National Health Insurance Reform in South Africa: Estimating the Implications for Demand for Private Health Insurance
Author: >Okore Apia Okorafor
Source: Applied Health Economics and Health Policy, Volume 10, Number 3, 1 May 2012 , pp. 189-200(12)
Publisher: Adis International
Abstract:Background A recent health reform proposal in South Africa proposes universal access to a comprehensive package of healthcare services in the public sector, through the implementation of a national health insurance (NHI) scheme. Implementation of the scheme is likely to involve the introduction of a payroll tax. It is implied that the introduction of the payroll tax will significantly reduce the size of the private health insurance market.
Objective The objective of this study was to estimate the impact of an NHI payroll tax on the demand for private health insurance in South Africa, and to explore the broader implications for health policy.
Methods The study applies probit regression analysis on household survey data to estimate the change in demand for private health insurance as a result of income shocks arising from the proposed NHI.
Results The introduction of payroll taxes for the proposed NHI was estimated to result in a reduction to private health insurance membership of 0.73%. This suggests inelasticity in the demand for private health insurance. In the literature on the subject, this inelasticity is usually due to quality differences between alternatives. In the South African context, there may be other factors at play.
Conclusion An NHI tax may have a very small impact on the demand for private health insurance. Although additional financial resources will be raised through a payroll tax under the proposed NHI reform, systemic problems within the South African health system can adversely affect the ability of the NHI to translate additional finances into better quality healthcare. If these systemic challenges are not adequately addressed, the introduction of a payroll tax could introduce inefficiencies within the South African health system.
Document Type: Research Article
Affiliations: Health Policy Unit, Mediclinic Southern Africa, Cape Town, South Africa
Publication date: 2012-05-01
- Information for Authors
- ingentaconnect is not responsible for the content or availability of external websites