Constitutional Court strikes blow against state control of private healthcare

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JEREMY MAGGS: The Constitutional Court has struck down provisions of the National Health Act that would have required private hospitals, clinics and doctors to obtain government permission before opening, expanding or relocating.

Now, as I understand it, the court has found the so-called Certificate of Need scheme unconstitutional, saying it was irrationally designed and unjustifiably limited the freedom to choose a trade or profession.

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The health department says it’s studying the judgment, but the ruling, I think, raises much bigger questions around state control of private healthcare, the future of reform and obviously, if this is a setback for parts of the NHI (National Health Insurance) project.

Professor Alex van den Heever is with me from the Wits School of Governance to weigh in on the subject. Alex, a very warm welcome to you. How significant is this judgment for the South African healthcare system?

ALEX VAN DEN HEEVER: I think it’s very important because it essentially sets a limit on what is, quite simply, poor quality policy.

There is a tendency for the national department, which hasn’t won a court case in a significant period of time, it limits their ability to just create crude policy and implement it using the argument of equity as a veneer.

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So although the arguments of equity are justified, and the court indicates that, it says that the process around the development of policy must be coherent, must take into account the rights of everybody affected. It must be institutionally coherent and capable of doing the job that it is set out to do.

So essentially, a determination of irrationality says that the legislation itself, the provisions, can’t meet the objectives that it sets out to achieve. It’s the very lowest bar of a constitutional test that you would apply to legislation, and they failed that.

JEREMY MAGGS: Can you just deconstruct this for me very quickly – the court, as I understand it, then effectively rejects the idea that government should decide where private doctors and facilities may operate. Does that sum it up?

ALEX VAN DEN HEEVER: Not quite, because they haven’t said that they can’t do that or they can’t do something along those lines.

They just said this framework as proposed can’t be done, it’s unconstitutional.

If government wants to do something along these lines, which is to ensure better equity in the distribution of healthcare resources, it must use the tools that would actually achieve that effect properly.

In this particular case, the framework essentially allowed for excessive, unchecked control at the national level of government, and that was seen as very problematic.

It would impact on people’s livelihoods, it would impact on care that people could access and so on. It could result in a reduction in the availability of care generally.

JEREMY MAGGS: So the state’s argument that it was about fairer distribution of healthcare effectively torpedoed them.

ALEX VAN DEN HEEVER: Yes, because essentially that argument was nonsense, because you’re talking about mostly the target of the provision was private sector practitioners. Private sector practitioners charge for their services.

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So essentially, the idea that you’re going to redistribute where they’re located based on need suggests you’re going to move them to areas where there is no ability of people to pay for those services.

So the logic doesn’t make sense. Government provides free services and they employ the staff, which is essentially how you achieve your equity objectives. So even that, they can’t explain how they would actually achieve equity with a Certificate of Need.

JEREMY MAGGS: Is there a workaround as far as government is concerned? In other words, could it pursue a more limited version of this policy, or do you think the principle itself has been fatally weakened?

ALEX VAN DEN HEEVER: I think the principle is actually very significantly weakened, because you’ve actually got to have a reason, a clear public purpose behind this kind of licensing.

So if you want to restrict where people are located spatially, what is your public purpose? What public wrong are you trying to rectify?

If it’s an equity objective, it doesn’t make sense if you’re dealing with a service that people are paying for.

If you’re dealing with another kind of problem, like over-servicing in a medical scheme environment, it’s a different kind of problem.

So because they haven’t actually made the kind of problem they’re trying to solve very clear, they can’t show that this instrument actually does something coherent.

What it means is really that government hasn’t done its job working out what it actually wants to do, other than just have some kind of unchecked control over private sector practitioners.

JEREMY MAGGS: There was also the danger, was there not, the risk that the Certificate of Need risked choking off private investment in healthcare? Obviously, that would have been a legitimate concern, that it would have limited growth within that space.

ALEX VAN DEN HEEVER: They have an effect on the services that are provisioned, and the way people can locate that would impact on hospital services.

It would impact on whether or not you can access the services, because the amount of people available in the areas that they’re available now would go down potentially, but they also won’t surface in the areas they want to move people to.

That was part of the judgment as well. The Department of Health couldn’t actually say, well, if you reduce the number of private sector practitioners in area A and you want them in area B, how are they going to get there?

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If they can’t move there sustainably, they’re essentially just going to exit the system. So you can’t actually show that you’re actually going to improve the services that are available to people.

So all the way through they didn’t really have a clear public policy objective.

JEREMY MAGGS: The judgment then, Alex, to what extent might it strengthen the hand of private healthcare providers in future challenges to any kind of NHI-related regulation?

ALEX VAN DEN HEEVER: Well, there are parallels to the NHI legislation, because it does deal with a very, very centralised and rather draconian framework, which seeks to essentially prohibit parts of the existence of the private sector as a way of building up the public sector.

That’s a very draconian measure in itself.

So the issue is, again, you’d have to justify why that is the only route to achieving an objective of greater equity. There you would also have to look at the practical opportunities for actually achieving that objective with that legislation.

So part of the problem is that when you also look at the NHI Act, many provisions, you can’t actually work out what they really mean. You would have to look at the regulations in order to understand them.

In this case, the court basically said you can’t interpret your Act using regulations, it must be fully provided for in the principal legislation. That would be a major challenge in the case of the NHI legislation.

JEREMY MAGGS: Thank you very much indeed. Professor Alex van den Heever from the Wits School of Governance.