• Alex M van den Heever.
• Old Mutual Chair of Social Security Policy Management and Administration, Graduate School of Public and development Management, University of the Witwatersrand, Johannesburg, South Africa. alex.vandenheever@wits.ac.za
• Bmc Public Health. 2012 Jan 1;12 Suppl 1:S5.

BackgroundAchieving universal coverage as an objective needs to confront the reality of multiple mechanisms, with healthcare financing and provision occurring in both public and private settings. South Africa has both large and mature public and private health systems offering useful insights into how they can be effectively harmonized to optimise coverage. Private healthcare in South Africa has also gone through many phases and regulatory regimes which, through careful review, can help identify potential policy frameworks that can optimise their ability to deepen coverage in a manner that complements the basic coverage of public arrangements.Research QuestionUsing South Africa as a case study, this review examines whether private health systems are susceptible to regulation and therefore able to support an extension and deepening of coverage when complementing a pre-existing publicly funded and delivered health system?MethodsThe approach involves a review of different stages in the development of the South African private health system and its response to policy changes. The focus is on the time-bound characteristics of the health system and associated policy responses and opportunities. A distinction is consequently made between the early, largely unregulated, phases of development and more mature phases with alternative regulatory regimes.ResultsThe private health system in South Africa has played an important supplementary role in achieving universal coverage throughout its history, but more especially in the post-Apartheid period. However, the quality of this role has been erratic, influenced predominantly by policy vacillation.The private system expanded rapidly during the 1980s mainly due to the pre-existence of a mature health insurance system and a weakening public hospital system which could accommodate and facilitate an increased demand for private hospital services. This growth served to expand commercial interest in health insurance, in the form of regulated medical schemes, which until this point took the form of non-commercial occupational (employer-based) schemes. During the 1980s government acquiesced to industry lobbies arguing for the deregulation of health insurance from 1989, with an extreme deregulation occurring in 1994, evidently in anticipation of the change of government associated with the democratic dispensation. Dramatic unintended consequences followed, with substantial increases in provider and funder costs coinciding with uncontrolled discrimination against poor health risks.Against significant industry opposition, including legal challenges, partial re-regulation took effect from 2000 which removed the discretion of schemes to discriminate against poor health risks. This included: the implementation of a strong regulator of health insurance; the establishment of one allowable vehicle able to provide health insurance; open enrolment, whereby schemes could not refuse membership applications; mandatory minimum benefit requirements; and a prohibition on setting contributions or premiums on the basis of health status. After a two-year lag, dramatically reduced cost trends and contributions became evident. Aside from generally tighter regulation across a range of fronts, this appears related to the need for schemes to compete more on the basis of healthcare provider costs than demographic risk profiles. Despite an incomplete reform improved equitable coverage and cost-containment was nevertheless achieved.A more complete regulatory regime is consequently likely to deepen coverage by: further stabilising and even decreasing costs; enhanced risk pooling; and access for low income groups. This would occur if South Africa: improved the quality of free public services, thereby creating competitive constraints for medical schemes; introduced risk-equalisation, increasing the pressure on schemes to compete on the cost and quality of coverage rather than their risk profile; and through the establishment of improved price regulation.ConclusionsThe objective of universal coverage can be seen in two dimensions, horizontal extension and vertical deepening. Private systems play an important role in deepening coverage by mobilising revenue from income earners for health services over-and-above the horizontal extension role of public systems and related subsidies. South Africa provides an example of how this natural deepening occurs whether regulated or unregulated. It also demonstrates how poor regulation of mature private systems can severely undermine this role and diminish achievements below attainable levels of social protection. The mature South African system has demonstrated its sensitivity to regulatory design and responds rapidly to changes both positive and negative. When measures to enhance risk pooling are introduced, coverage is expanded and becomes increasingly fair and sustainable. When removed, however, the system becomes less stable and fair as costs rise and people with poor health status are systematically excluded from cover. This susceptibility to regulation therefore presents an opportunity to policymakers to achieve social protection objectives through the strategic management of markets rather than exclusively through less responsive systems based on tax-funded direct provision. This is especially relevant as private markets for healthcare are inevitable, with policy discretion reduced to a choice between functional or dysfunctional regimes.

12 keywords...

hide…