Health risks are experienced by most households across the Southern African Development Community (SADC). These risks frequently impose significant financial burdens that can push families into poverty. However, very few people within the region use prefunded health finance as a means to mitigate for these risks. This is often due to a lack of appropriate products combined with limitations in health service delivery.
FinMark Trust would like to commission this project to improve the role that finance can play to achieve better health outcomes in SADC.
The South African regulatory environment for health finance is the most developed in SADC. A range of health services are free to the poor, yet many poor South Africans incur significant out-of-pocket expenses to access private health care, to replace income when ill or to fund transport or childcare-related costs.
South Africa has a two-tiered healthcare system: a public means-tested system that caters for poorer South Africans, and a private healthcare system which serves largely wealthier South Africans. Private healthcare and other out-of-pocket expenses are funded by medical aid scheme, insurance savings, and credit. The focus of this study is on prefunded health finance models, such as medical schemes andother health-related insurance models.
Prefunded health finance mechanisms are generally expensive for low-income households, and do not always cover the required health-related needs of South Africans. This excludes millions from appropriate access. South African regulators have recognised this challenge and are in the process of making significant changes to the regulatory environment, including the recent introduction by the Council of Medical Schemes of Low Cost Benefit Option medical schemes.
This study will also provide an update on the supply and regulatory landscape of health finance in South Africa, with a focus on:
- Health financing mechanisms currently available and the health needs they cover
- Challenges and opportunities posed by new regulatory changes
- Insights from the South African experience that can inform policy and regulations in other SADC countries
The findings of this project will also inform further study on the affordability of health finance services, and willingness of consumers to pay for particular services.