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Shopsteward Volume 27: Special Bulletin

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Media Centre  |  Submissions

COSATU Submission to Private Health Inquiry 2014

1 July 2015

Socio-economic Context

- SA is rated number 118 out of 187 countries on Human Development Index
- Health outcomes are very poor when compared to other middle-income countries
- 8.5 % of GDP is spent on health; 5 % services 16% of the population; 3.5% services 84% of the population
- only 10.4 % of the African population had medical insurance and 75 % of the white population was on medical aid ( General Household Survey 2012).
- 63.4 % percent of the Africans used public health services; while 84 % of the white citizens used private facilities
- Commercialization and privatization are destroying the South African health system
- Solution= National Health Insurance
- Impossible to introduce NHI without drastic price reduction in the private health sector.


- Competition Commission launched inquiry into private healthcare costs in 2013
- Informed by the exorbitant fees charged in the private health sector
- Hospital price inflation has been way above CPI for the past 15 years
- This undermines the constitutional right to healthcare

COSATUís arguments

- COSATU has presented three submissions
- Public interest and the fundamental right to access quality and affordable health care
- Argued against increased commercialization, consistent with WHO recommendations
- Theoretical perspective: competition policy must not override the principles of social equity.
- Public Interest Clause of Competition Act

State and Regulation

- Debunked the argument of perfect competition
- Competition policy has placed primacy on efficiency and competitiveness, whilst largely ignoring social equity
- Minimal role of the state in price regulation
- Ineffective regulation of private sector expansion e.g. poor provincial licensing system, National Health Act?
- Regulatory oversight: e.g. PMB etc

Private Hospitals

- Account for most of healthcare expenditure (36%)
- Identified 3 main costs drivers:

1. Rapid introduction of complex diagnostic technology and beds motivated by fee-for-service principle
private sector had a bed over-supply of 10†000 by 2008
2.Concentrated patterns of ownership, primarily caused by decision of the competition tribunal.
Netcare, Mediclinic and Life Health Care. These entities own 80 % of the private health care facilities in South Africa.
3. Commercialisation driven by increased market power.
expenditure on private hospitals was way above inflation between 2000 and 2010. In this period the consumer price index (CPI) was 6%; hospital inflation was 8.5%; but private hospital expenditure exceeded 12.2

Private Specialists

- Some practitioners support the practice of over-supply
- Financial benefits: low-cost consulting rooms, benefits associated with share ownership
- Account for second largest portion health care expenditure.
- CMS paid 25.5 million to these private specialists in 2013; 14% increase from 2012

Medical Schemes

- High levels of concentration:
- Discovery, Metropolitan Health (MMI) and Medscheme. They account for over 80% of all medical scheme administration
- Administrative costs:
- fees accounted for 90 % of the companyís operating profits between 2010 and 2011
- Increased co-payments
- Trustees and high stipends
- In 2013 the total costs of payments to trustees of the top 6 medical schemes was R25†021†000

Key Recommendations

- Panel recommendations must support the introduction of NHI
- Reintroduction of National Health Price List
- Improved regulation to address information asymmetry
- Reopen debate on the role of private sector in NHI
- Moratorium to be placed on using public funds to expand private sector
- Centralization of the national licensing system