Chapter 15: Healthcare

Question 1

healthcare is not seen as another financial service, but has a more fundamental role in the social security structure of the country.

Answer 1

“Fair financing in health systems means that the risks each household faces due to the costs of the health system are distributed according to ability to pay rather than to the risk of illness: a fairly financed system ensures financial protection for everyone. A health system in which individuals or households are sometimes forced into poverty through their purchase of needed care, or forced to do without it because of the cost, is unfair.”

Question 2

To ensure that individuals have access to health services, three interrelated functions of health system financing are crucial:

Answer 2

revenue collection, pooling of resources and purchasing of interventions.

Question 3

Revenue collection

Answer 3

is the process by which the health system receives money from households and organisations or companies, as well as from donors.

Question 4

Pooling

Answer 4

is the accumulation and management of revenues in such a way as to ensure that the risk of having to pay for healthcare is borne by all the members of the pool and not by each contributor individually.

Consumer preferences for insurance packages often focus on interventions of high probability and low cost (relative to the household capacity to pay), although these are best paid for out of current income or through direct public subsidies for the poor.

Question 5

Purchasing

Answer 5

is the process by which pooled funds are paid to healthcare service providers in order to deliver/provide a specified or unspecified set of health interventions.

Question 6

• Social Health Insurance (SHI):

Answer 6

only those who contribute are entitled to benefits. Contributors may be all employed people, or defined groups in certain industries or all taxpayers

Question 7

• National Health Insurance (NHI):

Answer 7

usually the same taxpayers would be the contributors but everyone would be entitled to benefits.

Question 8

• In social security systems the entitlements to benefits and the degree of risk-pooling are described in terms of pillars:

Answer 8

o Pillar 1: Universally available basic benefit for all citizens and specified classes of legal resident. It is available without contributions. Funding is typically from general taxes.
o Pillar 2: Contributory environment above Pillar 1 is characterised by strong mechanisms to ensure social solidarity: income-based cross-subsidies; risk-related cross subsidies; and mandatory participation.
o Pillar 3: Discretionary social security over-and-above minimum levels regarded as essential. Individuals are left to make decisions completely at their discretion.

Question 9

There are three kinds of medical schemes:

Answer 9

a) Restricted membership schemes are allowed to restrict who may become a member. Definitions include employment in a particular profession, trade or industry employment by a particular employer or class of employers; or membership of a professional association or union.
b) Bargaining Council schemes were initially set up under the Labour Relations Act and typically offer very limited benefits, often only primary health care delivered by salaried or panel doctors.
c) All other schemes are classified as open schemes (previously also called “commercial schemes”).

Question 10

Some restrictions may be placed on membership depending on:

Answer 10

• the extent of prior coverage;
• whether the medical scheme change arises from a change in employment;
• the length of any break in coverage;
• the age at entry.

Question 11

The maximum limitations (under specific circumstances) are defined in the Regulations and include:

Answer 11

• a three month waiting period;
• a twelve month exclusion on pre-existing conditions;
• a late joiner penalty.

Question 12

The Medical Schemes Act operates under a social solidarity framework and this includes:

Answer 12

• community rating in that contributions may only be determined according to income and family size (and not by other factors such as age. gender or health status);
• open enrolment whereby all eligible applicants who are able to pay the contributions must be accepted;
• minimum benefits that must be provided by all benefit options (these include specified hospital care as well as chronic disease management, these are known as Prescribed Minimum Benefits (PMBs)).

Question 13

Other legislation that is relevant to the South African Health and Care environment is:

Answer 13

• The Compensation for Occupational Injuries and Diseases Act (COIDA);
• The National Health Act;
• The Income Tax Act
• Equality legislation.