How can developing countries implement health systems that are both equitable and sustainable? Is social health insurance (SHI) a valid healthcare finance mechanism for these countries? This article examines the lessons that can be drawn from the South African experience of adapting and implementing SHI.

Researchers from Universities of Witwatersrand and Cape Town in South Africa, and the London School of Hygiene and Tropical Medicine studied the implementation of SHI in South Africa. SHI has a long tradition in the developed world but was only revived as a potentially useful model for low and middle-income countries in the 1980s. This revival was because:

• it was thought that SHI could increase the equity and efficiency of health resources
• it was believed that SHI could generate resources at times when government funding in healthcare was in decline.

These views were held by many policy-makers in South Africa in the late 1980s. Their stance was strengthened at the time by the existence of an unequal health system that spent its resources on a relatively small minority and did not provide care to those most in need. SHI was seen as the best funding model to deal with these problems. Its introduction was announced in the National Health Plan by the African National Congress in 1994. The initial idea is that the state collects funds from different sources and uses them to buy health services that can then be distributed to the population according to need. It was estimated that at least half of the South African population would benefit from the scheme. In the event, only a limited version of this idea is now being proposed. Researchers found that:

• The introduction of SHI in South Africa in its currently proposed form would not address the challenges of equality of provision faced by the system. This was partly because only those above a certain income were asked to contribute to financing, and would benefit from, the system.
• The model of SHI introduced only covered hospital services and not the entire range of healthcare services.
• The system increased inequalities in access to healthcare, with the rich accessing services through private insurance and the state covering low-income and high-risk groups.

The paper illustrates how SHI design can be affected by concessions that have to be made to key stakeholders and how these can affect the core objectives of SHI. Lessons for future policy development and implementation include:

• The design of SHI has to be geared to achieving key policy objectives such as equality and sustainability.
• In order to avoid inequalities of access and ensure the long-term sustainability of the system, it is necessary that the SHI and existing private insurers contribute to the same funding ‘pot’.
• For SHI to work its implementation has to take place at the same time as organisational and other financial reforms.
• Pre-determined objectives need to be stuck to in order to protect the integrity of the policy.
• It is necessary to take into account that powerful actors such as private insurers or high-income groups can have a negative effect on the implementation of SHI.
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Source(s):
'A tale of two visions: the changing fortunes of social health insurance in South Africa', Health Policy and Planning 18(1): 47-58, by D. McIntyre et al, 2003

Funded by: USAID; EU; DFID

id21 Research Highlight: 21 May 2003

Further Information:
Di McIntyre
Health Economics Unit
School of Public Health and Primary Health Care
Health Sciences Faculty
University of Cape Town
Anzio Road
Observatory, 7925
Cape Town
South Africa

Contact the contributor: dimac@cormack.uct.ac.za

University of the Witwatersrand, South Africa

Health Economics Unit, University of Cape Town, South Africa

London School of Hygiene and Tropical Medicine, UK

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'Insurance policy: the concept of social health insurance in South Africa'

'Ensuring good health: health insurance in sub-Saharan Africa'

'Change for the better? Health reform in Latin America'

'Claiming success – does community-based health insurance protect the poor?'

'The colour of money - healthcare financing in post-apartheid South Africa'

'See id21's collection of links relevant to health systems and economics.'