Is wealth the cause of poverty? Is everything in development a zero sum game?

Listening to how the ANC and the SACP motivate their proposed national health insurance scheme gives a disconcerting inkling of how they think about development.

Their proposal is for a compulsory national health insurance (NHI) to be the main solution to a number of  problems that beset the provision of health services. The main problem to be addressed by NHI is the low standard of care provided for the poor and the generally low standard of health indicators for the populace, especially in comparison to countries that are similar to South Africa in other ways (GDP, gini-coefficient, health expenditure). For example: South Africa’s life expectancy for men is 50 years  – compared to Brazil’s 68, Chile’s 75 and Mexico’s 72 and  South Africa’s infant mortality rate is 69, per 1000 live births compared to 20 in Brazil, 9 in Chile and 35 in Mexico.  

The assumption is that the main problem is one of funding. A compulsory system of health  insurance with a comprehensive benefits package and the public sector as the main provider of those benefits would allow government to get the rich to subsidise the provision for the poor – and divert rejuvenating funding from the private sector to the public.

But what if the problem is not primarily one of funding, but rather of, for example,  mismanagement of public funds and hospitals, failure of private health regulation and failure to compensate and motivate public sector health professionals? Then the problem is government failure. Proposing an NHI in this context might do something worse than creating a confusing diversion; it might exacerbate the problems precisely by giving government more money to waste and a bigger mandate to waste it.

Examining the terms in which the ruling alliance is motivating the NHI is instructive. The one leg of the argument is represented by Blade Nzimande (carrying his Secretary General of the SACP meat-cleaver, not wearing his Minister of Higher Education and Training mortarboard.)

As expected his main argument is to attack the capitalists:

The current system of funding health care in South Africa is a two-tier system which grossly discriminates against the working class and the poor in favour of the rich and propertied classes. From Politicsweb June 17 2009


The capitalist classes in the health sector, together with their lackeys and the media have already started a campaign to oppose the introduction of the NHI. The NHI aims to ensure universal access to affordable and quality health care for all, with the rich subsidizing the poor, and no up-front payment for health services. As part of this campaign to defend the NHI, the SACP further calls and will campaign for an end to the outsourcing of services in the public health system and for the return of all outsourced services into the hands of public health institutions. – Speech delivered by SACP General Secretary, Cde Blade Nzimande, on the occasion of the celebration of the 88th Anniversary of the SACP on 2 August 2009, Harmony Stadium, Virginia

Nzimande says:

the capitalist vultures in the private health care sector would leave no stone unturned to oppose the introduction of a National Health Insurance Scheme (NHI) for the benefit of the overwhelming majority of the workers and the poor of our country… Indeed in recent weeks, reels and reels of columns – written largely by beneficiaries, ideologues and parasites to the highly exploitative private health care and medical aid systems – are regularly appearing in some of the major newspapers of our country.

So instead of saying anything serious about how the NHI would work for the benefit of the poor, Nzimande asserts over and over again that the reason the poor get such poor health care is that the rich hog the limited resource. Further, that any criticism of the NHI is actually a defence of this obscenity and injustice.

Nzimande’s arguments are best compared to similar arguments from history by political elites blaming the suffering of the citizenary on a small and identifiable group and promising relief from that suffering by various forms of confiscation from and suppression of the identifiable group. We all know where that leads.

A better critique and a more carefully motivated argument for NHI – allthough still one that fails to convince me – comes from a less powerful player, Dr Olive Shisana (CEO of the HSRC, head of the ANC’s task team on the NHI and an ex-DG in Nkosazana Dlamini-Zuma’s department of health).

She says:

A National Health Insurance is a system of mandatory health insurance contributions, in which those who can afford contribute according to their ability and those who cannot afford are paid for through subsidies from government. The funds are pooled into one fund from which resources are drawn as people use services according to their need.

Her main issue is, again, inequality:

 The medical schemes expends more than 45% of resources to cater for a stagnant 7.4 million people whilst the public sector expends 40% on the rest of the population, … This cannot be right and needs to be corrected through transformative health policies such as National Health Insurance.

One might wonder what she means by the phrase “stagnant 7.4 million people” but that’s for some other time. Dr Shisana raises what for me would be one of the main objections to her own argument:

Concerns have been raised about the status of the public health system. It is true that the public sector has been facing major challenges in terms of both the quantity and quality of services it provides. Clearly, that cannot be explained by under-funding alone but by other health systems constraints such as shortages of human resources, management capacity constraints, sometimes cumbersome procurement processes and the ever increasing disease burden.

Frankly, this is an understatement. It is widely acknowledged that state capacity to provide public health care and its capacity to effectively regulate the bloated private sector has stumbled from disaster to disaster since 1994. The current situation is little less than a severe crisis.

So Nzimande, speaking from the central platform of the Zuma government is extending the call for “an activist developmental state” to the specific area of health provision. An active and assertive developmental state is CLEARLY what is needed, but not one that runs the assets and the capacity into the ground – by a combination and arrogance, incompetence and corruption. Incompetence and bullying arrogance is what has characterised much of public health policy in the past 10 years. One has to ask if the content and tone of Blade Nzimande proposals are a break with this past?

I will have to leave to another post a strong criticism of the private sector – hospitals, medical aids and professional organisations – for having failed to engage the government and the ANC in a realistic discussion about health care funding and instead behaved like pirates, taking every last cent of profit out of the system and then bleating for protection – in a country with one of the highest gini-coefficients in the world.

But for now, let it just be said that it is deeply unconvincing that the health care failure is primarily a question of skewed distribution of resources and public sector underfunding. From where I sit the problems appears to lie primarily with incompetence and capacity constraints and only secondarily with underfunding. We should not throw more money at the problem until we are sure that that money can be raised reasonably and spent effectively and honestly.