The draft National Health Charter makes many references to the alleged inequitable distribution of health resources in terms of access to care, human resources, and financing. It repeats the claim that a small minority of South Africans have a high degree of access to health services and a large majority have either limited access or no access at all. The charter states that in 2002/2003 the government spent R33.2 billion on health care for 38 million people while the private sector spent R43 billion servicing 7 million.
A cursory examination of the figures shows that the R7.6 billion spent by the national Department of Health has been omitted from the calculation. This is equivalent to private companies leaving out the cost of top management in doing their costing, raising questions as to what else may have been omitted.
The often repeated claim that government provides health-care to about 80% of the population, while privately supplied care is confined to the more affluent 20%, is incorrect. It is also dangerous to people who pay for their own health-care, as it leads to the inference that an equitable distribution of resources requires money spent by private patients on their own health-care to be redirected to the public health system. It also ignores the reality that part of the inequity suffered by poor patients stems directly from bad management of the public health system.
The private health sector, in fact, serves a much larger proportion of the total population than acknowledged by government. That about 7 million people, or 16 per cent of the population, are members of medical schemes, does not automatically convert to government’s assumption that the public sector provides health-care to the remaining 84 per cent.
Poverty statistics reveal that at least 54 per cent of the population is too poor to afford health care. Research conducted by a private medical insurer in 2001 estimated that 13,3m people (about 30 per cent of the population) were not members of medical aid schemes but could potentially afford membership. This indicates that a range of between 16 per cent and 52 per cent of the population can afford to use private health care and potentially between 48 per cent and 84 per cent do not use health care, or cannot afford comprehensive care when they need it and are totally reliant on the public health system when they do.
Medical scheme members and people paying out of pocket for care mainly use private care. People without medical cover often go to pharmacists for health advice or consult private doctors, using either private or public hospitals for further treatment. Government reports indicate that about 80 per cent of SA's population visit traditional healers, paying out of pocket for services, before using other health facilities. The private sector, which includes traditional healers, therefore obviously serves a much larger proportion of the total population than the number of people belonging to medical schemes. The consequent implication is that per capita spending in the public health system is higher than claimed.
The figures quoted in the Charter regarding the burden on the public sector are also overstated because in a given year only a small percentage of people actually get sick. In developed countries only 16 per cent of the population enter a hospital each year, with only a small percentage of them requiring serious and expensive procedures. Per capita spending on health care does not tell us anything about what the actual spending per treated patient is, and should not be used as an argument for redistributing resources from the private to the public sector, as proposed by the Charter.
Government needs to determine how many people are actually served by the public system in order to address the many problems it faces, since this determines the quantity, quality and type of health services it needs to make available. If government health planners are basing their planning on the 80 per cent of the population for which they claim to be responsible, resources will most certainly be misallocated.
The logic behind the “inequity arguments” regarding funding and proposals for “rectification” must be questioned. If we analyse the argument carefully, we find that it is saying that some members of the population spend a lot more of their own money on their own health care than the government, utilising taxpayers’ money, spends on people who are unable to purchase health care. Replace the words “health care” with “food and clothing” and we realise that there is a flaw in the argument. There is an undoubted food and clothing “imbalance of resources”, but the government does not, as a consequence, react by imposing draconian regulations on private-sector providers of these essential commodities. The effect of such an approach by government would be to reduce rather than to increase the quantity of food and clothing available to the poor. The same is true of health care.
However, the most important factor in the “inequity of resources” claims is the fact that almost all the funding for both sectors comes from the same people, who pay all their own health-care costs either directly or through medical schemes, and then as taxpayers provide almost all the resources that government uses to pay for health-care services in public facilities. Thus, when the argument is stripped down to its bare bones, what it actually says is that people must be denied the quality and quantity of services they currently purchase with their own money so that government can take even more of their money to spend on government-provided health care for others.
Optimal allocation of health care resources implies inequality in health care delivery. Consider the fact that medical treatments differ in their effectiveness. Some illnesses are easier to cure than others, and some treatments, while reducing suffering, do not actually cure the patient. Spending a specific amount of money on one disease may save more lives than spending the same amount of money on another disease. Weigh up these factors and one realises that equality in health care delivery will forever remain an elusive goal.
Author: Johan Biermann is a planner and policy researcher. This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the Free Market Foundation.
FMF Feature Article / 16 August 2005