The government’s proposal to implement only some recommendations of the five-year-old Health Market Inquiry (HMI) to address the high costs of private healthcare will “do nothing” to advance urgently needed reform in both 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 public comment on draft regulations to facilitate tariff negotiation in the private healthcare sector.

The ‘draft interim block exemptions’ would 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 has questioned the legality of the ‘block exemption’ approach and 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 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 coalition pointed out.

It noted that the stated 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 the majority of South Africans have access to affordable healthcare.

In a media release, UHAC steering committee member and South African Medical Association chairperson Dr Mvuyisi Mzukwa described the development as one-sided; ineffective in improving access to private healthcare while not addressing the need for 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.

“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 to ensure universal healthcare access for all levels of income and non-income earners,” said Mzukwa.

In the release, 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 was 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.

The UHAC noted that Health Minister Aaron Motsoaledi had described the move as an “interim stop-gap measure” to address rising costs of private healthcare ahead of implementation of the National Health Insurance (NHI).

The association said it maintained that the NHI was unimplementable and it had developed a proposal for healthcare reform which offered a pragmatic, financially viable and sustainable route to achieving equitable, quality and affordable universal healthcare access, with more than 30 healthcare professional organisations as signatories.

During a media briefing on March 6, Van den Heever discussed recommendations provided in the UHAC’s ‘Universal healthcare access for South Africa’ report.

He noted that implementation of the HMI recommendations needed to be pursued, noting that the stability of the private health system required that government focus on HMI recommendations holistically and not in a “piecemeal” or “manipulative” manner.

“The Health Market Inquiry 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,” said UHAC steering committee member and Progressive Health Forum convenor Dr Aslam Dasoo in the release.

“The Minister of Health is silent on all the other measures recommended by the HMI, such as the need for a risk equalization 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 to guard against political interference.

“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,” Van den Heever said in the release.

The UHAC explained that supplier-induced demand was where suppliers, such as medical practitioners or hospitals, influenced demand by ordering diagnostic tests, recommending treatments or procedures, or prescribing medications, that some argued were clinically unnecessary, amounting to over-servicing or over-prescribing to uninformed consumers.

On the lawfulness of the block exemption approach, Van den Heever, in the release, said the use of an exemption provision in a piece of legislation unrelated to healthcare – the Competition Act – was unusual and would likely not stand up to legal scrutiny.

“This is very likely unlawful because the Minister of Trade, Industry and Competition does not have the authority to regulate the health system – that is the responsibility of the Minister of Health.

“Meanwhile, the Minister of Health has not put forward this process in terms of his powers and the legislation that falls under his jurisdiction,” Van den Heever said in the release.

While the HMI recommended an independent body to steer private healthcare tariff negotiations and adjudicate disputes, the UHAC said the Minister of Health has said this function would be managed by the department, which Van den Heever argued was not independent and was likely to be tied up in legal challenges and delay yearly 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 in the release.

Mzukwa said the UHAC recommended that the block exemption approach be scrapped and that 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 is urging government to initiate a formal legislative process to holistically implement the HMI recommendations, addressing both pricing and demand-side issues.

In the release, UHAC steering committee member and South African Private Practitioners’ Forum CEO Dr Simon 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 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.

During the briefing, Van den Heever said a properly regulated multilateral negotiating forum and the creation of a supply side regulator should be considered moving forward.

“In essence, the block exemption is legally flawed and ineffective.

“A structured, independent regulatory framework is needed for sustainable tariff setting, and government must take responsibility for the delay in their health care market reforms, and they must have their feet held to the fire because of this,” he said.

“The important thing is that, as a country, we need a well-coordinated, a legal, independent and properly regulated pricing framework . . . that responds to international best practice and also obviously be accountable in terms of our domestic laws in South Afirca,” added Mzukwa.