In her article, “Spain did it, so why can’t South Africa nationalise healthcare to save lives?”*published in Mail & Guardian on 12 April, Nimi Hoffmann claims that South Africa should follow Spain. Her reasoning is based on a fundamentally flawed premise and would result in one of the most barbaric experiments to be meted out on a citizenry desperate for access to quality healthcare.
Hoffmann makes several unsubstantiated and erroneous claims to support her proposal. When one considers that medical negligence claims against the state are in excess of R104 bn, the fact that less than 1% of hospitals and clinics inspected by the Office of Health Standards Compliance complied with the Department of Health’s norms and standards, and the numerous complaints of serious corruption, fraud and maladministration within the public health sector, nationalising healthcare will have the entirely predictable consequence of increasing morbidity and mortality rates in South Africa.
Hoffmann would have us believe that the public healthcare facilities’ numerous shortcomings, such as long waiting times, poor-quality healthcare delivery, old and poorly maintained infrastructure, poor disease control and prevention practices, are the result of the public sector being “underfunded” because “the private sector captures the majority of health spending”. The private sector does not capture spending. People voluntarily choose to spend their hard-earned cash to access quality healthcare and to avoid the vagaries of a largely dysfunctional public healthcare system. The public healthcare system, in contrast, captures the income of private individuals through their involuntary tax payments to the tune of approximately R222.6 billion per annum.
The private sector also substantially cross-subsidises the public sector. Private suppliers provide the public sector with medicines, diagnostics, and other materials at greatly reduced prices. To compensate for this lost income, they then must charge the private healthcare sector well over the odds. This amounts to an implicit yet substantial subsidy to the benefit of the public health sector.
World Bank data reveals that South Africa’s public health expenditure per capita of $579 (measured in PPP-adjusted international dollars) exceeds the average upper middle-income country government health expenditure of $534 per capita. However, South Africa’s healthcare outcomes are significantly worse than its peers. In South Africa, average life expectancy is 63.5 years, as compared with 75.5 years in upper middle-income countries. The maternal mortality ratio in South Africa is 119 deaths per 100,000 live births, compared with 43 deaths per 100,000 live births in upper middle-income countries. And the infant mortality rate is 29.6 deaths (per 1,000 live births) in SA, compared with 11.3 in upper-middle income countries. In short, the South African government spends more taxpayer money per person than our peers but delivers significantly worse health outcomes.
Hoffmann supports the introduction of government’s National Health Insurance (NHI) policy, stating, “A national health service has been on the cards ever since 1944. But for one reason or another it has never been implemented”. The reason a fully tax-funded National Health Service that provides “free healthcare for all” was not introduced over seven decades ago, is the same reason why it should not be introduced today – it’s far too expensive. As part of her input into the 1994 Finance Committee that was established by the Department of Health to advise on NHI, Prof Anne Mills, a world renowned authority in health economics based at The London School of Hygiene and Tropical Medicine, stated, “It is clearly financially unaffordable to offer universally either the benefits currently on offer in medical aid schemes, or free and complete in the public sector. Benefits would therefore have to be severely restricted. However, it is difficult to see how this can be achieved because the setting up of a universal scheme would raise expectations about access to care. Moreover, the scheme would put in place a financing mechanism before having in place the health service infrastructure to satisfy demand. Benefits would inevitably be unevenly available, causing justifiable grievance”.
It is neither necessary nor appropriate for government to provide free healthcare for all. Those who can pay for their own healthcare and, generally, do not rely on government provided services, must be allowed to do so. However, under NHI, taxes will have to be raised substantially and the proposed mandatory payments into the central NHI Fund will crowd out private voluntary insurance. Cash-strapped individuals will no longer be able to afford their voluntary private-insurance premiums when burdened with a mandatory NHI payment as well. Those unable to pay both premiums will be forced to use the already overstretched public health service.
To its credit the British government has recognised the shortcomings of state monopoly provision and has started to commission the private sector, including South African companies, to perform operations for NHS patients. The resulting competition has driven down costs and reduced waiting times. Instead of trying to curtail the role of the private sector that relies on the pricing mechanism, the government should learn from Britain’s dismal experience with socialised medical care. South Africa has a world-class private sector and the government’s mission should be to make this sector more accessible to the poor via contracting and/or vouchers for the poor. The government should also give people the opportunity to insure against catastrophic future events by allowing actuaries to devise medical scheme options for low income individuals. In this way people will take responsibility for their own medical care needs.
When one considers the high levels of poverty and unemployment, the small tax base, and the poor performance of the public health sector, it is difficult to envision how a government-funded system that promises free care for all is appropriate for South Africa. Yet the consequences of the NHI proposal are entirely predictable. It would reduce the quantity and quality of South African healthcare provision, drive more healthcare professionals out of the country, create a bureaucracy entirely incapable of efficiently handling the huge volume of claims, and impose an unnecessary and intolerable burden on government.
Hoffmann concludes her piece with the following proposition, “let’s try nationalising our health system during this pandemic. Just for a little while”. Spain’s system of obligatory health insurance was introduced by the fascist Franco dictatorship in 1942 and was extended and built on from there. If Spain’s history is anything to go by, it should be a lesson in what not to do. Indeed, should South Africa dispense with democracy just because Spain did it? Paul Starr, a professor of sociology and public affairs at Princeton University, succinctly sums up the more sinister undertones of Ms Hoffmann’s seemingly compassionate suggestion: “Political leaders since Bismarck seeking to strengthen the state or to advance their own or their party’s interests have used insurance against the costs of sickness as a means of turning benevolence to power.”
We can either choose systematic deregulation of the private sector on both the funding and provision sides, or we can choose even tighter controls where all our health care decisions are governed from the cradle to the grave. We need to have the courage to recognise the impending disaster and correct the mistakes before they are made.
Jasson Urbach is a Director at the Free Market Foundation
*Nini Hoffman’s article “Spain did it, so why can’t South Africa nationalise healthcare to save lives? is available