Rights, wrongs and regulation

It hurts to say this, but I agree with the health minister. Like her, I believe that something needs to be done to address private hospitals’ proposed tariff increases. But the problem, which the minister has yet to admit, is that she appears to have no express statutory power to act.

Like the problem of power supply, profiteering by the three major hospital groups is not something new. Ask some of those fine people at the Council for Medical Schemes (CMS) who have been leading in this battle for some time. They woke up to the problem a long, long time ago.

But as a statutory council, the CMS only has the powers granted to it by its empowering legislation — and these are somewhat limited. With that in mind, it has sought — albeit unsuccessfully — to make creative use of competition law, trying to prevent the already concentrated hospital market from becoming even more consolidated.

Many of us working in health policy have for some time recognised the need for hospitals to be regulated by a reasonable legislative framework. In the absence of such controls, the industry will act rationally — although not ethically — in its pursuit to expand the bottom line. And without the appropriate regulatory tools in place, it’s very hard to compel the hospitals to do anything.

So who’s to blame? And more importantly, what should be done?

As always, my starting point is the Constitution, which recognises that everyone has a right to have access to healthcare services — which includes hospital services. The same Constitution places an obligation on the state to take reasonable legislative and other measures, within available resources, to achieve the progressive realisation of the right.

Simply put, the state has to ensure that people are able to access hospital services. For those who are reliant on the public health sector, the state must provide. But for those who access private healthcare, the state’s obligation is somewhat different. Instead of provision, the obligation includes passing and enforcing appropriate legislation to ensure that private services are accessible — meaning available and affordable.

Perhaps the best example of private health-sector regulation we have seen since 1994 was the introduction in 1998 of the new Medical Schemes Act. Although not perfect, the statute goes some way to address issues of access: health status cannot be used to exclude members and other beneficiaries; premiums cannot be based on individual risk; and a basic minimum package of benefits must be available to all.

One big problem, as pointed out by the Board of Healthcare Funders, is that medical schemes are forced to purchase services from an industry that — as far as pricing is concerned — is largely unregulated and where price competition is largely absent. So, hospital services must be covered, although the prices of such services are rising much faster than the rate of inflation.

So where to from here?

A resolution of the problem requires much more than hot air, which unfortunately seems to be the mainstay of the minister’s response. Instead, she should consider what reasonable steps she is required to take — by the Constitution — to ensure that hospitals are appropriately regulated. And in so doing, she should also be talking to those who have no financial interest in the provision of health care services.

Is this too much to ask?