Actuarial news and views from Cape Town and beyond

Competition Commission Market Inquiry into the Private Health Care Sector in South Africa

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In 2014, the Competition Commission began a market inquiry into the private health care sector in South Africa. This is not the first of its kind (in 2013 a similar inquiry was conducted by the UK’s Competition Commission) and its intent is to examine the competition in the sector and see whether the high prices charged are necessary. The main aims of the Commission are to use this inquiry to try “to achieve accessible, affordable, high quality and advanced private health care”.

Shivani spoke about this inquiry a little bit but I thought I’d look at it in more detail while also looking at the human rights aspect of healthcare. As Shivani said, healthcare is a basic human right according to SA’s Constitution and as such unaffordable healthcare goes against this right. An article that I found from an organisation called Section 27 (which is the section in our Constitution relating to our rights to healthcare, food, water and social security) is from a human rights perspective and is quite interesting (albeit biased) as it is trying to encourage the public to participate in this market inquiry.

Their main points are that the healthcare market is different to ordinary markets (as healthcare is not an ordinary good or service) and so it doesn’t function in the same way that ordinary markets do. They believe that the emphasis should move away from competitors trying to provide the most cost-efficient and effective products and move to quality over quantity. They also state that the sector needs to be more transparent in the availability and accuracy of the information they provide – something that I agree with.

The point of quality over quantity is a good one, although it does bring up the issues of third party payer, rationing – whereby the demand for healthcare is much greater than the supply – and of the principle-agent problem. Its easy for patients and doctors to demand quality healthcare be given/ provided when they aren’t the people paying for it.

The consensus will be given within two years of starting the inquiry and the Commission can recommend that new policy or regulations should be put in place or can further investigate specific companies (and in some cases refer these companies to the Competition Tribunal who can level fines on them). This consensus will occur in a final inquiry report that will take into account all public reports and information from different parties in the sector.

It will be interesting to see what they conclude and how these parties will be affected. In a system where demand is so much higher than quality supply, is it possible to provide low-cost quality healthcare?




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