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

2. 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)

3. 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

4. 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

5. 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%)

6. 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

7. 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.”

8. Distribution of deprivation

9. Resource allocation issues

10. Provincial health budgets

11. 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

12. 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

13. Distribution of grants (01/02)

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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