Price controls in medical sector risk disaster - IRR

Press Release

The Institute of Race Relations (IRR) notes with concern attempts by government to negotiate what is essentially a form of price control for Covid-19 treatment in the private sector. The government is again showing its antagonism to the private sector, and its ideological misunderstanding of economic realities.

In considering South Africa’s current position, it is vital to understand the role played by ideology in many of the government’s most disastrous and ineffectual decisions. From seeking to prescribe which undergarments could be bought, and when, to engaging in attempts at price fixing, the government has shown its willingness to prioritise ideological pursuits above all else.

It is reported that negotiations between the private healthcare sector and the government have failed to achieve a consensus on what the state is willing to pay private healthcare facilities and practitioners for treating Covid-19 patients. Criticism should, here, be aimed at both the government and the private sector.

By ceding the principle that medical costs can be determined through centralised decision-making, the private sector reveals its weak grasp of the ideological positions of the government. Time after time, important and prominent actors in South Africa’s private sector have entertained the ideological premises of the government by bargaining over the correct level of government intervention in economic affairs. For the private healthcare sector to concede to the government’s notion that the costs of life-saving treatment can be pre-determined by a committee of officials huddled in Pretoria fundamentally undermines the feasibility of South Africa’s private sector. If the private medical sector concedes that payment can be fixed, it also unwittingly accepts that the costs of treating any given patient can be fixed and be applicable to thousands of others. This flies in the face of reason. Costs must be based on the needs of patients, not on the whims of ideological bookkeepers in government.

For the government to engage in this farce of negotiating actual cost to a fixed rand value, such as R6 286 per day, is yet another illustration of its ideological conviction that officials can make determinations and reality must adjust accordingly.

The lockdown has shown the weakness of centralised decision-making and centralised control. While some decisions must, of course, be made centrally in times of crisis, the weeks since 26 March have delivered an avalanche of irrational and absurd interventions that have impinged on the lives and freedoms of South Africans.

A voucher-based policy solution proposed by the IRR in its comprehensive policy response framework to Covid-19, Friends In Need – Covid-19: How South Africa Can Save #LivesAndLivelihoods, published 25 March, would allow patients access to funding from the government for treatment they would otherwise not be able to afford through a simple funding mechanism, while simultaneously giving people the dignity and freedom of making their own choices on their own health.

Said IRR Deputy Head of Policy Research Hermann Pretorius: “As long as governments insist on treating people like children, depriving them of the right to exercise their own choices by usurping the power to act on their behalf, freedom and the hope of prosperity will elude the poorest, who are in greatest need. As long as South Africa’s private sector is willing to entertain the misguided and failed ideological obsessions of collectivist government in pursuit of centralised control, politicians will continue having the nerve to put the ideology of their parties above the welfare of people.”

Media contact: Hermann Pretorius, IRR Deputy Head of Policy Research – 079 875 4290; hermann@irr.org.za

Media enquiries: Michael Morris Tel: 066 302 1968 Email: michael@irr.org.za

Kelebogile Leepile Tel: 079 051 0073 Email: kelebogile@irr.org.za

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