Budget%202001/02:%20Key%20issues

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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)
• Health 7.3
• 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)

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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

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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

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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)

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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

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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.

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Distribution of deprivation
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Resource allocation issues
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Provincial health budgets
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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

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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

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Distribution of grants (01/02)
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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
• 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

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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

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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

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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

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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