South Africa’s medium-term fiscal policy statement for 2021 was more of the same old narrative. This fell short of high expectations that the impact of poverty and inequality would be strongly present.
Instead, South Africans have:
be patient, let’s stick to the dream of a primary account surplus, then maybe we can make the necessary investments to put in place an extended social security, invest in strengthening the health system, etc. In the meantime, do more with less.
Budgets alone do not solve structural problems such as state efficiency. Reducing the wage bill does not solve poor budget management or execution. Instead, it increases the risk of execution. But they provide insight into the government’s plans to meet its broader development priorities.
In the case of South Africa, tackling the impact of poverty and inequality on broader development is and should be our priority. For example, the youth unemployment rate is 60%. This is a structural situation, as many of the discouraged job seekers lack the skills and retraining required to access opportunities. Government plans will not solve this problem. If very strong growth happens, it will not benefit these groups, especially those in rural areas where job opportunities are scarce.
Given the impact of Covid on the socio-economic life of the country, including health, it was expected that Enoch Godongwana, the Minister of Finance, would signal in the medium term fiscal policy statement how the government planned to mitigate the impact of Covid on the healthcare system.
Indeed, the government has invested heavily in mitigating Covid risks. Examples include the introduction of a social distress grant, reduced interest rates and tax incentives for businesses hardest hit by the lockdown. Investments in vaccine supply have also been significant.
The government has also implemented a number of other public policy measures. These included several regulations aimed at limiting the spread of the virus, imposing alcohol bans to reduce the impact of trauma-related injuries on the healthcare system and providing significant allocations for vaccines.
But all this was not enough because 265,000 more people died between March 2020 and November 2021 than deaths from natural causes in previous years. This is almost three times the official number of reported Covid deaths. It will take some time to fully unpack this anecdotal evidence from district health officials who have investigated unexplained facility deaths. But these figures demonstrated the disruption of services and the need for strategies to address it in the future.
Covid-related restrictions have had some unintended consequences. These included restrictions on access to routine health services. A survey carried out during the first 150 days of South Africa’s 2020 lockdown showed a sharp decline in access to health services. In particular, access to HIV and TB testing has declined by up to 50%.
Additionally, Covid exposed the inefficiency of South Africa’s shadow healthcare system. More than 50% Covid testing were made in the private sector, despite only 15% of the population with private medical coverage. More than 40% of Covid-related hospital admissions were on private admission. Official Covid deaths were also higher in public settings – often due to late seeking care.
Given all of this, the government was expected to seize the opportunity and make the necessary investments to improve access and responsiveness of the healthcare system. Instead, the budget framework proposed further cuts to an already crumbling public health system.
The National Health Act defines the governance of the South African health system, assigning to the three spheres of government – national, provincial and municipal.
The National Ministry of Health provides a framework for a structured and uniform health system. Provincial ministries are responsible for the delivery of health services. They employ most health care workers and depend on the fair provincial share of national revenues for funding health care. Cuts to the provincial fair share will put additional pressure on struggling rural provinces like the Eastern Cape, Limpopo, North West and Free State to make the necessary investments to address health inequities .
Impact of Budget Cuts on Publicly Funded Health Care
Effective governance of health systems depends on good quality data on a number of indicators. These include the burden of disease, the delivery of health services, the results of interventions and progress in equity, in particular the limitation of out-of-pocket spending.
An indirect National Health Insurance (NHI) grant was introduced to strengthen health management information systems to improve decision-making and prioritization. Cuts to this grant have delayed this critical investment in strengthening health system responsiveness. The NHI grant has a history of poor spending. But the grant was redesigned to support the development of the infrastructure needed to establish the NHI Fund.
A recent report by the Medical Research Council examined the readiness of public hospitals to use diagnosis-related groups – a patient classification system that standardizes the cost of care. The report highlighted the dismal state of hospital administrative systems. About 40% of hospitals assessed were unable to produce discharge records – among other challenges. Cuts to this indirect NHI grant will undermine efforts to address this.
Then there is the Health Revitalization Grant which aims to support the construction of new facilities and the renovation of existing ones. Its share of the budget remains static over the next three years. Given the significant overruns in the management of these projects, this could have been an opportunity to reduce expenditures while prioritizing the strengthening of organizational systems which the grant also addresses. Investments in infrastructure are essential to improving the health system. But more attention needs to be paid to how projects are identified, appraised and approved. With limited fiscal space, greater priority should be given to revitalizing existing infrastructure.
Allocations to the HIV and TB grant and community outreach remain static. But given the need to respond to Covid-related disruptions, this is essentially a reduction. In addition, consideration should have been given to the effectiveness of the current subsidy. To end HIV as a public health threat, the UN had the objectives set that by 2020: 90% of people living with HIV should know their status; 90% of HIV-positive people who know their status must be initiated into treatment and finally 90% of those initiated into treatment must be virally suppressed. Currently, South Africa is performing poorly across the cascade. It is necessary to interrogate more closely what limits the answer. Keeping doing more of the same thing is clearly not the answer.
Abdication of obligations under the Constitution
Article 27 of the Constitution guarantees everyone the right to health services and commits the government to the progressive realization of this right.
And the budget, the vehicle for implementing this constitutional guarantee, should prioritize the interests of the most vulnerable. Instead, it puts the interests of the elites ahead of the needs of the majority.
Elites do not depend on public provision of basic services like education and health care. Private health expenditure corresponds to public health expenditure even though it only covers 15% of the population. Likewise, the expansion of low-cost private schools will erode the capacity of publicly funded education. And cuts in the number of teachers will not be felt by the elites.
Russell Rensburg, Program Manager Health Systems and Policy, University of the Witwatersrand