National Health Insurance
The Price of Healthcare by Age and Gender
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Figure 2 shows the very strong pattern by age and gender in the cost of healthcare. The costs are aggregated for a full calendar year for each age and gender group and this is the price that needs to be charged to cover the cost of healthcare benefits for that age and gender group. The package of benefits used for illustration is the Prescribed Minimum Benefits (PMBs) required in all medical schemes.
Children under the age of 1 year are much more expensive than slightly older children. Not all Under 1s are expensive but there are a few very high cost babies, usually those born prematurely. Male babies are more expensive than female babies as they tend to be sicker and there may be costs of circumcision soon after birth. Children of school-going age are the lowest cost beneficiaries but as they leave school, costs escalate rapidly. Costs in the early adult years are influenced by maternity costs, vehicle accidents, substance-abuse and the consequences of violence. Female costs are much higher than male due to the “maternity bump” in the child-bearing years. At age 40 male and female costs are about equal and after age 40 the impact of lifestyle choices in early adulthood begin to show in the high costs for chronic disease. Male costs are higher than female from about age 40 onwards for the rest of life.
Figure 2 : Price by Age and Gender of Prescribed Minimum Benefits in 2009
Legislation may modify how healthcare is charged, for example the community-rating provisions of the Medical Schemes Act require that each option (package of benefits) charges a flat community rate, not differentiated by age or gender or state of health. If a province receives an amount specified as per person, then this is effectively a community rate being paid to the province. The same concept lies behind the capitation fee used when paying groups of doctors.
The graph below shows the price by age and gender split into component parts: hospital costs (the diagnosis-treatment pairs or DTPs); the medicine for the chronic diseases in the Chronic Disease List (CDL) and the visits to GPs, specialists and related diagnostic and monitoring tests required by minimum benefits.
Figure 3: Price by Age and Gender of PMB Components in 2009
There are as yet no publicly available costings of public sector healthcare by age and gender. In the sections that follow, the price by age and gender for PMBs is used as a proxy measure to enable the demographic factors to be illustrated. How reliable is using the PMBs as a proxy for health costs?
- The shape by age and gender shown in Figure 2 is consistent with that seen in many other countries.
- The major difference is that in South Africa there is a higher cost of maternity due to the very high Caesarean rates in the private sector 6.
- The PMBs cover only about 50% of a comprehensive healthcare package 7.
- The cost of delivery in the public sector may be lower than in the private sector but there are no authoritative studies on the extent to which costs differ. A rough rule of thumb was thought 8 to be that the public sector might be 70% of the private sector cost.
- The HIV epidemic is greater in the public sector population than the medical scheme population used to develop the PMB pricing.
While the PMB price is not very reliable for estimating public sector costs, the general shapes by age and gender are likely to be broadly similar. The thoroughly-researched PMB shape 9 is thus used, updated using the same methodology to 2009 10,11, to estimate the effect there might be in South Africa as a whole due to changes in the age and gender structure of the population.
The Prescribed Minimum Benefit package is a list of some 270 diagnosis-treatment pairs (DTPs) primarily offered in hospital (introduced January 2000); all emergency medical conditions (defined January 2003); diagnosis, treatment and medicine according to therapeutic algorithms for 25 defined chronic conditions on the Chronic Disease List (CDLs) (introduced January 2004).
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