Health scheme could cost a cool R216bn

02 May 2010 - 02:15 By Adele Shevel

Heavy usage and scarce resources will undermine the plan, writes Adele Shevel

A national health insurance (NHI) scheme will ultimately cost South Africa R216-billion, according to research by economics consultancy Econex.

"This cost is enormous relative to what we can afford," said Econex director Dr Nicola Theron, who presented the findings at the annual conference of the Hospital Association of South Africa (Hasa) this week.

Commissioned by Hasa, the research indicates that the most economical model would cost R197-billion, close to South Africa's entire personal income tax contribution.

The study is based on the promise of universal coverage and a comprehensive package promised by the ANC, as well as no out-of-pocket payment and free choice of providers.

Work on NHI is being done behind closed doors by a ministerial advisory committee. No discussion document has yet been released, but the approach is believed to be less extreme than initially envisaged.

Theron said there was evidence of "pent-up demand" in healthcare and the increase in utilisation that would come about as a result of the free service offering would seriously overburden already scarce resources.

"We found that, in the face of potentially unlimited demand, we would need an additional 10000 GPs and between 7000 and 17000 specialists relative to what we currently have," she said.

About 30% of the uninsured seek care in the private sector and pay out of pocket, clear evidence of the pent-up demand.

"If everyone is covered and there is no income constraint, the healthcare behaviour of the entire population would mimic that of the richest income group," said Theron.

Econex's research shows that an NHI scheme would lead to a large potential increase in hospital visits, with declining public sector usage. Specialist visits would increase by about 180%, while GP visits could more than double.

"These figures suggest that one cannot afford freedom of choice in respect of a provider, so we'd need an allocation mechanism, especially with regard to practising specialists and GPs. We're simply not training enough professionals," said Theron.

Tony Twine, senior economist and director of Econometrix, said even an additional 5% of GDP added to existing government healthcare spend would render NHI very expensive.

"NHI is doable - we just can't do everything in a day. A progressive, phased introduction will allow resources to be deployed economically," said Twine.

The Actuarial Society of South Africa has put forward a model originally developed by consulting firm Deloitte.

Ashleigh Theophanides, director of actuarial and insurance solutions at Deloitte, said it was too early and too difficult at this stage to set a cost for NHI as there was still too much uncertainty.

"We are, however, able to provide scenarios with a range of cost estimates. This can be used as a tool to assist policymakers," said Theophanides.