South Africa: National Health Insurance: A View From The Bench?

Last Updated: 5 April 2012
Article by Neil Kirby

"It is a truism that the political setting is of central importance with regard to health care. The structure of Government, the manner in which political decisions are made and the values that underpin those decisions, form the backcloth against which all policies relating to health are determined and implemented."

The primary decisions by South African courts concerning access to healthcare are those that have been handed down under the constitutional directives contained in the Bill of Rights, more particularly, section 27(1)(a) and section 27(3) of the Constitution of the Republic of South Africa, 1996 ("the Constitution"). However, under the current debate concerning the implementation of a national health insurance scheme in South Africa, is there anything to be learnt from what the courts have already said the Government's obligation is in terms of the Bill of Rights to provide access to healthcare services for South Africans? This paper explores the judicial pronouncements that have occurred to date and considers these within the light of the national health insurance scheme debate.

Access to renal dialysis services

The first decision, and perhaps the most quoted in respect of access to healthcare services, is the decision of Soobramoney v Minister of Health, KwaZulu-Natal 1997 (12) BCLR 1696 (CC). This case concerned access to renal dialysis services in a public facility in Durban. After examining the particularly distressing facts of the matter, the Constitutional Court concluded that the appellant did not qualify for admission to the State's renal dialysis program. The Constitutional Court held that whilst the State is under a positive obligation to progressively realise the right to access healthcare services, the State has limited resources and cannot be compelled to provide healthcare services to everyone all of the time. The Constitutional Court settled on the legal test of whether or not the State has a reasonable policy to place persons onto a renal dialysis program. Therefore, at paragraph 28 of the judgment, the Constitutional Court sketches what would be a reasonable renal dialysis program within the context of the demand by the appellant to be placed on such a program:
"The appellant's case must be seen in the context of the needs which the health services have to meet, for if treatment has to be provided to the appellant it would also have to be provided to all the other persons similarly placed. Although the renal clinic would be kept open for longer hours, it would involve additional expense in having to pay the clinic personnel at overtime rates, or in having to employ additional personnel working on a shift basis. It would also put a great strain on the existing dialysis machines which are already showing signs of wear. It is estimated that the cost to the State of treating one chronically ill patient by means of renal dialysis provided twice a week in a State hospital is approximately R60 000 per annum. If all the persons in South Africa who suffer from chronic renal failure were to be provided with dialysis treatment – and many of them, as the appellant does, would require treatment three times a week – the cost of doing so would make substantial inroads into the health budget. And if this principle were to be applied to all patients claiming access to expensive medical treatment or expensive drugs, the health budget would have to be dramatically increased to the prejudice of other needs which the State has to meet."

The principle that does emerge from the Soobramoney decision, apart from the positive obligation placed on the State to realise access to health services for all South Africans, is that the State is also obliged to ensure that reasonable policies exist to facilitate access to health services. By means of the application of a reasonable policy, which must be applied universally to all, the State does advance materially its obligation to provide access to health services. In this regard, the Constitutional Court held at paragraph 29, that "[t]he provincial administration which is responsible for health services in KwaZulu- Natal has to make decisions about the funding that should be made available for health care and how such funds should be spent. These choices involve difficult decisions to be taken at the political level in fixing the health budget, and at the functional level in deciding upon the priorities to be met. A court will be slow to interfere with rational decisions taken in good faith by the political organs and medical authorities whose responsibility it is to deal with such matters."2 Therefore, the particular combination that is required constitutionally, in respect of the provision of healthcare services by the State, is rational decisions at a political level balanced with those at a functional level. The "functionality" of healthcare services, whilst not explained by the Constitutional Court in the Soobramoney matter, may refer to those decisions to be taken that are medical decisions or informed by such decisions that must be made in relation to the type, standard and location of the provision of care.

The reasonableness of dispensing fees Within the context of the battle that ensued between the Minister of Health and pharmacists concerning the introduction of dispensing fees in the decision of Minister of Health and another v New Clicks (Pty) Ltd and others (Treatment Action Campaign and Innovative Medicines SA as Amici Curiae) 2006 (1) BCLR 1 (CC), the Constitutional Court was faced with a debate between pharmacists and the Department of Health concerning the reasonableness of dispensing fees introduced as part of the single exit price legislation for medicines pursuant to section 22G of the Medicines and Related Substances Act No. 101 of 1965, as amended. In its decision concerning the reasonableness of the dispensing fee regulations, the Constitutional Court examined the nature of the services provided by pharmacists to the public in both the public and private healthcare sectors. Firstly, the court recognises the important constitutional purpose served by the pricing system, at paragraph 16, and the role played by pharmacies in providing access to healthcare services, in paragraph 19, more particularly, pharmacies in rural areas and courier pharmacies. Importantly, the Constitutional Court subjects the decisions by members of the executive as and when they make delegated legislation to the tenets of the Constitution. At paragraph 113 of the judgment, the then Chief Justice states that "[t]he making of delegated legislation by members of the executive is an essential part of public administration. It gives effect to the policy set by the Legislature and provides the detailed infrastructure according to which this is to be done. The Constitution calls for open and transparent government, and requires public participation in the making of laws by Parliament and deliberative legislative assemblies. To hold that the making of delegated legislation is not part of the right to just administrative action would be contrary to the Constitution's commitment to open and transparent government." Therefore, the Constitutional Court requires that delegated legislation must be enacted in accordance with the criteria set out in the Clicks judgment, more particularly, aspects concerning procedural fairness in relation to legislative administrative action. This formulation is important in relation to the establishment of any scheme constructed in terms of delegated legislation as is proposed for and the national health insurance scheme will have to ensure that it complies with the elements set out in the Clicks judgment.

In relation to matters of substance: the imposition of price control over medicines and the provision of pharmacy services, is fundamentally endorsed by the Constitutional Court as a process that complies with the provisions of the Constitution. Therefore, the Constitutional Court does not disagree with the creation of a single exit pricing system for medicines or controlling the dispensing fees of pharmacists, but is concerned simply with how these processes are conducted. Therefore, the imposition of price control per se on healthcare is not necessarily out of step with constitutional prerogatives ensuring access to healthcare services.4 In this regard, the then Chief Justice stated that: "The scheme is criticised by the Pharmacies on the ground that regulation of prices is less effective than market forces. The choice of price regulation, if not consistent with the Medicines Act, was a policy decision within the domain of the legislature and the executive with which this Court will not interfere. This Court is concerned with whether the scheme meets the requirements of the Medicines Act and was adopted in accordance with the provisions of the Constitution and PAJA, and not with whether there may be better ways of achieving the same purpose." (At paragraph 236).

In relation to the application of a dispensing fee for pharmacists, the Constitutional Court accepted that the imposition of a particular fee on a particular healthcare profession, in this instance, pharmacies, must be sufficient to enable that profession to operate viably and to make a reasonable profit. Therefore, the imposition of any capped or fixed fee in respect of the provision of healthcare services must allow for healthcare professionals to operate reasonably and to make a living from their profession.

The manner in which the Pricing Committee set about determining the single exit pricing for medicines was criticised by the Constitutional Court and the Constitutional Court, in providing that criticism, set out the process that would need to be followed in order for such a pricing system to be implemented lawfully: "The Pricing Committee has provided no models or other evidence to demonstrate how the dispensing fee was calculated or how the members of the Pricing Committee satisfied themselves that it was appropriate. It has not told us what assumptions it made about probable SEPs in calculating the dispensing fee, or how it assessed the dispensing fee when it seems to have had no data dealing with the dispensary revenue and expenses which it considered to be essential for that purpose. It has not addressed in any meaningful way the contention that the dispensing fee will lead to pharmacy closures that will impair accessibility to health care particularly in rural areas. The assertions made by Professor McIntyre and Doctor Zokufa about additional revenue sources and the subsidisation of the front shop by the back shop, are at best flimsy. The failure to make provision for compounding in the dispensing fee is a material misdirection."

The Clicks decision does provide a clear indication that additional economic controls over any aspect of the delivery of healthcare services constitutes an important part of the assessment of (1) the manner in which access is exercised by members of the public to such a system and (2) the participation in providing such access by healthcare providers. This analysis results in the Government being required to balance carefully the interests of those providing medical or healthcare service with the interests of the public and the access by members of the public to such healthcare services or simply healthcare devices. The unreasonable or irrational control of pricing systems in respect of healthcare services or simply healthcare services is not permitted in terms of South African law in so far as the rights of healthcare providers to ensure that they are regulated reasonably and transparently in terms of the Constitution are unfairly limited.

Imposition of a national health reference pricelist

This approach was further underscored in the decision by the North Gauteng High Court, Pretoria in Hospital Association of SA Ltd v Minister of Health and another; ER24 EMS (Pty) Ltd and another v Minister of Health and another; SA Private Practitioners Forum and others v Director–General of Health and others 2010 (10) BCLR 1047 (GNP), which concerned, once again, the imposition of a proposed national health reference pricelist on healthcare providers. In this decision, the North Gauteng High Court was required to consider the reasonableness of the imposition of a proposed national health reference pricelist for the provision of healthcare services in terms of provisions of the National Health Act No. 61 of 2003. The North Gauteng High Court found that the imposition of such a national health reference pricelist, as an administrative system, was compromised and overturned the system. The Court took cognisance of the impact of pricing regulations on access to healthcare services in relation to a potential decline in the availability of healthcare providers: "Ultimately, there was the real risk that the effect of the RPL Decision would play out on patients who may face the burden of a declining number of doctors within the country, and who may be confronted with general and specialist practitioners who, in an attempt to make ends meet, would be forced to focus on high volume turnover of patients at the expense of quality provision of medical services." (At paragraph 118).

The court was in favour of the introduction of regulated pricing provided that the pricing in question could be rationally connected to the purposes to be achieved by such pricing. The outcome of the decision in the HASA case indicates that the court was prepared to accept that the type of interaction between the stakeholders in the healthcare arena and the Department of Health was of such a nature that it produced an unreasonable result. In so far as this interaction was concerned, extensive representations were made by the stakeholders to the Department of Health that the introduction of a national health reference pricelist, on the basis proposed by the Department, would severely compromise the ability of the medical fraternity, in various disciplines, to provide healthcare services to members of the public. Whilst the judgment is necessarily silent about this particular aspect of the interaction between the parties, due to the overwhelming discrepancies within the administrative process that was followed by the Department, these issues were indirectly addressed by the interests held by them in operating sustainable businesses and practices for the purposes of providing healthcare services to the public.

Provision of Nevirapine to expectant mothers

Certainly, the provision of healthcare services is highly regulated by Government in which there is a definitive interest to ensure that healthcare services are provided equitably. In so far as further obligations were imposed upon the State to provide healthcare services, the decision, once again, of the Constitutional Court in Minister of Health and others v Treatment Action Campaign and others 1 2002 (10) BCLR 1033 (CC) dealt with the provision of Nevirapine to expectant mothers. In this matter the Court held that "the socioeconomic rights of the Constitution should not be construed as entitling everyone to demand that the minimum core be provided to them... All that is possible, and all that can be expected from the State, is that it act reasonably to provide access to the socioeconomic rights identified in sections 26 and 27 on a progressive basis." (At paragraphs 34 – 35). The Constitutional Court in the TAC decision thus shied away from endorsing a minimum core approach to formulating healthcare rights, which have been defined, for the purposes of the TAC decision, as "comprising maternal and child healthcare, including family planning; immunisation against major infectious diseases; appropriate treatment of common diseases and injuries; and the provision of essential drugs."8 This approach must be read together with the decision in B and Others v Minister of Correctional Services and others 1997 (6) BCLR 789 (C) in which the Court held that the obligation on the State was only to provide adequate medical treatment and not optimal or the best available medical treatment. This particular obligation arises in terms of section 35 of the Constitution, which is to be distinguished from the obligation imposed by section 27. However, there appears to be no reason why, based on the approach generally taken to healthcare rights by South African courts, section 27 would not similarly be qualified, albeit implied, by an obligation only to provide reasonable healthcare services or reasonable access to such healthcare services by the State to the public.

The imposition of particular criteria in relation to the defining of access to healthcare related to the socio-economic realities of the Republic will define the reasonableness of any healthcare access scheme. The balancing of rights of all the participants in such a scheme will inform whether or not the reasonableness of that scheme will succeed in light of constitutional jurisprudence.

Whilst it may be argued that the introduction of such a healthcare access scheme is not a matter for the courts to decide, the implications of the introduction of that scheme, in so far as they limit the rights of the stakeholders concerned, will indeed inform the legality of the scheme:
"I shall accept that the respondents had to make policy decisions, and that there need not be one objective determinable road to the progressive realisation of the right to healthcare, but in the end the court has to determine whether the steps taken by the respondents were, in the circumstances, reasonable. That is the constitutional imperative.... The pace is dictated by available resources. Yet, in my view the inexorable goal is a realisation of the right, even though it may be achieved progressively."


The pronouncements of South African courts to date in respect of the controls already proposed and dealt with by Government in respect of the healthcare sector become relevant in relation to the constitutionality of any proposed national health insurance scheme. The application of constitutional tests as part of the introduction of a national health insurance scheme, separates certainly the scheme that will succeed in South Africa from any scheme that has succeeded or has been implemented anywhere else in the world. The constitutional elements of such a scheme must be respected by all stakeholders, including the Department of Health, in order for it to succeed in South Africa. This particular aspect of the national health insurance scheme is one that ultimately will, if not considered adequately by the Department, cause such scheme to fail in South Africa.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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