7. APPROACH TO COST MODELLING AND KEY CROSS-SCENARIO ASSUMPTIONS An Excel-based model was used to estimate the costs of the proposed scenarios. The model allows the user to enter assumptions for each of the 20 forecast years (2020 to 2040), for each scenario. The key variables/assumptions per scenario are outlined below. These assumptions, along with a series of base costs (2019 costs) are used to model all future expenditure. The expenditure is split between private risk pools (medical schemes), public healthcare and out-of-pocket and private insurance. The model further breaks down private risk pool expenditure into administration, primary healthcare and other levels of healthcare. It also breaks down public expenditure into administration, primary healthcare, hospital care, infrastructure, medico-legal claims and savings from IT systems and reduced corruption. The assumptions and outputs are used to calculate and compare final output values from the various scenarios. As a reminder: this is not a detailed bottom-up costing model working from the basis of a defined benefit package. Rather, we use a top-down approach and use the available financial resources spent on health services as our starting point. We believe this is a more pragmatic approach in the absence of the detailed basic benefit package that is missing from the current NHI Bill. Table 12 outlines the key variables that went into our scenario assumptions and provides a brief explanation for the range of assumptions used.
Table 12: Model variables Variable name
Description (some-
Baseline and range
Justification
Data sources
times self-evident)
of assumption
% of population in
The percentage of the
84% of South Africa is
Scheme membership
Council for Medical
public sector system
population without
not currently covered
has been stagnant
Schemes 22
private risk pooling
by medical schemes
in recent years, and
– it can increase to
improving the public
100% in the scenari-
system will likely
os, but does not drop
make more users join
in any of them
it. Closing schemes
StatsSA United Nations 23
will require users to join the public system
21 | TRADE-OFFS ON THE ROAD TO UHC: A QUANTITATIVE ASSESSMENT OF ALTERNATIVE PATHWAYS FOR SOUTH AFRICA
