This presentation by Mark BLECHER was made at the 3rd Joint DELSA/GOV Health Meeting, Paris 24-25 April 2014. Find out more at www.oecd.org/gov/budgeting/3rdmeetingdelsagovnetworkfiscalsustainabilityofhealthsystems2014.htm

1. South Africa: Health and Finance
Departments working together on complex
health financing reforms
OECD 3rd meeting on fiscal sustainability for health
Presenter: Mark Blecher | National Treasury, South Africa | 25 April 2014

2. 1
Background
 South Africa currently has a transitional/pleuralist health system with around 50% of
funding (for 80% of population) run through decentralised provincial government and
about 50% of financing (for 20% of population) by non-profit medical insurance with
delivery by private providers
 Health spending around 8% of GDP – 4% public 4% private
 SA has a problem of quality in public sector and unaffordability in private sector
 SA developing universal health coverage (UHC) reform under banner of National Health
Insurance (NHI)
 Strong political support from ruling party (ANC)
 Department of Health has been developing a White Paper and Treasury a financing
options paper
 Delays in bringing detailed policy proposals to public domain is inhibiting national
debate
 Costing projects health spending to increase from R110b to R255b over 14 years
 New financing mechanism is important also in context of low budget growth in current
period of low growth and fiscal constraint

3. 1
Some features of NHI under discussion
 Universal cover
 Financing: mix of options e.g. general tax, payroll tax, surcharge on PIT, VAT
 Establish one main national NHI Fund
 Redirect funding currently to decentralised provinces via the NHI Fund
 Purchasing by NHI Fund of services from providers such as hospitals using new
reimbursement methods e.g. DRGs
 Provision mainly initially by strengthened public sector with some introduction of
contracted GP services and possibly some use of private medicine delivery chains

4. Some of areas being negotiated are
complex or contested
• Size of reforms necessitates Departments and stakeholders working together which may
have somewhat different interests. Negotiations have been difficult at times, often
dominated by political considerations and can be difficult to balance political and technical
• Was switch from expansion of coverage under SHI paradigm to model that starts from the
onset notionally with universal coverage
• Role of existing non-profit medical schemes (insurance) including civil servants scheme
and industry schemes vis a vis the single NHI Fund
• Approach to benefit package
• User fees
• Access to private provision
• Selection of different financing mechanisms – who contributes and how
• Affordability and cost controls at a time of low economic growth and fiscal constraint
• Powerful interest groups can be difficult to reconcile if not handled well e.g. decentralised
provinces, tax payers, medical scheme members, doctors, business, trade unions
4

5. 1
Political factors: positive
 Strong support from ruling party
 Joint desire from Health and Finance Departments to develop improved health
financing dispensation
 Strong relationship between Ministers
 Cabinet and party support for early Green paper
 International move to UHC and good lessons from many countries
 Access to top international consultants

6. Factors that can negatively affect
negotiations
• Low economic growth and fiscal constraint makes difficult to raise new
taxes
• View that ones own position is the only correct one; difficulty in
compromising; Lack of a mandate to negotiate
• Weaknesses in aspects of technical work and under-spending in pilot
districts
6

7. Conclusion:
Best results likely when:
• Strong political commitment and joint leadership
• Strong technical work
• Deep joint technical engagement, work and agreement (c.f. new child vaccines,
TB diagnostics, AIDS treatment)
• Need to put out government papers soon (White paper and Financing options
paper)
• Need greater transparency for meaningful public and stakeholder debate
• More piloting and development e.g. purchasing reforms in pilot NHI districts
• Willingness to meaningfully evaluate and modify direction accordingly
• Following adoption of policy proposals NHI Act will follow and Treasury will
consult in more detail on specific tax proposals
7