National Health Act, 2003 (Act No. 61 of 2003)

Notices

National Health Insurance Policy towards Universal Health Coverage

Chapter 3 : Problem Statement

3.3 Structual problems in the health system

3.3.5 Health care financing challenges

3.3.5.3 Fragmentation in funding pools

Purchase

73.

A major characteristic of the South African health system is the fragmentation of funding pools within and between the public and private sectors. In the private sector, there are 83 medical schemes42 funding the health needs of only 16.2% (8.8 million lives) of the population. Spending through medical schemes in South Africa is the highest in the world and is six times higher than in any OECD country and represents more than six times the 2013 OECD average of 6.3%.

74.

Medical schemes are fragmented along the lines of occupational categorisation as well as the ability of individuals to afford the medical scheme contributions associated with a specific benefit option. The overall consequence of this fragmentation is that there is limited cross-subsidisation within the private medical schemes environment.

75.

Within the public sector there are multiple funding pools across the three spheres of government. This fragmentation is exacerbated by several funding streams namely equitable share allocations, conditional grants and locally generated revenues. These do not allow for effective planning, and contribute towards uncertainty in the availability of funding for services.

76.

The effect of the fragmentation is that a majority of South Africans, particularly the unemployed and poor, are not provided with adequate financial risk protection from catastrophic health expenditures and their health needs are not adequately met.43. Fragmentation is also a key driver of inequality and contributes to inequity in the distribution of health benefits.