The government’s proposal to implement “only minor selected recommendations” of the five-year-old Health Market Inquiry (HMI) to address the high cost of private healthcare will “do nothing” to advance urgently needed reforms to the public and private healthcare sectors.
This is the view of the Universal Healthcare Access Coalition (UHAC), a broad-based alliance representing most of South Africa’s healthcare professionals and funders, in response to Trade, Industry and Competition Minister Parks Tau’s invitation for comment on draft regulations to facilitate tariff negotiation in the private healthcare sector.
Read: Negotiating forum is a ‘critical step’ in addressing the cost of healthcare
The “draft interim block exemptions” will exempt medical schemes and private healthcare providers from the Competition Act’s ban on collective bargaining and set up a multilateral negotiating and price-setting body overseen by the Department of Health.
The UHAC questions the legality of the “block exemption” approach and the control of the tariff-setting process by the department, rather than an independent body, as well as the effectiveness of “a piecemeal approach” to implementing the HMI’s recommendations.
The proposed multilateral negotiating forum excludes tariffs for private hospitals and other private healthcare facilities, yet these are responsible for most healthcare costs and inflation.
The aim of the regulations, according to Tau, is to contribute to realising the constitutional right of access to healthcare and put a check on private healthcare costs, to ensure that most South Africans have access to affordable healthcare.
UHAC steering committee member Dr Mvuyisi Mzukwa described the development as one-sided; ineffective in improving access to private healthcare, while not addressing the need for the integration of public and private healthcare.
“There is no arguing that we need better regulation of the private healthcare sector, including on how tariffs are determined. Controlling the costs of private healthcare is a vital component in achieving equitable access to healthcare, but government’s contention that this will ensure affordable healthcare for the majority of South Africans is a fallacy.
“The reality is that only about 15% of South Africans are members of a private medical scheme, and even if prices decrease significantly, the majority do not have sufficient income to pay for healthcare in any form, regardless of price.
Dr Mzukwa, the chairperson of the South African Medical Association (SAMA), said: “The majority are always going to be catered for by a tax-funded free public healthcare service, not through medical schemes. The only possible framework for the South African context is for both systems to work together in order to ensure universal healthcare access for all levels of income and non-income earners.”
‘Piecemeal measures are sufficient’
Health Minister Dr Aaron Motsoaledi has described the move as an “interim stop-gap measure” to address rising costs of private healthcare ahead of implementation of National Health Insurance (NHI).
The UHAC maintains that NHI is unimplementable and has developed a proposal for healthcare reform that offers what it describes as a pragmatic, financially viable, and sustainable route to achieving equitable, quality, and affordable universal healthcare access.
The reform proposal was developed by SAMA, the Progressive Health Forum (PHF), and the SA Private Practitioners Forum (SAPPF), which then formed the UHAC and gathered further input and signatories. By 5 March, 34 organisations had joined the UHAC and become signatories to its proposal.
UHAC steering committee member Dr Aslam Dasoo, the convenor of the PHF, said: “There is a flawed mindset behind this interim approach. The health department is refusing to put in place a permanent system to manage and regulate private healthcare because it is working on the assumption that somehow in three years’ time, we will have a completely new healthcare system that replaces both the current public and private systems and pays for everything.
“This is implausible. It is not going to happen. The HMI undertaken by the Competition Commission, which investigated competition and price-setting in the private healthcare sector, was clear in its recommendations in 2019 that they involved an integrated package of measures designed to achieve systemic change in how the sector operates and create a pro-competitive environment. Piecemeal measures would be insufficient.
“The HMI report is five years old, the recommendations were issued in 2019, but only now is implementation being talked about as urgent, while lacking a comprehensive, integrated response that could have been developed over the last five years,” Dasoo added.
UHAC steering committee member Dr Simon Strachan, the chief executive of the SAPPF, said the government is instead pursuing a fragmented, watered-down version of the HMI’s recommendations.
“The HMI chair, former chief justice Sandile Ngcobo, emphasised that market failures may persist if a partial approach is taken to implementing the recommendations, yet this is exactly what government is now doing.
“The HMI report was clear that the systemic weaknesses in private healthcare were due to government’s failure of stewardship for over 20 years, including failure of the health department to use its existing legislated powers to manage the private healthcare market and hold regulators accountable. As a result, we have a private healthcare sector that is neither efficient nor competitive.
“The Department of Health’s latest response to the HMI findings will neither enhance competition, nor improve protection of consumers,” said Strachan.
The focus on narrow aspects of pricing alone and the piecemeal approach now being taken will not reduce the costs of private healthcare, he said.
“The Minister of Health is silent on all the other measures recommended by the HMI, such as the need for a risk equalisation framework, processes for regulating hospital licensing, quality assurance, and measuring the outcomes of patient care, and ensuring the independence of supplier regulation and tariff-setting bodies in order to guard against political interference,” Van den Heever said.
“These are all key elements of a structured approach to managing private healthcare. Without those, even if a price regulatory framework were to work, capping prices on its own would have no effect on costs because the supplier-induced demand that the HMI identified would not be resolved without the other systematic interventions.”
Supplier-induced demand is where suppliers, such as medical practitioners or hospitals, influence demand by ordering diagnostic tests, recommending treatments or procedures, or prescribing medications, that some argue are clinically unnecessary, amounting to over-servicing or over-prescribing to uninformed consumers.
Open to court challenges
UHAC steering committee member Professor Alex van den Heever, of the Wits School of Governance, said the use of an exemption provision to the Competition Act to manage health policy is questionable, and likely open to court challenges.
“The regulations gazetted by the Minister of Trade, Industry and Competition not only provide for price-setting but also introduce a framework to assess treatment protocols and quality of care that are self-evidently beyond the scope of the Competition Act, which is not enabled to make pronouncements on issues of healthcare.
“These are health policy issues which fall squarely under the jurisdiction of the Minister of Health, and has nothing to do with Trade, Industry and Competition. It is the Minister of Health who needs to establish a positive legislative framework to implement the recommendations of the HMI,” Van den Heever said.
Although the HMI recommended an independent body to steer private healthcare tariff negotiations and adjudicate disputes, the Minister of Health has said this function will be managed by the department, which Van den Heever argues is not independent and is likely to be tied up in legal challenges and delay annual tariff announcements.
“Even if this is tried as an interim measure, in terms of the proposed exemption provision, it will be subject to legal challenges by any stakeholder unhappy with a final choice made by a health department official.
“It is also very unclear whether the final tariffs produced through the gazetted framework will be binding on any party,” Van den Heever said.
Implement all the recommendations
Mzukwa said the UHAC recommended that the block exemption approach is scrapped, and the government instead take immediate action to implement the full recommendations of the HMI, which provided “a detailed, evidence-based roadmap for addressing healthcare pricing and market distortions”.
The UHAC urged the government to initiate a formal legislative process to holistically implement the HMI recommendations, addressing both pricing and demand-side issues.
Strachan said this should include establishing an independent regulatory authority to oversee tariff-setting and prevent anti-competitive pricing, with a structured multilateral negotiating body to ensure transparent, fair, and binding tariffs.
“Hospital and facility pricing must be incorporated in the tariff-setting mechanism in order to address the largest contributors to healthcare cost inflation. This must be combined with implementing the HMI’s recommended market reforms, such as the risk equalisation mechanism together with an enhanced mandatory minimum benefits framework.
“The Competition Commission, Council for Medical Schemes, and National Treasury should play a greater oversight role, ensuring that any tariff-setting mechanism is economically sound, competition-compliant, and legally enforceable,” he said.
Dasoo said: “The time for short-term, piecemeal interventions has passed and South Africa requires a coherent, legally grounded, and independently regulated healthcare pricing framework that aligns with global best practices and competition law principles.”
