South Africa

Op-Ed: SA’s healthcare system, and the critical split down the middle

By Tim Fish Hodgson 16 May 2014

Twenty years into our constitutional democracy, it is time that we started taking our Constitution’s radical project of economic transformation seriously. Though it is often acknowledged that we remain one of the most unequal societies in the world, what this actually means for most South Africans lives is often overlooked. In the context of healthcare, though our Constitution entrenches a right to access to healthcare services and the National Health Act aims to establish one unified national healthcare system, the reality is that our health system remains split in two. By TIM FISH HODGSON for SECTION27.

One part of the system is a struggling public healthcare system, riddled with problems. The other is a highly profitable private healthcare market, which, considering the fact that 17% of the country access their constitutional right to health through this market, remains largely under-scrutinised.

The Competition Commission’s initiation of a market inquiry into the private healthcare sector, which is an attempt to allow us to understand how this market operates better, should be analysed in this context. Properly understood and conducted, it is one example of how to achieve the constitutional imperative of transforming of our economy.

Economic transformation and the Constitution

Echoing the Freedom Charter’s demand that “People Shall Share in the Country’s Wealth!” our Constitution sets as a founding value the “achievement of equality” and entrenches a right to “equal benefit of the law”. Economic transformation has always been understood, in the words of Nelson Mandela, as a prerequisite to the reconstruction of our country:

“We cannot accept that economic and social power is locked into the richest parts of the country. The result would be a central government which has neither the authority nor the power to embark on the reconstruction of the whole country. The equality principle must apply throughout South Africa.”

Calls for economic transformation are therefore central to our constitutional democracy, not alien to it. The Constitution, as the supreme law of our country, should determine the contours not only of our policies and laws but also the parameters of economic structures and systems.

Simply put, economic systems are constitutionally required to be built around rights and through constitutional institutions rather than rights being hesitantly squashed into economic systems as an afterthought or for rhetorical flourish.

But where does this acknowledgment take us?

Constitutional rights and the economy: forging South African(isms)

Our Constitution, wisely, to reflect the divergent and changing views within our society, does not create or require the creation of any one economic system, whether capitalism, socialism, neo-liberalism, Marxism, libertarianism or any other imaginative ism-cocktail. It leaves us to debate, determine and develop our own unique South African(isms) as a society, while setting the parameters within these ‘isms’ must operate.

One of the ways in which the Constitution sets these parameters is by ensuring that no matter which ‘isms’ the ruling elites of the day prefer, the government must make policies and laws geared at the realisation of socio-economic rights such as the rights to basic education, sufficient food, and access to adequate housing and healthcare services. Another way it does so is by locating within this obligation the power for the government to regulate markets for public goods such as healthcare. Though these markets determine many South Africans’ experiences of their rights market participants, unlike the government, act primarily in their own interests. Hence the need for appropriate government regulation.

Importantly, though, our Constitution does not stop at permitting government regulation of the private sector. It also places constitutional obligations directly on “private actors” such as businesses within in all markets. These as yet under-defined and under-discussed obligations are a particularly powerful elephant in the Constitution-shaped room when the market in question is the market for a “public good” which is also a constitutional right.

The nuts and bolts of economic transformation: the centrality of competition law

But the Constitution itself is not enough to complete the disintegration what was, by design of the architects of Apartheid, a decidedly unfree market system.  Whilst allowing the market system to continue in many ways unscathed through our transition, which lead many to conclude that the ANC government had and has “sold out” to “white monopoly capital”, our first government passed the Competition Act (Act) aimed at breaking the backbone of these unfree market systems, bolstering competition in our markets and ensuring that this is done to the benefit of all South Africans. The Act frames itself in this historical context. It emphasises not only market efficiency, but equity, explicitly aiming, for example, to “advance the social and economic welfare of South Africans”.

It is important to understand the centrality placed on the Competition Act in ensuring economic restructuring and transformation. As Makhaya and Roberts –competition experts and formerly senior members of the Competition Commission – note, the government viewed the Act as the “main tool to correct market outcomes post-liberalisation”. This attitude is evidenced by the limited number of other direct strategies employed by the government to transform the structure of our economy.

The Act relies substantially on Competition Commission to ensure the achievement of this enormous responsibility.  One of the difficulties faced by the Commission thus far has been balancing the tension between addressing our Aartheid legacy and attempting to open up our economy. In the context of our historically unfree market system, liberalisation without regulation and active transformation has led not to competitive markets but to the entrenchment of existing market dominance created during Apartheid.

Nevertheless, the Competition Commission’s role in economic transformation should not be understated, nor its obligations relaxed because of the fine line it must walk. The Commission’s role is so pivotal to facilitating competition and realising the aims of the Act that the Constitutional Court has said it is the “lifeblood of the Act”, the “primary vehicle” through which its aims are to be achieved and that it “exists for the benefit of all South Africans”.  The Commission’s urgent and only lawful interest is the public interest in both ensuring that markets are free and that they, through appropriate regulation, contribute to economic transformation.

Supporting the Commission’s attempts to act in the public interest: the initiation of the market inquiry into the private healthcare sector

Acknowledging that the complaint initiation and referral process and the Commission’s investigatory powers were insufficient to realise these aims – the Commission had been chastised by Courts for going on “fishing expeditions” in its overly-zealous attempts to accomplish its mandate – Parliament amended the Act in 2009 to clarify the Commission’s powers to initiate market inquiries. The Amendment Act provides the Commission with extensive powers to conduct market inquiries in the public interest in order to “achieve the purposes of the Act”. A market inquiry is a broad investigation of the state of competition in a particular market. On the conclusion of an inquiry, the Commission must table a report in Parliament and may recommend new policies, laws or action to be taken by regulators. If it identifies anticompetitive practices, which violate the provisions of the Act, the Commission may also use information acquired to initiate and refer complaints to the Competition Tribunal.

The Commission’s decision to initiate a market inquiry into the private healthcare sector should be interpreted in light of both the right to access to healthcare services and its crucial role the transformation of our economy. The initiation of the Inquiry has taken place amidst piercing criticisms from Roberts and Makhaya that:

“while the competition regime has been relatively effective in blocking anti-competitive mergers and, more recently, uncovering explicit cartel behavior, it has been relatively ineffective in addressing entrenched market power and opening up the economy to greater access.”

In other words: the Commission has not, up to this point, contributed significantly to the transformation of the economy, despite its statutory mandate to do so.

When public institutions such as the Competition Commission take their statutory duties seriously, they deserve our support and encouragement. This is particularly so in the context of the market for private healthcare because inequality in access to and enjoyment of healthcare rights is so stark. Moreover, the Commission notes in its Terms of Reference for the Inquiry, that the price of private healthcare itself, already only affordable to a minority of South Africans is worryingly rising above the rate of headline inflation. The Commission intends to use the Inquiry to find out why. It will require the support of civil society in doing so.

The need for civil society support is not theoretical. The Commission has already come under a strategic assault by Netcare, the largest hospital group in South Africa, who will be in court next week, alleging that the Commission’s appointment of KPMG as consultants is unlawful, as a result of KPMG’s conflict of interest as a former consultant for Netcare. As the Commission’s court papers reflect, regardless of outcome, this legal challenge has already delayed its work on the inquiry significantly.

More is at stake in this case than the appointment of KPMG or even the success of the healthcare inquiry. In the words of former Chief Justice Sandile Ngcobo, speaking for the Constitutional Court and now Chairperson of the Private Health Care Inquiry Panel: “[l]ike justice, equality delayed is equality denied”. The only question then is, what or – perhaps who – is responsible for this delay? DM

Photo: A 2002 file photograph showing a Hospice caregiver (R) helping HIV/Aids patient Evelyn Taba (L) into a Hospice full care ward in Phillipi, Cape Town, South Africa 2002. EPA/NIC BOTHMA Black and White image

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