other province achieves

more than 24%. Although these results are not health department-specific, they suggest
that the management weaknesses are influenced by governance at the broader provincial
level.
 When the Auditor-General did compare the financial wellbeing of provincial
health and education departments with others, it is clear that provincial health
departments are the worst-performing.

In its report, the Auditor-General, in fact, notes that urgent action is required
to prevent a collapse of health services.

The causes of public sector governance failures have not been systematically researched.
But institutionalised patronage networks based on — for instance — family relationships
or quid pro quo and that operate through incumbent political parties represent the
most reliable explanations based on the findings of the Public Protector’s 2016

report on state capture and 2013 research published in the Review of African Political
Economy.

When patronage is combined with centralised decision-making, the capture of strategic
functions such as staff appointments, the issuing of licenses as well as procurement
is potentially inevitable.

Evidence of the endemic corruption that has been reflected in almost every sphere
of the public sector can be found in the high levels of irregular expenditure identified
by the Auditor General as well as in the extensive moonlighting by critical

public sector staff such as nurses uncovered by in a 2014 study published in the
journal Global Health Action.
 Quality, not coverage is the problem

South Africa has one of the lowest levels of out of pocket expenditure in both the
developing and developed world, found 2016 research published in the journal Health
Policy, which suggests that coverage – or universal healthcare coverage – is less
of a problem than the quantity and sustainability of coverage.

Yet the rationale for National Health Insurance (NHI) appears to have been lifted
from contexts where universal healthcare coverage strategies are needed to close
gaps in coverage rather than address weaknesses in the institutional framework and
governance.

But it is within the context of South Africa’s health system weaknesses and reform
imperatives that we must consider the adequacy of the proposed NHI as a means to
improve the system’s capabilities. Here’s how four stack up:

1. The NHI may put too much power in the hands of a few
 The governance model for
the National Health Insurance Fund, which is intended – at least as stated – to 
procure all health services in South Africa, is effectively appointed and removed
by one person: the minister of health.

The minister recommends board members, who are appointed by Cabinet. But the ministry
has broad discretion to appoint acting board members and remove them.

While the National Health Insurance Fund gets to shortlist and nominate a candidate
for the position of chief executive, the actions must be approved by the ministry
of health.

The National Health Insurance draft Bill refers to an independent board. But ample
scope exists for the ministry of health to influence the membership and tenure of
the board and thereby the board’s decisions. This approach to governance leaves 
wide scope for extracting patronage through the person in the position of minister
of health. Such practices have failed provincial health services and state-owned
enterprises. No technical review has been performed to justify the governance approach.
No justification is provided for why the ministry of health should have such powers
of appointment and removal within a context where the experience demonstrates that
it runs counter to the public interest.

2. Administration – it’s about more than paperwork
 NHI proposals envision that 
the entire population of South Africa would need to actively choose a primary healthcare
provider to be pre-funded by the National Health Insurance Fund on their behalf.
So not only would the fund need to administer 56 million enrollees who could technically
not receive benefits without being enrolled, it must also manage their self-assignment
to healthcare facilities.

This proposal is, therefore, a considerable undertaking for which no precedent exists
in South Africa.

Secondly, it is proposed that financing to hospitals be activity-based, i.e. that
hospitals be reimbursed for people’s care based on the estimated costs of certain
categories of treatment. This means that the treatment a patient receives has to
be matched with their information and validated so that the fund could ensure that
hospitals are only paid for what they provided. This would require universal public
and private sector implementation of electronic patient records and associated business
processes at a very high standard at all levels of care.

3. Will people flock to better-resourced private providers?
 Currently, private 
sector hospitals are perceived to be of a higher standard than public hospitals.
To prevent the excessive use of private facilities proposed to form part of the 
NHI network of providers, public sector hospitals would need to be governed, managed,
staffed, and equipped to a similar level as private hospitals before the implementation
of the overall system.

Only about 19% of public hospital beds achieved the Office of Health Standards Compliance’s

core standards by 2018. As of early this year, no strategy to upgrade the public
hospital system has been evaluated or proposed.
 The NHI proposals also put forth
a central national determination of referral networks – or the ways in which people
move between health facilities and doctors – with possible bypass fees.

As with a number of NHI proposals, the legal framework already exists to allow this
with existing public services. It, has, however never been implemented due to the
systemic unfairness that would exist if low income communities were penalised for
bypassing poorly performing public services in their area.

From my personal experience as the finance director of the Gauteng Department of
Health from 1998 to 2000, it is worth noting that the Department of Health, up until
early 2019, had not been able to establish an organised system of referrals in the
public sector.

4. Who decides and how close do they sit to the problems that need fixing?
 A key
area arising in the NHI proposals is the assumed superior purchasing efficiencies
that will be derived from the introduction of what’s called a “purchaser-provider
split”. This approach distinguishes between the organisation that buys healthcare
services, for instance, the National Health Insurance Fund, and that which provide
services. Under the current system, the purchaser (government) also provides health
services. For instance, a public hospital is part of the provincial government and
ultimately falls under a single accounting officer in the form of a provincial head
of department.

The shift to a purchaser-provider approach requires the full decentralisation of
health services so that they can be contracted individually, together and with private
sector services. It is also proposed that the National Health Insurance Fund will
implement the sub-regional units responsible for contracting these services.

It is worth noting that this is quite different to national healthcare services 
in the United Kingdom or Canada, both of which have established fully decentralised
and genuinely independent regional structures (trusts) that organise the services
and purchasing for their areas.

The National Health Insurance Fund is proposed as a national structure in which 
no structural de-centralisation is envisioned. The constitutional role of provincial
health administrations in organising context-specific health strategies is not discussed
or evaluated in the various official papers or in the draft NHI bill. No strategy
to decentralise health service decision-making has to date been articulated, evaluated
or initiated.

But perhaps the most concerning aspect of the National Health Insurance reforms,
however, has been the obstruction of incremental reforms to both the public and 
private sectors. No legislative development of any substance has occurred from 2004
to the present day in either the public or private sectors. This, I wrote in a 2016
article in the journal Health Policy, included the halting and withdrawal of all

structural reforms of the private health system that were in the process of implementation
during 2008.
 The reason? Apparently, there was an assumption that the complete 
NHI framework could be implemented in a

single year between 2009 and 2010.
 As a consequence, basic systems of governance
have not been upgraded nor have resource allocation mechanisms been updated despite
accumulating evidence of system weaknesses that are amenable to intervention.

The flawed governance frameworks that are exposed to patronage have been retained.

And in the NHI framework, it is proposed that they be maintained. Given the above,
the most probable scenario for the South African health system going forward involves
the maintenance of the status quo with the possible implementation of a NHI, which
is unlikely to become fully operational.

* The above is based on a chapter by Alex van den Heever in a recent book from the
Mapungubwe Institute for Strategic ‘Reflection’s (MISTRA):