Health expenditure on medical scheme beneficiaries was more than 6.5 times greater than health expenditure on persons wholly dependent on the public sector.    

‘€œOnly about 40 percent of total health care funds locally are spent in the public sector, with 60 percent flowing through private parties,’€ says SAHR guest editor Stephen Harrison.

Di McIntyre and Alex van den Heever, writing in the SAHR, said problems in the private sector were rapidly spiraling out of control making it critical that some resolution is reached in the mandatory health insurance debate.

They accused private medical schemes of ‘€œcream skimming’€ ‘€“ or trying to exclude the highest risk individuals — despite regulatory controls.

Adverse selection also impacts negatively on the voluntary health insurance industry. Adverse selection is when those with the greatest risk of illness are more likely than relatively health individuals to join an insurance scheme.

The authors argue that mandatory health insurance would effectively deal with both these practices as the selection of individuals who contribute to the scheme would be specified by legislation.

‘€œCurrently a very important window of opportunity exists for pursuing a mandatory health insurance system that is feasible, affordable and sustainable within the South African context,’€ they said.

Opportunities were created by current planning to overhaul the social security system, within which it makes perfect sense to nest a mandatory health insurance.

In addition, government spending on debt servicing is declining rapidly (from 19% of the total government budget in 2000/1 to 9,5% in 2007/8). This means the health sector could get a slightly higher budget allocation which could be used to strengthen public sector services to form the core of a mandatory health insurance system.

The researchers said that urgent critical steps must be taken to progress with mandatory health insurance in South Africa, namely to:

·               Achieve an explicit policy commitment on achieving a universal, comprehensive basic package of health care services funded through general tax revenue and mandatory insurance contributions (as part of comprehensive social security contributions) in the shortest time possible;

·               Dramatically improve public sector hospital services. This will require additional funding as well as an overhaul of existing governance models for public hospitals, including the possibility of granting greater operational autonomy.

·               Proceed with the risk equalisation between individual medical schemes as soon as administratively possible (Under risk equalisation, one health insurance firm pays a subsidy to another to compensate it for having a greater number of high risk and more expensive subscribers);

·               Promote the containment of private sector costs through direct controls on the supply of services;

·               Lay the groundwork for a State-sponsored scheme that will be affordable and attractive to low and middle income workers.

The authors said it was important to not miss this window of opportunity as another was unlikely to be presented in future. ‘€“ Health-e News Service.