Biznews contributor David Drew recently published an intriguing set of calculations related to the anticipated cost of the proposed National Health Insurance (NHI) scheme. Drew’s numbers highlight the dramatic possible scale of the undertaking and also raise important questions about the quality of available data – he seems to have struggled to find relevant numbers, which is worrying from a policy perspective.
However, there is one small point he makes that, I believe, invites further scrutiny. Drew writes, “Now if we assume that public health care can deliver the same efficiency as the private system, which even if we build in the cost/profit of medical aid administrators is a bold assumption, the math suggests that government would need to AT LEAST be spending about R1,000 per person per month for the approximately 46 million people currently relying on the public health system.” (emphasis added).
The issue is this: there is no evidence that private health systems are more efficient than public ones. In fact, most global evidence suggests that, if anything, public health systems are more efficient than their private counterparts, as well as less less dangerous for patients.
___STEADY_PAYWALL___
Public healthcare is cheaper and safer
First, let’s be clear on what we mean by efficiency. An efficient health system gets good outcomes with the least possible expenditure of resources – good outcomes typically being measured by things such as life expectancy and mortality (deaths per 10,000 people admitted to a hospital, for example).
There is a widespread assumption that the pressures of market forces will mean that a profit-focused private health system will naturally be more efficient than a public one, just as private manufacturers are more efficient than state-owned ones. Private healthcare systems are also sometimes supposed to produce better outcomes – longer lives, fewer deaths for the sick – than public ones.
However, in practice, this turns out not to be true.
The area has been extensively studied, with many of the studies originating in the US, where the healthcare system includes a mix of for-profit and non-profit hospitals and systems. In general, the evidence suggests that for-profit hospitals are no more efficient than non-profit ones – indeed, some studies show they’re less efficient – and they often have higher mortality rates.
Read also: NHI nightmare: Why it’s bad for your health AND wealth – SA market expert
One study on measures of healthcare efficiency found that public hospitals are more consistently efficient than private ones. Another study found that private for-profit hospitals have worse patient outcomes – namely more deaths – than non-profit hospitals with no differences in efficiency. Yet another study found no systematic differences in efficiency and quality between private and government-run hospitals.
In Europe, where private healthcare is being given a growing role, a meta-analysis found that there is no evidence that private hospitals are more efficient than public ones (if anything, the reverse is true) and that there is little difference in quality of care (although again, public hospitals tend to do better). A report on the impact of outsourcing to the private sector by the UK’s public health system, the National Health Service, indicate largely negative outcomes for patients and reduced efficiency.
If we look beyond individual hospitals, there is also plenty of evidence that private systems are not more efficient or better for patients than public ones. The best example, obviously, is the US, which spends an enormous fortune on private healthcare yet has a lower-than-average life expectancy (compared to other rich countries), higher maternal mortality, higher infant death rates, and generally worse health outcomes. There is also good evidence that the “public” bit of the US system, Medicare, which pays for healthcare for people over 65, is significantly more financially efficient than the private sector. Inflation in the public sector (Medicare and Medicaid, the system that covers poor children and some poor adults) is also much lower than private healthcare inflation.
Read also:Â Prepare to get hit by NHI funding in six years
It’s pretty obvious why public healthcare would be more efficient than private. In a public system, the government can negotiate in bulk for medications. It can prioritise things that matter – good care for pregnant women, say – over things like nice hospital food, which private patients care about but which does nothing to save lives. Care can also be provided on an “as needed” basis – a public system can focus on sick people who need care and save lives, rather than focusing on providing unnecessary care to wealthy people who can afford insurance.
Personally, I can attest to this. When I was living in the US, my annual health insurance – covering my husband and I, paid jointly by me and my employer – cost $23,600. This is a foolish amount of money and led to foolish outcomes. When I turned over my ankle on the stairs and sustained what was clearly a minor sprain, my doctor sent me for an MRI and prescribed six weeks of physical therapy. A generic prescription medicine I was on cost $176 a month – the same drug could be purchased in Canada for $12 a month. And, as a private medical aid patient in South Africa, I underwent a surgical procedure that my US doctors later told me was wholly unnecessary.
In other words, because I could pay for it, I was being given a lot of medical care I didn’t need. At the same time, millions of people in the US and South Africa with serious medical problems are unable to access the care they need. This is the very definition of an inefficient health care system.
So, while David Drew may or may not be correct about the cost of the NHI – the government must be much more forthcoming about the real costs and its plans for funding the programme – one thing is certain: a well-run public healthcare system would be at least as efficient as SA’s current, opaque and expensive private system. The catch, of course, is how well-run the system would actually be.
