mmi submission on the funding of national health insurance€¦ · 1 mmi submission on the funding...

1

MMI submission on the funding of National Health Insurance

Presented to Davis Tax Committee

1 November 2016

Boshoff Steenekamp

Industry Relations Team

MMI Health Centre of Excellence

2

Content

What NHI and Universal Health Coverage are

Whether the health system is underfunded or

underperforming

What should be funded

─ Health system reform proposals

How to increase revenue to fund the health

system

3

Universal health coverage is an old concept that was popularised by the 2010 World Health Report, and now enjoys world-wide attention

UHC can never be fully achieved – the box keeps on growing. Does not imply a specific delivery system or financing mechanism.

4

Equity in healthcare financing

Young and

healthy

Sick and old

High income

Low income

Achievable through compulsion and cross

subsidisation

Achievable through compulsion and cross

subsidisation

Kutzin, Joseph, Yip, Winnie and Cashin, Cheryl. Alternative Financing Strategies for Universal Health Coverage. [ed.] Richard M Scheffle. World Scientific Handbook of Global Health Economics and Public Policy. s.l. : World Scientific Publishing Company Pty Ltd, 2016, pp. 267-309.

5

National Health Insurance (NHI)

White Paper describes a National Health

Service, similar to NHS in the UK.

Presents a purchaser-provider split,

publicly funded, public and private

provision, with supplementary private

insurance.

6

Social Development Index Quintiles by country, 2015

Institute for Health Metrics and Evaluation (IHME). Rethinking Development and Health: Findings from the Global Burden of Disease Study. Seattle, Washington : Institute for Health Metrics and Evaluation, 2016. ISBN 978-0-9910735-7-3.

7

Health related SDG index

Measuring the health-related Sustainable Development Goals in 188 countries: a baseline analysis from the Global Burden of Disease Study 2015 The Lancet DOI: 10.1016/S0140-6736(16)31467-2

8

Difference between observed and expected

Health related SDG index

Measuring the health-related Sustainable Development Goals in 188 countries: a baseline analysis from the Global Burden of Disease Study 2015 The Lancet DOI: 10.1016/S0140-6736(16)31467-2

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Fin

anci

ng

Fin

anci

ng

Where additional funds are required

Creating resources Creating resources

Revenue collection Revenue collection

Service delivery Service delivery Stew

ard

ship

, go

vern

ance

, ove

rsig

ht

St

ewar

dsh

ip, g

ove

rnan

ce, o

vers

igh

t

Pooling Pooling

Purchasing Purchasing

Ben

efit

s B

enef

its

Functions Intermediate

objectives Coverage

goals

Equity in resource distribution

Equity in resource distribution

Efficiency Efficiency

Transparency and accountability

Transparency and accountability

Utilisation in relation to need

Utilisation in relation to need

Financial protection and equity in

finance

Financial protection and equity in

finance

Quality Quality

Steenekamp, Boshoff. Review of South African healthcare financing: towards Universal Health Coverage. A contribution towards the debate on achieving Universal Health Coverage in South Africa. Centurion, South Africa : MMI Health, 15 July 2016.

McIntyre, Diane and Kutzin, Joseph. Health financing country diagnostic: a foundation for national strategy development. Health Systems Governance & Finance. Geneva : World Health Organization, 2016. ISBN 978 92 4 151011 0.

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A health financing strategy should define…

…changes to revenue raising, purchasing, benefit design, and overall system architecture and governance…

…to address specific, identified problems that limit progress towards UHC (final and intermediate) objectives…

… and provide a solid foundation for future development of a system…

…that can be feasibly implemented given current and expected future contextual constraints.

Joe Kutzin, Study material, WHO advanced course on health financing for universal health coverage for low and middle income countries.

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Contextual constraints hindering NHI implementation

Poverty, unemployment and inequality

Narrow PIT & CIT taxpayer base: R23bn revenue shortfall*, additional taxes of R13bn in 2017-18

*

High tax-to-GDP ratio

Confidence is low

Politically charged

GDP growth < 1%

Higher education funding: R17.6bn more than projected*

Rating agencies

Uncertainty around NHI policy in relation to Comprehensive Social Security policy

* Ensor, Linda. Pravin Gordhan’s medium-term budget in a nutshell: big tax increases, spending cuts. Business Day. 26 OCTOBER 2016.

12

Debt to GDP ratio Forecasts and actual

Ensor, Linda. Pravin Gordhan’s medium-term budget in a nutshell: big tax increases, spending cuts. Business Day. 26 OCTOBER 2016.

13

GDP growth Forecasts and actual

Ensor, Linda. Pravin Gordhan’s medium-term budget in a nutshell: big tax increases, spending cuts. Business Day. 26 OCTOBER 2016.

14

Government wage bill trend % of non-interest expenditure

0

5

10

15

20

25

30

35

40

45

FY15/16 FY16/17 FY17/18 FY18/19 FY19/20

% o

f N

on

-in

tere

st e

xpe

nd

itu

re

2016 Budget 2016 MTBPS

van Papendorp, Herman and Packirisamy, Sanisha. MTBPS 2016: Additional taxes and spending cuts used to negate weaker growth impact on fiscus. Macro Research and Asset Allocation. Pretoria : Momentum Collective Investments (RF) (Pty) Ltd, 26 October 2016.

15

Government wage bill comparison % of GDP

0 3 6 9 12 15 18

PhilippinesKenya

MaliMalaysiaRomania

Cote d'IvoireNetherlands

MoldovaGhana

UKKosovo

El SalvadorIreland

JamaicaHonduras

PortugalSA

FranceTunisia

Zimbabwe

Government wage bill as % of GDP

van Papendorp, Herman and Packirisamy, Sanisha. MTBPS 2016: Additional taxes and spending cuts used to negate weaker growth impact on fiscus. Macro Research and Asset Allocation. Pretoria : Momentum Collective Investments (RF) (Pty) Ltd, 26 October 2016.

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Four NDP prerequisites for building NHI

Improve the quality of public health care

Lower the relative cost of private care

More professionals in both sectors

Health information system that spans public

and private health providers

These reforms will take time, require

cooperation between the public and private

sectors, and demand significant resources.

National Planning Commission. National Development Plan 2030 Our future - make it work. Department of the Presidency. Pretoria : Republic of South Africa, 2012. ISBN: 978-0-621-41180-5.

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Risk adjustment mechanism for medical schemes Risk adjustment mechanism for medical schemes

Norms and standards for equitable financing in provinces Norms and standards for equitable financing in provinces

Priority setting authority (NICE or HITAP) Priority setting authority (NICE or HITAP)

Coding, remuneration, and outcomes authority Coding, remuneration, and outcomes authority

Transversal contracts for medicines, surgicals, labs and equipment Transversal contracts for medicines, surgicals, labs and equipment

Prepare for a purchaser provider split, improve service delivery Prepare for a purchaser provider split, improve service delivery

State sponsorship for missing middle State sponsorship for missing middle

Stewardship, governance and oversight Stewardship, governance and oversight


Revenue collection Revenue collection

Single health information platform


Service delivery, creating resources, stewardship, governance and oversight Service delivery, creating resources, stewardship, governance and oversight

Revenue collection Revenue collection Pooling Pooling

Purchasing Purchasing Benefits Benefits

Virtual single risk pool

Virtual single risk pool

Interventions towards NHI

Based on: MMI Health. MMI Comments on NHI White Paper. Pretoria : MMI Holdings, 31 May 2016.

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Economic framework for cost containment OECD publication

Based on: Moreno-Serra, Rodrigo. The impact of cost-containment policies on health expenditure. [book auth.] OECD. Fiscal Sustainability of Health Systems. Bridging Health and Finance Perspectives. Paris : OECD Publishing, 2015.

THE Total Health Expenditure

THE Total Health Expenditure

HEO/I Health Expenditure

(Outpatient and Inpatient)

HEO/I Health Expenditure


HEPH Health Expenditure (Pharmaceuticals)

HEPH Health Expenditure (Pharmaceuticals)

HEADM Health Expenditure

(Administration)

HEADM Health Expenditure

(Administration)

PO/I Price


PO/I Price


QO/I Quantity


QO/I Quantity


PPH Price

(Pharmaceuticals)

PPH Price

(Pharmaceuticals)

QPH Quantity

(Pharmaceuticals)

QPH Quantity

(Pharmaceuticals)

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Areas of influence for cost containment policies OECD publication


THE THE

HEO/I HEO/I HEPH HEPH HEADM HEADM

PO/I PO/I QO/I QO/I PPH PPH QPH QPH

Supply side Supply side Demand side Demand side Public management,

coordination and financing

Public management, coordination and

financing

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Empirical evidence abounds for specific policies to influence cost containment


THE THE

Supply side Supply side Demand side Demand side Public coordination Public coordination

• Provider payment mechanisms

• Provider competition

• Insurer competition and selective contracting

• Generic substitution • Joint purchasing • Workforce

legislation • Malpractice

legislation • Budget caps







• Cost sharing • Private insurance

subsidies • Gatekeeping • Formularies • Definition of health

benefit package



benefit package

• Direct control on pharmaceutical prices/profits

• (De)centralisation of health system functions

• Sources of health system financing

• Health technology assessment





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THE THE
















benefit package



benefit package









Relation between MMI proposal and OECD framework


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THE THE
















benefit package



benefit package












23


THE THE
















benefit package



benefit package













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Impact on UHC dimensions

Missing middle Missing middle

Purchasing efficiency Competition challenges Coding, remuneration, outcomes authority Transversal contracts

Purchasing efficiency Competition challenges Coding, remuneration, outcomes authority Transversal contracts

Pooling problems Pooling

problems Priority setting Revenue collection Fiscal space

Priority setting Revenue collection Fiscal space

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Norms and standards for equitable financing in provinces Norms and standards for equitable financing in provinces



Transversal contracts for medicines, surgicals, labs and equipment Transversal contracts for medicines, surgicals, labs and equipment

Prepare for a purchaser provider split, improve service delivery Prepare for a purchaser provider split, improve service delivery

State sponsorship for missing middle State sponsorship for missing middle

Stewardship, governance and oversight Stewardship, governance and oversight


HIV independent of donor funding HIV independent of donor funding

Total


Crude estimate of funds required (Million Rands)

Virtual single risk pool Virtual single risk pool

1,000 1,000

20 20

10 10

10 10

20 20

20 20

5 5

10 10

6,600 6,600

5 5

100 100

12,800 12,800

5,000 5,000

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How should NHI be funded?

“Ideally, NDP priorities should be financed from increased tax revenues

generated as a result of stronger economic growth, improved tax

compliance, expenditure reprioritisation, elimination of inefficiency and

corruption and increased effectiveness of public spending.”*

The public health budget is “under acute pressure” (R40bn

expenditure cut over two years mostly affects the health system, the

provision of free basic services, the roads network and rural water and

electricity provision). * *

Additional funds are required to improve efficiency.

Removal of tax credits poses a significant threat to lower income

members of medical schemes.

Aim at 5% to 6% of GDP, or 15% of government expenditure – no

magic numbers.

* The Davis Tax Committee. The tax system and inclusive growth in South Africa: Towards an analytical framework for the Davis Tax Committee. First interim report on macro analysis for the Minister of Finance. 2014.

* * Ensor, Linda and Paton, Carol. Health and basic services to feel pain of R40bn spending cut. Business Day. 27 OCTOBER 2016

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Taxes not suitable to fund NHI

Earmarked taxes not recommended

─ Rigidity

─ Payroll taxes and non-wage cost of employment

─ Political commitment to health is more important

“Novel” or “Innovative” taxes contemplated in WHO 2010 World Health Report not appropriate in SA

Personal Income Tax and wealth taxes

─ High rates on a narrow tax base

Corporate Income Tax

─ Rather improve the effective tax rate* from 17% to 28%

* The Davis Tax Committee. The tax system and inclusive growth in South Africa: towards an analytical framework for the Davis Tax Committee. First interim report on macro analysis for the Minister of Finance. 2014.

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PIT and wealth taxes

Double estate duty tax : R2.3 bn

Increase the dividend tax rate from

15% to 20%:

R9.1 bn

New band taxing earnings above R1

million at 45%:

R5 bn

PIT: 1% tax increase across the board

(protecting low-income):

R10 bn

Total R26.4 bn

van Papendorp, Herman and Packirisamy, Sanisha. MTBPS 2016: additional taxes and spending cuts used to negate weaker growth impact on fiscus. Macro Research and Asset Allocation. Pretoria : Momentum Collective Investments (RF) (Pty) Ltd, 26 October 2016.

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Potentially applicable taxes

Fuel levy – 44c/litre

VAT – increase to 14.6%

─ Exempted basic goods and social spending appears to negate the regressive nature of VAT

─ Simplicity linked with robustness, depth and breadth

─ Best vehicle for expansion of NHI as benefits expand through the proposed virtual single risk pool

Gamification

─ Give small tax credits to reward healthy behaviour

─ Rewards programme similar to wellness programmes in the market

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In conclusion

“These reforms will take time, require

cooperation between the public and private

sectors and demand significant resources.” *

MMI passionately supports the drive towards Universal

Health Coverage for all South Africans. MMI’s purpose,

which is to enhance the lifetime financial wellness of

people, communities and businesses, is 100% aligned

with this objective.

* National Planning Commission. National Development Plan 2030 Our future - make it work. Department of the Presidency. Pretoria : Republic of South Africa, 2012. ISBN: 978-0-621-41180-5.

31 Lluis Masriera. Sombras reflejadas (1920)

mmi submission on the funding of national health insurance€¦ · 1 mmi submission on the funding...

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