Not so fast, Dr Crisp – FMF’s Michael Settas takes on bureaucrat who is driving SA’s proposed NHI project

Michael Settas, chairman of the Free Market Foundation’s Health Policy Unit, sheds more light on the National Health Insurance (NHI) project in South Africa raising widely held concerns. Settas says universal health coverage already exists in the country, emphasising the need to address issues of cost and quality rather than completely overhauling the system. He is concerned about the lack of pre-implementation feasibility studies and engagement, potential disinvestment in the private sector, and the tax implications of the proposed reforms. Settas argues collaboration with non-State stakeholders, ignored thus far, is crucial for NHI to stand any chance of success. – Alec Hogg

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Relevant timestamps from the interview

00:00 – Introductions
01:14 – Michael Settas on his work outside of the Free Market Foundation
02:33 – Settas on the FMF’s stance on NHI
06:19 – On where he disagrees with Dr Crisp on NHI
11:31 – On Indonesia’s NHI model – comparing SA’s NHI to overseas models
16:07 – On NHI’s impact on the private sector
20:25 – On the need for the private sector and government to work together toward NHI
23:06 – Concludes

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Edited transcript of the interview

Alec Hogg: Today we have Michael Settas from the Free Market Foundation to discuss the National Health Insurance (NHI) project in South Africa. Michael, thanks for joining us. Could you tell us about your background and your work outside of the Free Market Foundation?

Michael Settas: Thank you for having me. I’ve been in the healthcare industry for about three decades, mainly in the private health sector. I currently run a business that provides health insurance. It’s an interesting sector, both in the private and public realms.

Read more: Dr Nicholas Crisp – Case for NHI (and why vested interests are pursuing Operation Fear)

Alec Hogg: Healthcare is a highly contested and complex field. While we’ve been cautious in our coverage, the NHI debate is unavoidable. What is the Free Market Foundation’s position on the matter?

Michael Settas: South Africa already has a substantial health system in both the public and private sectors. The idea of achieving universal health coverage through the NHI is unnecessary because we already have it. The issue lies in the high costs in the private sector, making it unaffordable, and the quality problems in the public sector, which are primarily due to governance and management issues rather than resource constraints. Pouring more money into the system won’t solve the underlying problems. The focus should be on addressing governance and management deficiencies. The Office of Health Standards Compliance, the clinical auditor general if you like, has also highlighted governance and management as key areas of concern. However, it seems this doesn’t align with the NHI narrative.

Alec Hogg: Dr. Crisp mentioned the need for restructuring in the healthcare system, particularly regarding the authority and competence of hospital managers. He highlighted the challenges they face in managing basic tasks like repainting, which requires involving the Department of Public Works. Do you agree with his assessment, and where do you differ from his perspective?

Michael Settas: I agree that there are structural issues that need attention, such as the disjointed responsibilities between the Department of Health and the Department of Public Works. It would be beneficial to either improve the functioning of the Department of Public Works or transfer the maintenance budget to the Department of Health. However, where I differ is that Dr. Crisp is tasked with implementation, while the fundamental design and architecture of the NHI is the problem. There has been a lack of feasibility studies and technical understanding of how the NHI will operate, considering its impact on both the public and private sectors. It is reckless to proceed without proper assessment. Additionally, the proposal to increase taxes and eliminate access to private care for taxpayers who already fund healthcare through medical aid contributions and taxes is fiscally dangerous and could further narrow the tax base.

Read more: Discovery Health CEO challenges NHI, begs closed door ANC to open its eyes and ears

Alec Hogg: The argument from proponents of national health systems is that consolidation leads to lower healthcare spending as a percentage of GDP. They cite examples like Indonesia, where healthcare spending is under three percent of GDP and medicines are provided for free. They also point out the administrative costs of private health care companies, which can be as high as 15%. How do you respond to these arguments, and is it a fair comparison?

Michael Settas: While comparisons to other countries can provide insights, we must consider the complexity of our healthcare system and the unique challenges it faces. Consolidation may result in lower spending, but it does not guarantee improved outcomes or efficient resource allocation. We need to carefully assess the value for money and consider the impact on access to care and overall healthcare quality. The administrative costs of private health care companies should be evaluated in the context of the services and benefits they provide. It’s important to analyse the full picture rather than relying solely on simplistic comparisons.

Alec Hogg: I apologise if there was any confusion. I understand that Dr. Crisp mentioned the need for a basic level of care that currently may not exist for everyone.

Michael Settas: It’s important to clarify that access to public healthcare is available to all individuals in South Africa, regardless of citizenship. The issue lies in the quality of care and delivery failures. Regarding healthcare spending, South Africa is in line with other upper-middle-income countries, with an average public health spend of 4.1% of GDP. It’s not accurate to combine public and private spending and conclude that we spend too much. Taking away private healthcare without proper assessment and feasibility studies could have unintended consequences. It’s not as simple as reallocating funds to create a national health system. Additionally, it’s important to consider the implications of reducing access to private healthcare for those who currently have it, especially without a clear plan for raising sufficient taxes to finance the system. It’s crucial to approach this issue with a comprehensive understanding of the complexities involved.

Read more: NHI debate: PPP model that works for 250m Indonesians – template for SA?

Alec Hogg: My understanding from Dr. Crisp was that the aim is to provide a basic level of care that is currently lacking. For example, if someone needs flu medicine, they would be able to obtain it without financial strain. The national health system would still allow individuals to seek private care if they choose to do so. The idea appears to be reduce wastage and improve access to healthcare without eliminating the option of private hospitals and doctors.

Michael Settas: There are several important aspects to consider, Alec. First, the impact on the private sector cannot be ignored. The assumption that hospitals and doctors will simply remain in place without disinvesting is flawed. If the National Health Insurance (NHI) determines reimbursement rates below a reasonable level of return for private providers, they may choose to disinvest, leading to a lack of healthcare delivery. Additionally, the proposed certificate of need, which regulates where and what private providers can practice, could further restrict access to private healthcare.

The notion that the private sector has excessive waste is unsubstantiated, and claims of reducing costs by 50% lack evidence or feasibility studies. While improvements can be made, it’s important to recognise that hospitals and medical aids have faced financial pressures, and the assumption that all providers are making exorbitant profits is inaccurate. The lack of discussion and engagement throughout the policy process is concerning. Input from various stakeholders, including the medical fraternity, has not been adequately considered or incorporated into the bill. Successful healthcare systems require the participation and collaboration of healthcare professionals.

Lessons can be learned from historical examples like the UK’s National Health Service, where engagement with doctors was crucial for its success. Engaging both the private and public sector providers, as well as the provinces, is essential for finding viable solutions. It’s possible that the bill may encounter opposition in the National Council of Provinces, as premiers may have concerns about its progress. Proper engagement and addressing issues like state capture and incompetence are necessary steps forward.