As the country in the world's eye, COVER looks at the parlous state of healthcare in South Africa. Graeme Mackenzie explains
Due to the advancement of medical science and technology over the past 100 years life expectancy has doubled in most countries across the globe, (although this advancement has been curtailed over the past 20 years with the advancement of HIV worldwide). South Africa, with one of the highest HIV infection rates in the world now experiences negative growth rates in certain parts of the country due to the pandemic.
Statistics in South Africa tell us that there are currently 3.7 million people over the age of 60 and slightly more than 341,000 older than the age of 80, while the number of individuals over the age of 100 is unknown.
The growth in the HIV infection rate, the lack of access to affordable medicines for the majority of the population and the stance of the previous (Mbeki) government to virtually deny the existence of the disease has led to a polarization in the population from a life assurance and healthcare perspective, namely those with HIV (estimated conservatively at 18%) and those without. Currently 43% of deaths in South Africa are AIDS related.
Those in the latter group enjoy a life expectancy matched to that in first world economic communities like the UK and US (74 for males and 81 for females). In the former group, the life expectancy for a male is 53 and a female 57 (increasing over the past five years since the roll out of anti-retrovirals from 50 and 54 respectively).
So what are the implications of living longer?
The most likely implication for an individual is running out of retirement savings as adequate provisions have not been made. It is also worth remembering that South Africa is not a welfare state, therefore at present there is no national health system or life sustaining state pension so individuals need to make their own plans and provisions for their retirement and their general healthcare.
As South Africans face the daunting prospect of planning for a successful retirement there are many things that need to be considered. Perhaps the most important is to manage the cost of their medical care. If this is not managed successfully this expense could radically erode retirement savings and undo all the previous planning and saving.
Data shows us that retirees aged 65 and above utilise health services more than double that of younger individuals. More importantly, when the older individuals require hospitalisation, their length of stay is more than 50% longer than that of people in the 30 to 50 age category.
The current state funded healthcare system in South Africa exists in a large public sector (82% of the population) which has been massively under-resourced, under-funded and over-utilised. Private healthcare sourced by the balance of the population has to date only been available to those in the middle and high income brackets. This means that approximately 7.8 million South Africans belong to a medical aid programme, while another 41 million must get by with limited access to medical services in the public healthcare sector.
This unfortunate scenario means that quality medical services are only available to a fortunate few and, effectively, not to those who need it the most but to those who are able to afford it.
The cost of healthcare in South Africa has risen significantly in the recent past and much quicker than prices in the general economy. The CPI index has averaged approximately 6.2% from 2000 to 2007 while the Private Hospital Cost Index has averaged around 10.3% over the same period. This means that the cost of medical care has more than doubled since the year 2000.
Considering that most households have suffered financially over the past 18 months or so with less disposable income available, one of the first expenses that has been seen to be cut is medical cover, leaving a greater majority of the population without care or funds to pay for medical services should the need arise.
This situation has been compounded by a dramatic increase in medicines and medical costs due to above inflationary increases in medical practitioners' salaries as hospitals struggle to stem the outflow of skilled medical staff to Europe, the US and the Middle East, the need to radically upgrade and invest in the latest technology and the increased costs in monitoring and identifying fraudulent transactions. These transactions include overpricing of services rendered, unnecessary procedures as well as identifying fraudulent claims.
It is worth noting that even if a person has made allowances for inflation while planning their retirement, it is likely that medical inflation will exceed general inflation by at least 3%.
Recognising that South Africa's healthcare system is in desperate need of a radical overhaul if it hopes to be able to supply adequate services to the majority, if not to all, of the population in the future, the government is now investigating means by which to redress the imbalances in the current healthcare environment. While stating that healthcare now forms one of the pillars of government policy and that funds will become available, the government remains tight lipped as to exactly how they will address the issues at hand.
National health insurance scheme
One of the options for alternative funding for medical care is the National Health Insurance scheme. It is envisaged that this proposal would address the current economic imbalances and provide access to reasonable health services to all South Africans regardless of their financial status.
However, working towards a National Health Insurance scheme is a complicated, time consuming and costly task, requiring accurate budgetary commitments as well as a thorough upgrade of the current public hospital infrastructures and resources.
There is little doubt that it will take a great deal of time and energy but if we can be encouraged by the government's 10 point plan recently communicated, it should ultimately ensure that the population as a whole pays into the NHIS and receives appropriate benefits.
Access will also be provided to the lower income households, thereby supplying quality medical services to all of those in desperate need rather than a selected few.
An independent study commissioned in 2009 will start to track certain emerging trends from previous private and state healthcare research. This would include the decrease in member ratings across most medical schemes compared to 2007 and the fact that members are having to pay greater sums from their own resources to cover shortfalls in healthcare costs.
This situation is supported by the fact that the number of members who believe that they are getting value for money has considerably decreased from previous years.
The proposed National Health Insurance scheme will feature heavily in the survey. Research will ask members of their understanding of the NHI and its ability to provide quality healthcare to all South Africans. More interestingly, members will be asked about their appetite to contribute to a mandatory health tax and potentially move from a private healthcare environment to the NHI and to purchase medical top-up products that would be available to fill in the gaps. n
Graeme Mackenzie is managing director at VA Risk Management
