National Health Systems Reforms

Introduction

The South African health system shows many scars from the apartheid era. The majority of the population have limited access to health care services, delivered by a highly stressed, fragmented public health system. Minister of Health Nkosazana Zuma has expressed a commitment to reform the health care financing and delivery system in South Africa to address these issues.

In January 1995, Minister Zuma convened a Committee of Inquiry, chaired by Drs Olive Shisana and Johnny Broomberg, to propose a new health reform plan. After 6 months of consultation and research, the Committee presented its draft findings in its report titled Restructuring the National Health System for Universal Primary Health Care for public comment on 19 June 1995. This issue brief summarizes the Committee of Inquiry's report and provides a context for this proposal.

Current Situation

Despite the fact that South Africa spent R 30 billion rand for health care in 1992-3, 8.5% of it gross domestic product, millions of South Africans lack adequate access to basic health care services. The vast majority of South Africans (77%) rely on the public sector for their health care services, but public sector health spending accounts for only 38.7% of total health spending. The minority of the population relying on the private sector consume most of the health resources.

Public health spending has been directed to secondary and tertiary level care hospitals that provide intensive and expensive treatment to a few individuals. In 1992-3, only 11% of the total health budget bought primary health care services while 81% of public spending paid for care received in hospitals.

Proposed Policy Changes

There are five central proposals in the report: PHC benefits package, building PHC delivery capacity, financing improved PHC services, containing overall health care costs, and reforming the private sector.

1. The central pillar of the Committee's proposal is to provide free access to comprehensive PHC services for all South Africans.
2. The current PHC infrastructure however is not sufficient to adequately provide the promised services. To meet this need the report proposes to strengthen and redistribute public sector resources to underserved areas. In order to increase the number of PHC providers professional nurses will be retrained as primary health care nurses and serve as the front-line providers in the new system. Private providers will be encouraged to serve the public sector patients through sessional and contract work and an accreditation process. They also propose several reforms to encourage providers to work in underserved areas.
3. The Committee developed an economic model to estimate the cost of implemented the ideal PHC delivery system throughout South Africa based largely on clinical data from the Alexandra and Soweto clinics in the Gauteng Province. They estimate that the new PHC system would cost R 6.3 billion in 1997/98 increasing to R 9.2 billion in 2000/01. They project that current public spending levels and potential revenues will not be sufficient to pay for these proposal. The gap between revenues and expenses is estimated to be R 1.4 billion in 1997/98 growing to R 3.4 billion in 2000/2001. The Committee presents several options to finance this programme but it does not make any recommendations stating that it should be left to the Cabinet to decide. The financing options presented include: redirecting more general tax revenues to health dedicated excise or VAT funds changing the tax status of medical aid schemes a dedicated PHC payroll tax and the imposition of user charges on voluntary private health insurance.
4. The Committee recognizes that to ensure sustainability of the PHC system it must contain overall health care costs. They several recommend measures to improve the efficiency of the Department of Health. In addition they envisage the PHC Essential Drug List (EDL) as a means to control the cost of medicines. They also want to promote competition for patients between public and private providers to reduce spending. Finally they recommend a series of reforms within the Department to reduce spending.
5. The original terms of reference for the Committee of Inquiry focused on the public sector. The Committee believed that the private and public financing and delivery systems were so interrelated that they should expand their scope to recommend reforms to stabilize the medical aid scheme and private insurance market. They believed that as the private sector enrolment declines more people will use already overburdened public facilities.

The proposed private sector reforms include: mandating coverage among workers for public hospital services, regulatory reforms of medical aid schemes, increased regulation of private hospitals, pharmacies, and doctors and changes to the tax status of medical aid schemes.

Some Potential Implications

The proposed reforms, if implemented, will have far reaching effects on the health care financing and delivery system. Some of the major implications of the report are highlighted below:

• All PHC services will be free of charge at the point of service. There will be a small user charge for prescription drugs a penalty for inappropriate use of the emergency ward and payments for inpatient hospital care.
• All graduating doctors would be required to serve in the public sector for 2 years or repay their educational costs before practising in the private sector.
• A PHC Essential Drug List containing medications to treat 90-95% of primary level conditions with treatment protocols will be developed for the public sector.
• The Committee believes that this will increase the Department's purchasing power reduce costs reduce fraud and abuse and generate income from sales to the private sector.
• The administrative structure will be decentralised through creation of a district-based health system. It is envisaged that each district will be comprised of about 100 000 people and be responsible for delivering managing and financing of PHC services.

Timetable for Action

After the Committee of Inquiry has reviewed all the submissions and made changes to their proposal, it will present a final report with recommendations to Minister Zuma. She will either accept or reject these recommendations. If she accepts the report, the Department of Health then will write a White Paper on National Health System Reform that will be circulated publicly later this year. National legislation around these proposal will be drafted by the Department of Health. This legislation is expected to be presented to the National Assembly early in 1996. All health legislation should be referred to the Health Portfolio Committee, who will hold hearings and request further public submissions. The Portfolio Committee can make changes to the bill. Final passage by the National Parliament is expected in May 1996.

Within the proposal, there are many "fast track" recommendations that do not require new legislation. If Minister Zuma accepts the recommendation in the report, the Department of Health will begin to enact many of these changes. These include: the elimination of user charges at public facilities, development of the district health systems, registration of the population, the retraining of health professionals, and the provision of EDL medicines at public PHC facilities.

For More Information:

1. Research on the Current Health Situation in South Africa

• A National Household Survey of Health Inequalities in South Africa, by CASE for the Kaiser Family Foundation
  South African Health Review 1995, Health Systems Trust

2. Proposals and Policy Documents

• Restructuring the National Health System for Universal Primary Health Care, Committee of Inquiry into National Health Insurance System
  Working Draft Report on District Health System, Health Policy Co-ordinating Unit

3. Contact for more information

• Mr Peter Long, Legislative Analyst, NPPHCN (021) 696-4873, PHILA@wn.apc.org

Last updated: 14/12/98
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