Twenty eight million. That’s the number of people in Africa who will die from cardiovascular illness, diabetes, and other non-communicable diseases, according to the World Health Organization. That’s 46% of all deaths in Africa by 2030. Half of these deaths, according to a 2017 article in the BMC Public Health journal, are because hospitals aren’t good enough.

“Large numbers of our people continue to die prematurely and to suffer unnecessarily from poor health. Treatable conditions are not being treated on time and preventable diseases are not being prevented,” says South Africa’s Health Minister Aaron Motsoaledi on his department’s website.

It is because times are tough in South Africa. Gross domestic product growth was -0.7% in the first quarter of 2017, while unemployment increased to 27.7%. Medical aid is expensive. It costs about R4,500 ($340) a month, on average, for a family of four. That is almost half of South Africa’s average salary of R10,680  ($815) per month, according to BankservAfrica. It means a mere eight million people, out of 55 million, can afford cover.

To make matters worse, last year, 16 of the top 20 medical aid schemes had to reach into investment funds to stay afloat. It also meant that, this year, scheme members received price increases, on their cover, far higher than consumer price inflation.

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It is so bad the South African government wants to start National Health Insurance (NHI), the first step to free healthcare for all, by 2025, bankrolled by the tax payer.

The NHI White Paper says the money that people pay for private health should be directed to funding the NHI. According to Paula Armstrong, an economist at Econex, an economic consulting firm, even though medical schemes received about R18.5 billion ($1.4 billion) from a medical scheme tax credit, in 2014/15, redirecting some of this money won’t be enough and it is the poor who are likely to suffer.

“The removal of medical scheme tax credits will affect poorer medical scheme beneficiaries disproportionately. In total, 21.86% (1.9 million in 2016) of medical scheme beneficiaries will move above the affordability threshold with the removal of tax credits. The disproportionate effect on relatively poorer households will need to be considered when evaluating the rationale for removing medical scheme tax credits to help fund the NHI,” she says.

Some medical aid schemes are suffering anyway. Between 2000 and 2015, according to Alexander Forbes, the number of medical aid schemes reduced from 144 to 83. If government presses ahead with free health, they are going to lose out even more.

“I see small schemes consolidating and move into larger risk pools… Bigger pools provide bigger sustainability and that’s where I think we will see smaller schemes suffering, going forward,” says Gerhard Van Emmenis, Principal Officer of South Africa’s second largest open medical scheme, Bonitas Medical Fund.

The big question is how many of these medical aid schemes will survive.

“We do believe, at Bonitas, that we should have both, private medical schemes and NHI. You can’t just destroy or dismantle national assets like medical schemes that have proven over the years that they can contribute to the healthcare industry,” says Van Emmenis.

According to the White Paper, NHI will tackle the most needy first. That is healthcare at schools, childhood cancer, women’s health, the elderly and the disabled. Most of the people will have to wait.

“For NHI to be a success, collaboration between medical schemes and government is essential. There needs to be agreement on the roles of both players as well as which benefits will be covered by the NHI and which can be offered by the medical schemes.”

Gerhard Van Emmenis, the Principal Officer of Bonitas. (Photo by Motlabana Monnakgotla)

According to Van Emmenis, specific conditions, such as mental and dental, may not be fully covered by NHI. This is the gap where private schemes could find business. Van Emmenis says medical aid schemes should find a way to work with government, instead of fighting it.

“Primary healthcare might be accessible to everyone, but then there’ll always be a complementary environment with dental benefits and a lot of other things, which is not necessarily life threatening but can improve the quality of your life. You may need packages that will attend to stress, for instance… That’s where we are going to play a part in the future,” he says.

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The problem is, there is no clarity on whether people will be allowed to belong to a private medical aid scheme in the future of free health. To make it worse, the cost of the NHI is likely to be heavy, according to Econex. It is expected to increase healthcare costs from R121 billion ($9.2 billion) for the 2015/2016 fiscal year to R256 billion ($19.5 billion) for the 2025/2026 fiscal year. The government argues it is not going to be expensive but Econex says the annual health budget is likely to increase by R200 billion ($15 billion), and not the R108 billion ($8.2 billion) stipulated in the White Paper.

NHI not only faces money problems but also has scarcity at hospitals and a blundering bureaucracy. To add to that, it would use a standard price list that may be cheaper for patients but, in the long term, less rewarding for doctors. Doctors could work longer days for less money and could look outside Africa for work.

“You’d get an orthopaedic surgeon that only works on hands and is a specialist in that… That guy will detect what sort of charges he’ll charge for his services. You can’t just take it away and decide to pay all orthopaedic surgeons the same money. I can promise you which one will be on the first plane leaving the country, it will be the guy who’s a specialist. If a doctor leaves this country today, it takes us at least seven years to replace that doctor,” says Van Emmenis.

The private hospitals that are left will also suffer.

The 2014 National Income Dynamics Study, by the Southern Africa Labour and Development Research Unit at the University of Cape Town, surveyed 28,000 people in 7,300 households and found that 41.5% of them used private healthcare in their last medical visit.

“The reality is that many people use a combination of both sectors. It means the number of people with medical aid does not equate to the number of people using the private health sector. The converse is also true with some medical scheme members using public hospitals or state clinical protocols for the treatment of specific conditions such as tuberculosis,” says Van Emmenis.

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Van Emmenis says Bonitas is in favor of healthcare being cheaper and wider, but wants more consultation.

Matthew Prior, Funder Relations and Health Policy Executive at hospital group, Life Healthcare, concurs.

“Until the NHI benefit structure has been defined it is difficult to say what the impact will be. In addition, the role of private medical schemes is couched in vague terms, as the benefits that will be offered by the NHI have yet to be determined,” he says.

Life Healthcare had about 600,000 admissions, in 2016 alone, excluding outpatient and emergencies, and 95% of those were patients covered by a medical scheme. Prior says Life Healthcare agrees with the fundamental objective of the NHI but much depends on how it is implemented. He says improving the nation’s health, by addressing the challenges within the healthcare sector, is a massive undertaking and a responsibility that government should not shoulder alone.

“Although the White Paper mentions shortage of staffing, there does not appear to be a coherent plan to increase supply of medical professionals to meet NHI demands. A massive re-organization of the entire healthcare system, where there is an acknowledged shortage of management skills, places any fundamental change to the healthcare system at risk,” he says.

Prior says it is also not accurate to assume that by changing the financing structure and directing more money to the public sector will, on its own, improve the delivery of quality healthcare to all South Africans.

“The key issues around healthcare resources, management skills and leadership must be properly addressed. Recruitment of doctors on contract from foreign countries is a necessary measure in the short-term but it does not build long-term, sustainable capacity in the country,” he says.

Making matters more complicated, research by Econex shows that removing medical aid tax credits will make medical aid schemes too expensive for one in five.

“Members leaving private healthcare will place additional burden on an already overburdened public sector. One would also need to carefully monitor whether organized labor will accept the impact of the tax credit removal on net income,” says Prior.

If history is anything to go by, this is not the end for medical aid companies. About 10 years ago, South Africa introduced the Government Employees Medical Scheme. It got many worried, but some private medical aid companies, like Bonitas, grow regardless.

“Bonitas had 85,000 members that belonged to government that had to go to GEMS. We had about 216,000 members and everybody thought Bonitas was going down, but today we have about 350,000 members… So with the possibility of NHI, we have shifted our emphasis and visions to developing products that can and will be complementary,” says Van Emmenis.

Private money is likely to survive the biggest shake-up in Africa’s health system, whatever the weather.