Modelling the resource requirements for

universal coverage: A case study of South Africa

Di McIntyreHealth Economics Unit

University of Cape Town

SHIELD project: Strategies for Health Insurance for Equity in Less Developed Countries

Background

• Proposal to introduce universal coverage in South Africa:– Heated debate with particular concerns about

‘affordability’

• Modelling useful to explore likely implications of different financing reforms:– Resource requirements (and impact of key design

features)– Revenue potential

Broad approach used

• Identified the key scenarios:– What kind of financing reforms are being

considered, proposed, or might be feasible?• Resource requirements:– Population x utilisation x unit costs (Excel

spreadsheet model)– Absolute amount and relative to GDP

• Revenue: – Health sector share of government budget;

additional tax or mandatory contributions

Reform scenarios

• Status quo:– Limited growth in private insurance (<20% of

population); limited improvement in public sector• Extended schemes:– Mandatory extension of private insurance to all

formal sector workers and dependents (<40%)• Universal system:– Core of substantially improved public services;

access to all; mainly tax funded including additional payment by formal sector

Core methods and assumptionsBenchmarked baseline 15 year projections

Population Sources: Census, schemes, SHIELD household surveysDisaggregation: Age & sex, insurance status

Reliable projections (AIDS impact not adequately accounted for in official stats)

Utilisation Source: SHIELD household surveys; benchmarked against HMIS & scheme dataDisaggregation: Age & sex, insurance status, type of service

Normative targets and cross-checked with international experience

Unit costs Data from Treasury & HMISScheme claims

Real increases: trends & improved resources

Expenditure benchmark

Audited public & scheme expenditure

Excerpt of model

Coverage and utilisation

Total expenditure as % GDP

Public expenditure as % GDP

Public funding requirements

• Status quo:– Will decline to 10.5% of government budget

• Extended schemes:– Will decline to 9.4% of government budget (but

increased costs of covering civil servants)• Universal system:– Increase share of government budget to 15% plus– Proportional income tax of 4% (2% employer & 2%

employee)– Or, progressive income tax of 1.2% to 6%

Conclusions

• UC is lowest cost option in SA, but places greatest burden on public funds and requires:• Increased allocations for health in line with Abuja

target, and• Additional taxes

• Modelling illustrates likely resource requirements for reform scenarios, but also provides insights into reform design (sensitivity analyses)

Pre-conditions for success

• Cost containment:– Minimise unit costs, careful purchasing from non-

government providers– Minimise administration costs: avoid

fragmentation– Contain utilisation: strengthen primary &

community services; improved gate keeping– Need for ongoing M&E, refine model with

updated data

SHIELD partners

For more informaton visit: http://web.uct.ac.za/depts/heu/SHIELD/about/about.htm

Funding: European Commission and IDRC