Even before the recent meeting with President Trump in the Oval Office, it was evident that the new US administration was closely scrutinising South Africa. Topics like health reform and the potential threats of punitive import tariffs were at the forefront. There were also significant cuts to crucial aid, especially for essential HIV programmes. The US Secretary of State made a notable announcement on X (formerly Twitter): he would refrain from attending the forthcoming G20 Summit in Johannesburg this November. The rationale? He claimed South Africa was involved in "very bad things," including promoting "solidarity, equality, and sustainability" through the G20 platform.
However, this accusation highlights a fundamental truth. Health reform remains a challenge worldwide. South Africa's commitment to these principles was demonstrated at the G20 Health Working Group meeting in Durban in March. The central theme was "Accelerating Health Equity, Solidarity and Universal Coverage." These phrases are not mere buzzwords; they embody essential values that nations worldwide, including the United States, collectively embraced. This collective action took place when they signed the Sustainable Development Goals (SDGs) in 2015.
Resisting Intimidation
In light of this blatant pressure, President Ramaphosa has resolutely declared that South Africa will not be intimidated. Like other leaders from nations targeted by Trump, such as Canada, China, and Denmark, Ramaphosa is now considering policy measures. These measures will show its citizens and the global community that South Africa will not submit to American hegemony.
As he evaluates his options, one auspicious opportunity arises. It is to use this crisis to rapidly reform South Africa’s healthcare system, reminiscent of the US model. This move could align with broader health reform initiatives.
South Africa's Healthcare and the US System
Due to its apartheid history, South Africa, similar to the US, inherits a racially stratified healthcare system. This division reflects pervasive economic inequality, with both nations' healthcare heavily reliant on private health insurance. Health reform in both countries is crucial to addressing these disparities.
In both countries, around half of total health expenditures stem from private insurance schemes. Exorbitant premiums, limited coverage, and high administrative costs often mark these. Consequently, these inequitable systems effectively deny the poor and vulnerable access to essential healthcare.
Moreover, in both nations, insurers cannot contain rising costs in the private health sector. They merely shift this financial burden onto households and employers through soaring premiums and unaffordable out-of-pocket expenses. This not only decreases crucial health coverage but also hampers the broader economy. Research by Nobel Laureate Professor Angus Deaton illustrates that increasing health insurance premiums in the US are negatively impacting worker wages. Inefficient health insurance schemes are making US businesses less competitive and escalating inequality.
The warning signs for South Africa are unmistakable. Failure to act will lead it down the same path as the US, which astonishingly allocates 18% of its GDP to a dysfunctional healthcare system. In this system, the US experiences some of the worst health outcomes (especially regarding maternal mortality) among OECD countries.
Universal Health Coverage
Fortunately, valuable lessons have been learned globally on addressing these systemic issues. The effective approach involves replacing private health financing (including insurance and patient payments) with solid public funding. This typically occurs through general taxation and compulsory social health insurance. This strategy is the established model for achieving universal health coverage (UHC), ensuring everyone can access necessary health services without incurring financial burdens. All wealthy nations, except the US, have successfully implemented this model. They leave 10% of Americans without proper health coverage. This troubling trend is set to worsen as Trump and some Republican governors attempt to roll back the modest gains made by former President Barack Obama’s Affordable Care Act. Under the current administration, the US is moving away from universal health coverage as part of a broader health reform debate.
The NHI Act
The encouraging news is that South Africa already has a viable plan to attain universal health coverage. This plan is through the National Health Insurance (NHI) Act, enacted last May. By establishing a single-payer system primarily funded by general taxation, South Africa will require the healthy and affluent members of society to subsidise services for the sick and the poor. This crucial mechanism is foundational for successful universal health coverage reforms globally.
However, similar to the situation in the US, powerful vested interest groups that profit from the existing system are likely to oppose these necessary health reform initiatives.
- Robert Yates is a visiting professor of practice at the London School of Economics and Political Science.