Picture: SUNDAY TIMES
Picture: SUNDAY TIMES

THE cost of treating patients who are admitted to hospital is virtually the same in the public and private sector, according to research presented by University of Cape Town actuary Shivani Ramjee at the Hospital Association of South Africa’s (Hasa’s) annual conference on Monday.

Her findings are at odds with the government’s rhetoric, which paints private hospital costs as being much higher than those of public hospitals. The research is important, as the government is weighing up whether to purchase services from the private sector when it introduces National Health Insurance (NHI).

The National Development Plan, for example, says "progressive inclusion of private providers into the publicly funded system is likely to be … gradual due to their substantially higher unit costs".

Ms Ramjee said: "If the costs are not that different, then the state can start to contract with the private sector. There is a lot of global experience in doing so."

She found that the average cost per admission in the private sector was just 5,7% more than that of the public sector, a much smaller differential than the rhetoric might suggest, she said.

Much of the debate makes direct comparisons between the two sectors, but this is misleading because their input costs are different: for example, private hospitals pay tax, pay more for medicines, and raise capital on the open market.

Ms Ramjee cautioned that her study was limited by the publicly available data, and indicated the need for further research. It should not be used as the basis for evidence-based policy decisions.

Earlier in the day, independent actuary Barry Childs said twice as many people would be able to afford medical scheme membership if the government revived a set of reforms that fell off the political agenda five years ago, and schemes were more efficient.

If more people belonged to medical schemes and had access to private healthcare, it would take the load off the public sector and allow the government to stretch its healthcare rand further, he said, urging delegates to lobby for regulatory reforms to the medical schemes industry.

"We don’t have to wait 14 years or 25 years to improve people’s access to healthcare. We can do it right now," said Mr Childs, alluding to the 14-year timeline set out in the NHI green paper published two years ago.

Only about 8.7-million South Africans, or 17% of the population, belong to a medical scheme, according to the latest Council for Medical Schemes annual report.

In addition to pushing for "regulatory completeness" of the medical schemes industry, the industry needed to collaborate to eliminate fraud, be more active in the way it purchased services, improve income cross-subsidies in the system, and do more to prevent disease, he said.

Medical schemes had been a "regulatory orphan" since 2007 when the government turned its attention to NHI, said Mr Childs.

Up until that point it had been planning to make changes to the medical scheme industry — including a Risk Equalisation Fund and mandatory membership for all employed people — that would enable more lower-paid workers to access private healthcare. The government’s focus then shifted to NHI, which is aiming for a universal healthcare system. The Medical Schemes Amendment Bill of 2008, which contained the reforms alluded to by Mr Childs, was never processed by Parliament and lapsed.

A new Medical Schemes Amendment Bill has since been drafted by the Council for Medical Schemes, but it has yet to be submitted to Parliament or published for comment.

Mr Childs said he thought it unlikely that the bill would contain all the measures needed to stabilise the medical schemes industry as the Council for Medical Schemes registrar, Monwabisi Gantsho, had previously said that the Risk Equalisation Fund is no longer on the agenda.

The aim of the fund was to level the playing field between schemes that had lots of young and healthy members (and therefore lower healthcare costs) and those with more old and sick members. At present, schemes with a better risk profile can charge less and attract more young members.

Stanlib chief economist Kevin Lings argued that the best way to make medical scheme membership affordable for more South Africans would be to create more jobs and a bigger middle class.

South Africa had a "minute" tax base, in which 859,000 of the 5.88-million taxpayers paid 53% of the total income tax bill, he said.