The government’s approach to addressing the high costs of private health care in South Africa should be seen as an act of desperation that should be withdrawn and redrafted by an independent body.
The reasons why and a recommended way forward were laid out on Thursday at a briefing by the Universal Healthcare Access Coalition (UHAC) — a collaboration of most of South Africa’s healthcare professional organisations and related institutions representing patient advocacy, academia and society.
The UHAC’s call on Thursday comes in the wake of government’s proposal to implement only minor selected recommendations of the five-year-old Health Market Inquiry (HMI) to address high costs of private health care, claiming these measures will “do nothing” to advance urgently needed reform of both public and private health care.
Last month trade industry and competition minister Parks Tau gazetted a block exemption to the Competition Act in the areas of “the collective determination of health-care services tariffs”; “the collective determination of standardised diagnosis, procedure, medical device and treatment codes”; and “the collective determination of quality measurements/metrics, medicines formularies and treatment protocols/guidelines”.
This prompted the UHAC to respond to Tau’s invitation for public comment, noting that while Tau was positioning the block exemption as a step towards health-care pricing reform, the proposed “regulation by exemption” lay outside the minister’s authority, was open to legal challenge, had been drawn up “poorly and manipulatively” and should be withdrawn.
“These regulations are a piecemeal portrayal of their hostility to private health care, an act of desperation, and should be withdrawn to save themselves heartache and humiliation,” said Aslam Dasoo, a member of the UHAC steering committee and head of the Progressive Health Forum.
Economist Prof Alex van den Heever, chair of social security system administration and management studies at the Wits School of Governance, who compiled UHAC’s report, said setting prices could not be seen “as a problem solver on its own”.
“The HMI emphasised the need for an independent, transparent regulatory body — a public entity. It must be independent to prevent regulatory capture, failures and poor stewardship,” Van den Heever said.
Instead, the “draft interim block exemptions” would exempt medical schemes and private health-care providers from the Competition Act’s ban on collective bargaining and set up a multilateral negotiating and price-setting body overseen by the health department.
These are health policy issues which fall squarely under the jurisdiction of the minister of health, and have nothing to do with trade, industry and competition. It is the minister of health who needs to establish the legislative framework to implement the recommendations of the HMI
— Prof Alex van den Heever, chair of social security system administration and management studies at the Wits School of Governance
UHAC steering committee member and chairman of the South African Medical Association (Sama), Dr Mvuyisi Mzukwa, described the development as one-sided and ineffective in improving access to private health care while not addressing the need for integration of public and private health care.
“There is no arguing that we need better regulation of the private health-care sector, including how tariffs are determined. Controlling the costs of private health care is a vital component in achieving equitable access to health care, but government’s contention that this will ensure affordable health care for the majority of South Africans is a fallacy,” he said, pointing out that only about 15% of South Africans have medical aid and the majority cannot afford any health care and would therefore not be aided by price reductions.
Van den Heever said using an exemption provision to the Competition Act to manage health policy was questionable, as it would not only provide for price-setting but could introduce a framework to assess treatment protocols and quality of care — all beyond the scope of the Competition Act.
“These are health policy issues which fall squarely under the jurisdiction of the minister of health, and have nothing to do with trade, industry and competition. It is the minister of health who needs to establish the legislative framework to implement the recommendations of the HMI,” Van den Heever said.
The HMI undertaken by the Competition Commission, which investigated competition and price setting in the private health-care sector in 2019, made clear recommendations that involved an integrated package of measures designed to achieve systemic change in how the sector operates and create a pro-competitive environment.
“The HMI report is five years old, but only now is implementation being talked about as urgent, while lacking a comprehensive, integrated response that could have been developed over the last five years,” Dasoo said.
“The HMI report was clear that the systemic weaknesses in private health care were due to government’s failure of stewardship for over 20 years, including failure of the health department to use its powers to manage the private health-care market and hold regulators accountable. As a result, we have a private health-care sector that is neither efficient nor competitive,” commented UHAC steering committee member and CEO of the South African Private Practitioners’ Forum, Dr Simon Strachan.
Other areas of concern that had been neglected by the new regulations included the need for a risk equalisation framework, processes for regulating hospital licensing, quality assurance, measuring patient care outcomes and the independence of supplier regulation and tariff-setting bodies to guard against political interference.
“Without these, even if a price regulatory framework were to work, capping prices on its own would have no effect on costs because the supplier-induced demand the HMI identified would not be resolved without the other systematic interventions,” said Van den Heever.
He explained supplier-induced demand as doctors or hospitals influencing demand by ordering tests, treatments or procedures or prescribing medications regarded as clinically unnecessary resulting in over-servicing uninformed consumers.
Mzukwa said UHAC wanted the “flawed block-exemption approach” scrapped and that government instead implements the full recommendations of the HMI, which provided “a detailed, evidence-based road map for addressing health-care pricing and market distortions”.
Strachan said an independent regulatory authority should oversee tariff-setting and prevent anticompetitive pricing, with a structured multilateral negotiating body to ensure transparent, fair and binding tariffs.
“The Competition Commission, Council for Medical Schemes and National Treasury should play a greater oversight role, ensuring that any tariff-setting mechanism is economically sound, competition-compliant and legally enforceable,” he said.
Dasoo said it was time for an independently regulated health-care pricing framework that aligns with global best practices and competition law principles.
See UHAC's full report here.
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