Roadmaps to managed competition: to what extent does South Africa meet the preconditions for equity and efficiency?

Abstract

Abstract South Africa offers universal health coverage through large public and private systems. The private system is characterised by a regulated market for health insurance, referred to domestically as medical schemes. From 2000, the private system was undergoing a reform process consistent with theoretical approaches for regulated competition for health insurance. However, from 2008, the reform process was interrupted, leaving in place a partial framework which included open enrolment, community rating and regulated minimum benefits but excluded, inter alia, risk equalisation. The incomplete reform, however, provides an opportunity to examine the system outcomes that result from a partial approach. This paper therefore reviews the system outcomes of the partial reform using a descriptive data analysis. The findings then inform an evaluation of the extent to which the preconditions for regulated competition have been met as indicated by the theory of regulated competition in healthcare. The paper therefore highlights the areas where regulatory interventions need to be prioritised in South Africa to achieve the objectives of regulatory competition that are able to achieve access, fairness and efficiency. The analysis points to significant failures at the level of health insurance competition in South Africa with resulting outcomes consistent with the theory of regulated competition.