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This article is taken from the November 2001 Phatlalatsa newsletter


A study of Public Priorities, Willingness and Ability to Pay for Social Health Insurance in South Africa

Matthew, in conjunction with Jud Cornell and S&T Non-Executive Director Geetesh Solanki, has just completed a study of public priorities, willingness and ability to pay for social health insurance (SHI) in South Africa commissioned by the Department of Health. He describes the project.

The project

This project had a clear set of objectives, namely to assist the Department of Health in gaining an understanding of:

  • The perceptions and priorities of members of the likely target groups for SHI regarding the composition of possible benefit packages under SHI, and
  • The willingness and ability to pay for SHI.

This was a demanding project brief, with tight financial and time constraints. These limitations precluded a random survey of workers and employers. Instead, the study focused on certain sectors, using a replicable methodology, which can be expanded in future into additional sectors, or to explore specific questions more fully.

The study has produced strong indications of perceptions and priorities in the groups surveyed. The voices of health service users emerge with unusual directness, highlighting the contradictions and tensions within groups, the barriers to change and the challenge of rebuilding public trust in the health sector.

Paying for SHI

Exploring willingness and ability to pay in the abstract must be undertaken with an understanding of the inevitable limitations of this approach. Willingness and ability to pay depend crucially on several factors:

The mechanism for payment - pre-payment is more predictable than fee-for-service and therefore easier to budget for, but also likely to be viewed with some suspicion by those who are not certain how much use they will make of the services and who may use services without payment at present.

Wage level and financial situation at the time when a new system is introduced: individual weightings of priorities and needs shift over time and are highly influenced, in the case of health care, by family health status and levels of health service utilisation.

The perception of value for money. It should be noted that this factor is, in turn, strongly influenced by prices and practices in the private sector and, in particular, by the speaker’s own situation in terms of medical scheme coverage.


The qualitative and quantitative components of this study focused on employees and employers within a mix of private and public sectors. A description of these sectors can be tabulated as follows:

Public Private



Central Government

Clothing Industry

Taxi Drivers

Local Government

Motor Industry





Mining industry


The study began with a series of in-depth interviews with key informants, including officials from the national and provincial departments of Health and others. Interviews focussed on a range of issues, including policy shifts, experiences, and lessons already learned.

This study revealed a striking degree of residual goodwill towards the public health sector, alongside a clear indication of the need for visible improvements in order to retain and extend this goodwill, as the support base for a viable Social Health Insurance system. At the same time, the pervasive public perception is of a sector in crisis, with low morale and slipping standards, unresponsive to criticism and the distress of its users.

This image is a powerful barrier to the successful introduction of Social Health Insurance, as it undermines trust and, in particular, the leap of faith required for public support of a new contributory system based largely on public sector provision. While many participants believed that it was important to get additional funding into the public health sector, there was widespread distrust about whether the money would reach its target and be appropriately used.

‘We’ll pay – if services improve’

This is an indication also of a broader distrust about service delivery by government, which has knock-on effects on attitudes towards the health sector (defence spending was repeatedly cited as an example of ‘useless’ spending in the context of the need for social investment). The overwhelming response of participants may be summarised in the words of one participant: ‘When we said we are prepared to pay, it was conditional. It was provided the service was improved.’ There needs to be visible and credible change in attitudes (particularly of nurses) and facilities as a pre-requisite to the successful introduction of any form of SHI.

It is noteworthy that there is greater support for SHI from employees than from employers, on the whole. This may be due to the nature of the employer sample, but it indicates the need to undertake detailed work with appropriate employer organisations. If SHI is to be successful, it will have to be supported by employers. In the first instance, work needs to be done in establishing relationships with employers and employer organisations in the sectors which contain the natural target groups for SHI: specifically, low wage sectors with low medical scheme membership.

The worker responses in this study were complex and, on occasions, contradictory. This factor must also be taken into account in further work on SHI, which will require the development of a solid support base in the trade union movement for successful implementation.

It is clear from this study that current medical scheme status and experience crucially influence attitudes towards alternative mechanisms such as SHI. A current medical scheme member is likely to see SHI contribution levels as low (and may therefore welcome a shift), while someone who has never been a scheme member may well perceive any regular contribution (however low) as a problem and resist it.

Levels of service?

One of the most surprising results of this study was the reaction to tiering of services. The predicted response (certainly expected by key informants in the public health sector) was that users would expect some kind of differentiation in return for paying for services that others received ‘free’. In the view of health sector informants the key issue was that the differentiation should be in ‘hotel’ services, rather than in medical service levels.

However, users and potential users displayed a much more nuanced view on this issue. Employers tended to support tiering in terms of access (i.e. cutting waiting time) but employees (especially in the focus groups) were uncomfortable with differentiation of any sort, expressing strong views on the need to deal fairly and equally with all, on the basis of their need for health care, rather than their ability to pay. Instead there was a strong sense that hospital services needed to be improved for all users.

These improvements (reduced waiting times, improved hygiene and security, better facilities and a change in staff attitudes to patients) would both encourage new users, who would shift to the public sector via SHI, and improve conditions for existing (indigent) users. These findings suggest that there may be broader support for the aim of social solidarity and cross-subsidisation expressed in earlier models of SHI than has been taken account of recently.

It should be noted that this study has not included interaction with the private health sector (including the medical schemes industry). Further development will need to include engagement with the private sector, including the debate about the relative efficiency of the public and private sectors.

This study provides evidence of potential, though conditional, support for a program of Social Health Insurance. It also reveals areas of concern which could threaten the success of this programme, including widespread unhappiness about public hospitals, linked to doubts about whether the funding provided by SHI would be retained in the health sector. It is clear that support is dependent on visible improvements in public hospitals and the re-building of public trust in the public sector.


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