oa South African Health Review - Health care financing and expenditure : framework for transformation

Volume 2002 Number 1
  • ISSN : 1025-1715



This chapter summarises the main findings of the National Health Accounts (NHA) Project that was conducted in the late 1990s. the NHA Project is the natural successor of what was generally known as the Health Expenditure Review. the Review described patterns of health care financing and expenditure in apartheid South Africa, highlighting extensive geographic disparities, disproportionate spending on hospital-based care in the public sector, and severe cost escalation in the private sector. the NHA Project evaluates the extent to which these problems have been addressed by reforms put in place by the new government during its first term of office. It focuses on the three financial years 1996 / 97 to 1998 / 99, making comparisons with 1992 / 93, the year investigated by the Review. <br>The NHA Project reveals two eras of &lt;b&gt;public&lt;/b&gt; health sector financing. the first ran from 1992 / 93 to 1997 / 98. It was characterised by substantial growth in government financing of health care, the re-distribution of health sector funds across provinces, and the shift of resources to primary health care. In contrast, data from 1998 / 99 indicate falling per capita financing of health care by government, a reversal of re-distribution trends between provinces and limited growth in PHC expenditure. It is unlikely that these latter phenomena were temporary, as they were associated with major policy changes that affect the long-term climate for public health care financing. Indeed, the implementation of the government's macro-economic policy, changes to the formula determining global budgets for provinces, and the elevation of other sectors - such as defence - in the budgeting process, mark a transition between these two eras of financing. These policies, together with limited economic growth and persistent public sector inefficiencies, have curtailed the potential for increasing access and equity in the public health sector. <br>The NHA data also highlight several key features of &lt;b&gt;private&lt;/b&gt; health sector development in the post-apartheid era. These include growth in private sector provision (most markedly in bed numbers), rapid growth in expenditure, and contraction of the number of people with regular access to private care. Together, these trends suggest an overall decline in value-for-money in the private sector, at least prior to the implementation in 2000 of the Medical Schemes Act of 1998. During this period, some of those previously able to afford private care undoubtedly became dependent on public services, particularly hospitals. This would have represented an additional burden on a public sector that was already over-stretched. <br>In view of these rather disappointing findings, the chapter suggests a number of policy areas which government needs to address in order to achieve its publicly stated objectives.

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