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Medical Costs in SA vs the World: How Do We Compare?

Author: Megan Ellis
Date: 2017-06-28
Healthcare and medical aid is a huge bone of contention in SA, but is it that bad? How do we compare in terms of cost?
Medical costs around the world have been in the spotlight in recent political campaigns. Countries like the US and the UK have been grappling with the costs of public and private healthcare. Meanwhile, South Africa has notoriously poor access to healthcare. But how do our costs measure up to the rest of the world? Simply comparing the cost of a procedure in different countries doesn't take into account different levels of purchasing power. But there are a few other measures we can use for comparison.

Healthcare Portion Of GDP

By looking at how much of the GDP consists of medical costs and services, we can see just how much South Africa's citizens are paying for medical care. According to the World Health Organization (WHO), the most recent figures (2014) showed that that the total amount spent on healthcare in SA wasn't very different to other countries:
  • SA: 8.8% of the country's GDP;
  • UK: 9.12%of the country's GDP.

Government Vs. Private Spending

The differences become apparent when looking at the ratio of private spending on health versus government spending.
  • Private spending is 51.76% of the total amount spent;
  • Government spending is 48.24% (including funding of public hospitals and government medical workers);
  • Medical aids account for 82.8% of private healthcare spending.
This is a stark contrast to countries like the UK.
  • 83.14% of medical spending comes from government;
  • Only 16.86% is spent by private citizens;
  • Medical aids only make up 20.41% of private spending on healthcare.

South Africa Vs. OECD

When looking at Organisation for Economic Co-operation and Development (OECD) countries, our government funding of healthcare falls well below the average.
"The public sector is the main source of health funding in nearly all OECD countries. In South Africa, 48% of health spending was funded by public sources in 2012, much lower than the average of 72% in OECD countries," a report by the organisation says.
OECD countries include 35 states like Australia, France, Germany, Greece, Latvia and Turkey. Many of these are developed countries. In terms of government spending on healthcare, South Africa's is among the lowest of OECD countries, along with Mexico, Chile and the United States.

South Africa Vs The United States

But how does South Africa compare to the United States in terms of how much is spent on healthcare? Well, spending on healthcare accounts for a large chunk of the US GDP - at a staggering 17.14%. The stats are very similar to SA:
  • Private expenditure accounts for 51.7% of spending on health in the US.
  • Government spending accounts for 48.3%. (Where this differs though is that most of the US government spending on health is through social security, which accounts for 88.29% of government spending on healthcare.)
  • For private spending, medical aids accounted for 64.2%, which is significantly lower than SA.
But on the other hand, out-of-pocket expenses for private healthcare accounted for 21.37% of total spending. In South Africa, this percentage is only 12.54%. This partly explains why there is a difference between the proportion of spending on medical aids - with more Americans paying out of their own pockets.
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Higher Costs Of Medical Aid In South Africa?

The cost of medical aid plans in South Africa come into focus when you realise how many people they actually cover. WHO points out that despite a lion's share of private spending going towards medical aids, these plans only cover 16-17% of the population.
"South Africa spends more on voluntary private health insurance (42%) as a share of total health expenditure than any other country in the world. It serves, however, only 16% of the population," a report by WHO says.
However in 2014 in the US, only 11.7% of the country's population didn't have medical insurance. So 16% of the SA population's spending on medical aid accounts for around 43% of total spending on healthcare. 88.3% of the US population's spending on medical aid only accounts for 33.2% of the country's total spend. This implies that the cost of medical plans in South Africa might actually be considerably higher than those in the US, in terms of proportional expenditure. Considering the sheer number of people who are uninsured in South Africa, it is alarming that medical aids account for so much of spending on healthcare.

Healthcare Spending Per Capita

Here we compare healthcare spending per capita with the salary per capita of residents in each country. This is so we will get a better picture of how much healthcare costs people in relation to their earnings. Data from the World Bank shows that health expenditure per capita has risen for both the US and SA over the past decade.
  • In 2014, SA's health spending per capita stood at $1 148.
  • The US, health spending per capita in 2014 was $9 402.
In terms of gross national income per capita:
  • South Africa stood at $12 730
  • US was at $55 140.
This shows that for South Africans, health expenditure accounts for around 9% of the average resident's income. For the US, this figure rises to 17% of the average American's income.

Global Rankings

Globally, we are ranked at number 63. This makes our healthcare significantly cheaper than countries like New Zealand, Japan, Russia and Chile. The global figure for healthcare spending per capita was at $1 272 in 2014, a little above the figure for South Africa. For OECD members, this figure rises to $4 697. But we also have to take into account how much of this spending is by government versus private individuals. For example, while Canada is at number 11 in the healthcare spending rankings, over 70% of their healthcare costs are paid by government.

So What Does This Mean?

Healthcare is more expensive in the United States. In fact, the United States is actually the country with the most expensive healthcare in the world. While South African healthcare isn't necessarily expensive, quality also comes into consideration. South Africa has long been criticised for its standard of healthcare in public facilities. In order to achieve higher quality, South Africa's government would have to spend significantly more on healthcare. The state of our public healthcare is why so many residents who can afford it flock to medical aid. This, of course, allows medical aids to charge higher rates due to the demand. These medical aid costs have spiked in the past few years. Just in 2017, Discovery Health announced an increase of up to 14.9% for premiums. While the Competition Commission has been looking into the price of medical aid schemes, this doesn't address the issue of public healthcare.

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