Applied Fiscal Research Centre, UCT: Social Service Delivery
Parliamentary hearings on Budget 1999
Submission to The Portfolio Committee on Finance on The Health Budget and Social Service Delivery


Presented by
Tania Ajam
Deputy Director: Applied Fiscal Research Centre

February 18, 1999

The Health Sector: Policy, Budgets and Service delivery
An analysis of the national department of health budget cannot be abstracted from financing of the health sector as a whole. The health sector is one of the few sectors where all three spheres of government are involved in service delivery. The national department of health is primarily involved in policy-making and oversight, and also acts as a conduit for funds to provinces for academic hospitals, health training and for other conditional grants. The provinces are the primary agents of health service delivery at district and regional hospital level. Local governments also provide primary health care, clinic services and ambulance services.

Yet the nationwide health system must be managed as an integrated whole. There must for instance be articulation between the various levels of care, for example, across institutions and a well-functioning referral system. This makes coordination between and across the spheres of government in policy, budgeting and implementation absolutely imperative.

Health sector budgets
Unfortunately to get an overall idea of sectoral spending it is necessary to aggregate the nine provincial health budgets and the national department expenditure. However, the Budget Review 1999 does provide projected consolidated national and provincial MTEF projections. As is evident in the table below, national health increased from 8% of consolidated health spending in 1995/96 to 24% in 1998/99.

Table 1: Consolidated expenditure outcomes and projections

R million

1995/96

1998/99

Avg growth

MTEF

   

Avg growth

 

Outcome

Estimate

         
 

e

e

         
     

95/96 - 98/99

1999/00

2000/01

2001/02

98/99 to 00/01

National department

1 290.9

5 535.1

62%

5 939.7

6 243.4

6 378.8

4.1%

Consolidated national and provincial health spending

16 078.0

23

220.0

13%

24

036.0

26

337.0

28

324.0

4.3%

National spending as a percent of total

8.0%

23.8%

 

24.7%

23.7%

22.5%

 

Sources: Budget Review, table 5.8; National expenditure survey 1999 pg 126

As can be seen from the table below, that increase was due to conditional grants falling under the Policy and Planning subprogramme.
Table 2: National health department expenditure by programme

R million

Expenditure outcomes Prelim MTEF

 

1995/96

1996/97

1997/98

1998/99

1999/00

2000/01

2001/02

Administration

33.4

43.0

46.2

49.7

55.2

54.8

54.3

Policy and Planning

264.9

352.4

231

4660.4

4966.2

5291.4

5378.9

Regulation, services and programmes

139.4

244.7

220.8

800

900.7

876.3

912.5

Auxiliary and associated services

14.9

15.9

14.5

14.8

15.7

16.7

16.9

RDP Projects

839.3

           

Less Internal Charges

1

           

Subtotal

1290.9

656.0

512.5

5524.9

5937.8

6239.2

6362.6

Capital

     

10.2

1.9

13.2

16.2

Total

1290.9

656.0

512.5

5535.1

5939.7

6252.4

6378.8

Programme as a percentage of total expenditure

Administration

2.6%

6.6%

9.0%

0.9%

0.9%

0.9%

0.9%

Policy and Planning

20.5%

53.7%

45.1%

84.2%

83.6%

84.6%

84.3%

Auxiliary and associated services

1.2%

2.4%

2.8%

0.3%

0.3%

0.3%

0.3%

RDP Projects

65.0%

           

Capital

     

0.2%

0.0%

0.2%

0.3%

 

100%

100%

100%

100%

100%

100%

100%


Source: National expenditure survey 1999, table 17.1 and own calculations

Issues in health financing

1] Information
At present there is not information at sub-programme level on actual expenditure and budgets for the national departments and the nine provinces. This makes tracking actual expenditure on HIV/AIDS in the sector virtually impossible to track. In addition these may be located in different departments eg welfare. The Minister of Finance has expressed enthusiastic support for output budgeting. But this is still in its embryonic stage and needs to be refined (e.g. laboratory and virology services how much? Two whom? What per unit cost?)

2] Conditional grants
There has been an increase in conditional health grants (see table 17.4 of the National Expenditure Review 1999). Yet questions about conditional grants remain:
Input versus output grants and accountability for results
Where should accountability for conditional grants be allocated?

3] Unfunded mandates
These have been mitigated by joint MinMecs and the 4x4s, but without proper costing of national policies, this is likely to persist.

4] Personnel budget
Increases in personnel costs at provincial level have been crowding out non-personnel and capital expenditures (like medicines, clinics etc). This is a cause for concern because it could compromise service delivery. Also problems with the skill profile of health service personnel.