from a health sector perspective Budget 2001/02: Key issues from a health sector perspective University of University of the Cape Town Witwatersrand

Overall health budget Average increase p.a. (2001/02-03/04): Consolidated expenditure = 8.1% Declining % share of budget Declining in real per capita terms: Just keeping pace with inflation Overall population growth Increasing dependency on public services (declining medical scheme membership and employment levels)

Allocation to provinces Provincial health budgets critically dependent on total provincial budgets Formula devised by Dept. of Finance: relative needs for service provision Social services (7%) Basic (41%) Education (5%) Institutional (19%) Health (8%) Economic activity (17%) Welfare (3%) Backlog

Health component (Population without medical scheme cover x 4) + scheme members Should medical scheme members be included ? Are the provincial data on medical scheme membership accurate ? Require medical schemes to submit provincial membership data to Council

Controversial components Economic activity: Allocates resources back to provinces according to contribution to economic activity Strongly favours urban provinces Backlogs: Focus on infrastructural rather than human development backlogs Insignificant weighting (3%)

Treasury rationale Proxy for provincial tax revenue FFC recommended equalising for differential provincial tax revenue Maintain infrastructure for economic activity “such as maintenance of provincial roads” Underlying concern about financial management in rural provinces

Alternative perspective Equity perspective: weight heavily in favour of most deprived areas / areas with greatest human development backlogs “It is not enough to ensure that all people are treated the same if starting points are unequal. Instead, one might need to treat different groups and individuals differently to ensure their finishing points are equal.”

Distribution of deprivation

Resource allocation issues

Provincial health budgets

Fair shares for health Variation among provinces in securing a fair share of provincial budgets for health Heavily dependent on fortunes of global provincial budgets Concern for those provinces where health is not awarded sufficient priority rather than provinces where it is Norms/standards: PHC package

Conditional grants Central hospitals Health prof. training and research Redistribution of tertiary services Hospital rehabilitation programme Durban, (Umtata) and Pretoria hospitals Integration Nutrition Programme HIV/AIDS

Distribution of grants (01/02)

Central hospitals Estimated national services at 75% of expenditure in each hospital Moving to specify highly specialised services (HSS) / ‘national assets’ Rationalise provision of HSS Cost HSS and set grant level accordingly

Training and research Two concerns: Future plans: Mostly goes to academic/central hospitals Not based on actual cost of training Future plans: Use resources for training at all levels of care (primary health care approach) Cost training activities and fund accordingly

Conditions Submission of business plan Central hospitals: Non-discrimination between residents and non-residents Conditions specified by 30 April 2001 Capacity within Facilities Planning and Hospital Management Directorate

Level of care issues Non-hospital primary care services 11% in 1992/93 19% in 1998/99 Overall health spending (real) declined between 1997/98 and 1998/99: District hospitals and non-hospital PHC saw largest cuts Effect of conditional grants (Western Cape = 41%, Gauteng = 34%) Revise central hospital grant urgently

Local government financing Estimated expenditure requirements to deliver basic services to poor residents: electricity water sanitation refuse removal Health not included: First resolve relative responsibilities of province and local government for health

Alternatives for LG flows Status quo: via provincial health depts.: Allocating less from LG own revenue Provincial subsidy sometimes a small % of total LG spending on health but onerous ‘controls’ by provinces Confusing, dual lines of accountability Via national Department of Finance: Wide variation in LG health care provision Limits integrated PHC planning

Key conclusions Process issues – transparency and wider communication: Formula Conditional grants Promote equity in the allocation of global budgets to provinces Strengthen capacity to use resources appropriately (poorer provinces) Monitoring and evaluation