I (E)nsuring Access to Healthcare

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2 I (E)nsuring Access to Healthcare Lusani Mulaudzi, FASSA Strategy Consultant Grassroots Impact Solutions President Elect Actuarial Society of South Africa The South African Journey

3 Background Achievements High level stats Positive spin Cultures Government programs

4 Agenda South Africa since 1994 Healthcare Financing Affordability & National Health Insurance Low cost Health Insurance Breaking the Mould

5 Agenda South Africa since 1994 Healthcare Financing Affordability & National Health Insurance Low cost health insurance Breaking the Mould

6 South Africa since 1994

7 Vision 2030

8 Key Challenges

9 Tale of two cities

10 Tale of two cities Access to Healthcare

11 Agenda South Africa since 1994 Healthcare Financing Affordability & National Health Insurance Low Cost Health Insurance Breaking the Mould

12 Tax Rates Quality of Public Cover impact on Tax rates and Private Cover 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% -2% -4% Average Quality; 5% Low Quality; 2% Top Class Quality; 15% Above Average Quality; 10% Level of Public Health Cover The size of the bubble represents the extent of private cover. The lower the quality of public cover, the lower the health tax equivalent rate and the higher the extent of private cover. Assuming normal state inefficiencies and availability of private cover and private facilities

13 Universal Health Cover All citizens, irrespective of financial status, age and geography, should receive Universal Health Coverage (UHC). It is a human right. UHC does not mean free coverage for all possible health interventions regardless of cost as no country can provide all services free of charge on a sustainable basis. Top class quality public healthcare is not a realistic expectation Health system is a reflection of the national values Budgetary constraints are a reality

14 Access to Health Insurance in South Africa 9% 7% 84% of the population in South Africa have no comprehensive health insurance 84% They have limited or no access to private health care Open Schemes Restricted Schemes Uncovered

15 Health System Inequality R , Expenditure per life per annum R 3 208,99 Medical Scheme covered lives Uncovered lives 4.45 more spent for each covered life compared to an uncovered life

16 Budget (general taxes) Medical scheme Contributions (voluntary) Tax subsidy (R7-8 billion) Medical Schemes (community rated, open enrolment) Prescribed Minimum Benefits Funded utilisation (FFS) Public Hospital Basic Private Hospital fee-for-service Public Primary Care Private Primary Care Source : Taylor Committee Process. Health System in 2000.

17 Financing Healthcare Funding, setting financial incentives for providers, ensuring that all individuals have access to effective healthcare. Protecting individuals from risk of impoverishment Requires 3 key functions: revenue collection pooling of resources purchasing of interventions. Source: WHO World Health Report 2000

18 Revenue Collection Donations Tax Premiums Cash

19 Pooling

20 Purchasing High Percentage of Premium Capitation Provider Risk Per Case Per Diem Low Fee-for-Service High Fund Risk Low Source : Garofalo et al, Managed Care Contracting, 1999

21 Structure of South African Health System Revenue collection Pooling Purchasing General taxation Provincial Health Departments Other governmental Social Insurance (RAF, COIDA) Private insurance (medical schemes) Out-ofpocket No pooling (individual purchasing) Provision Private providers Source: Ministerial Task Team on SHI

22 Agenda South Africa since 1994 Healthcare Financing Affordability & National Health Insurance Low Cost Health Insurance Breaking the Mould

23 Medical Aid Premiums (R per main member pm). Sizwe Full Benefit Sizwe Full Benefit Sizwe Affordable Care Bonclassic Commed Standard Commed Standard Maxima Standard Bonitas Standard Commed Standard Boncomplete Sizwe Affordable Care Sizwe Savings Care Sizwe Affordable Care Bonitas Select Discovery Classic Saver Maxima Basis Commed Shina Maxima Basis Grid Maxima Saver Essential Saver Sizwe Savings Care Bonitas Primary Maxima Saver Grid Commed Shina Sizwe Hospital Care Maxima EntrySaver Medshield Medivalue Commed Shina Maxima EntryZone Ranging from $71 per month to $357 for a single member

24 Premium Income vs Claims expenditure per family per month in 2016 (R ) 4 000, , , ,0 - (1 000,0) (2 000,0) (3 000,0) (4 000,0) $245 Gross contribution income $203 Relevant healthcare expenditure Source: CMS 2017

25 Under Proportion of REF Price for PMBs pbpm 2007 Proportion of Price by Age 100% 90% CDL Conditions: CDL Medicine 80% 70% 60% 50% 40% Maternity HIV/AIDS CDL Conditions: Related Costs CDL Conditions: DTP Hospital Understanding the disease profile of a population is a crucial part of building a sustainable healthcare system 30% 20% No Chronic Disease Chronic not Verified 10% 0% Age Bands Source: REF Contribution Table 2007

26 The medical scheme population (CMS, 2015) Age profile 12,0% 10,0% 8,0% 6,0% 4,0% 2,0% 0,0% Population distribution by age: medical scheme vs total South African population 2013 The effect of opting out of a system is evident in this graph Most of those opting out are unemployed or earning very little Medical Scheme South Africa

27 Income (R ) Income levels of South Africans th, 50th, 75th and 90th Percentiles of Annual Income Age 90% of South Africans earn less than $8 000 per annum ($655 per month) Private Health Insurance would consume 37% of their income on average *$1 = R14

28 Number of Employees in Population ( millions)

29 Affordability of wider insurance coverage Current Situation 8.9 million people. Health tax equivalent: 1.2% Scenario 2: Restructure Pillar 1 Subsidy Up to 8.3 million people. Health tax equivalent: 1.5% Scenario 3: Social Health Insurance Phase million people. Health tax equivalent: 3.1% Scenario 4: Social Health Insurance Phase million people. Health tax equivalent: 4.1% Scenario 5: National Health Insurance Total population. Health tax equivalent: 14.3% Source: Ministerial Task Team on SHI July 2005

30 Percentage of Household Income. Summary of Mandatory Impact (NHI) as a Percentage of Family Income 45% 40% Effective Current Medical Scheme Contribution Scenario 2: Voluntary ER/EE Expenditure Scenario 3: Mandatory ER/EE Expenditure Scenario 4: Mandatory ER/EE Expenditure Scenario 5: NHI: Mandatory ER/EE Expenditure Impact of Universal Subsidy for groups who did not get TES Married, Spouse not earning, 2 children 35% 30% 25% Impact of initial income crosssubsidy 20% 15% 10% 5% 0% Below Means Test Income Bargaining Council Income Below Tax Threshold Income Low Income Average Income Medium Income Medium High Income High Income Very High Income Not mandatory under Initial Phase Source: Analysis for Ministerial Task Team on SHI

31 RSA NHI Key Points All South Africans Single fund self-administered Monopsony purchasing Risk based capitation (primary) DRG based fees (hospital) Benefit package not defined Voluntary contracting Supplementary cover only for PHI Funded by payroll and PIT

32 NHI Funding requirements Annual amounts in perspective Rbn (2015 Rands) Med Infl CPI Adj Base Estimated cost of NHI is R380bn ($27bn) ~ Trinidad s GDP 2015 of $30bn, almost double Jamaican GDP 10% of GDP

33 Tax Rates Quality of Public Cover impact on Tax rates and Private Cover 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% -2% -4% Average Quality; 5% Low Quality; 2% Top Class Quality; 15% Above Average Quality; 10% Level of Public Health Cover The size of the bubble represents the extent of private cover. The lower the quality of public cover, the lower the health tax equivalent rate and the higher the extent of private cover. Assuming normal state inefficiencies and availability of private cover and private facilities

34 Agenda South Africa since 1994 Healthcare Financing Affordability & National Health Insurance Low Cost Health Insurance Breaking the Mould

35 Healthcare needs Cash & Low cost alternatives Medical schemes Public Health

36 Hospital Plan Day Cover Only Hospital Plan Only Combined Cover Seniors Plan (55+) Seniors Comprehensive Single - R240 ($17) pm Single + 1 child - R360 pm Couple + 1 child - R540 pm Single - R352 ($25) pm Single + 1 child -R396 pm Couple + 1 child - R748 pm R592 ($42) pm Single + 1 child -R756 pm Couple + 1 child - R1288 pm R295 ($21) pm Couple - R590 pm R525 ($37.5) pm Couple - R1050 pm

37 Agenda South Africa since 1994 Healthcare Financing Affordability & National Health Insurance Low Cost Health insurance Breaking the Mould

38 Breaking the Mould Profession National Business Career Public Interest emphasis Long term Health Plan Design impactful solutions Invest in yourself Country specific health system research Solidarity principles Fill the gaps with affordable solutions Know your strengths and interests Deliver quality service Take risks, travel, educate yourself Invest, invest, invest in human resource development

39 Thank you Questions

40 Contact Details address: Mobile number: LinkedIn: Lusani Mulaudzi