Will the 2017 budget address the health system crisis?

JOHANNESBURG, WEDNESDAY 1st MARCH: South Africa is facing an ongoing crisis in the public healthcare system. The 2015 General Household Survey indicated that seven in every ten households use public clinics and hospitals. However, when they access these facilities they are faced with dysfunction. Hospitals that leave patients on stretchers without being seen. Doctors in short supply who take weeks to see patients in critical condition. Arriving at clinics at 5am only to wait in inordinately long queues for the whole day. Waiting for hours in urgent need of emergency care, for ambulances that sometimes never arrive. Widespread medicine stockouts causing people to be turned away from clinics empty handed.

Without a doubt the current crisis in healthcare provision is linked to the year-on-year slowing of expenditure towards health services in the provinces. In 2016/17 financial year, healthcare spending was increased by only 5.6% and provincial hospital services faced a 2% cut (amounting to nearly R600 million). When the healthcare inflation rate is taken into account, which according to medical aid schemes was 11%, the health budget for provinces, in real terms, was cut by 13%. While we recognise that the country is in difficult financial times, it is critical that health allocations to provinces should not only meet rising costs – but must also be increased in real terms above inflation to ensure improvements in the delivery of health services.

Unfortunately, the 2017 budget does not meet this need. Again, overall healthcare spending has been increased by only 8.3% with allocations towards antiretroviral treatment receiving the bulk of the increase. Based on government’s consolidated health budget, allocations towards the provinces have been reduced in real terms despite them providing the bulk of public services. Overall allocations do not seem to match the rate of inflation or the rate of population growth per province. It won’t be enough to address the dysfunctional nature of the health system nor protect the health system from further deterioration. Poor governance, mismanagement, and corruption in the provinces will only exacerbate this problem.

The 2017 budget also outlines the continued public spending expenditure ceiling across all departments through “trimming non-core goods and services”. While we agree the need to reduce bloated administrations, what constitutes non-core goods and services in the health sector? There are no clear guidelines on this. Would it include salaries for porters? Or security guards? It is essential that the public spending ceiling – and the re-prioritisation of R30 billion – does not undermine the recruitment and retention of essential medical personnel and the provision of quality services.

Additionally, facility infrastructure is in a dire state across the country with broken structures, inadequate ventilation, no access to water or electricity, waiting areas that do not accommodate everyone, and undignified or unusable toilets. In some communities there are no clinics at all. The 2017 budget indicates that the health facility revitalization grant will be trimmed over the next three years. Given the state of our health facilities this is a major red flag. We therefore call on National Treasury and the National Department of Health to indicate what steps they will be taking to ensure that such “trimming” will not impact negatively on the quality of our health facilities.

– The establishment of an NHI Fund

TAC supports the establishment of a National Health Insurance (NHI) system in South Africa. The NHI’s aims of making healthcare funding more equal and accessible to all, underpins the values of life, dignity, social solidarity and risk-sharing that TAC believes in and supports. We consider a progressive and effectively structured and implemented NHI system to be essential to the achievement of universal health coverage in South Africa in the medium to long term.

We are now moving into the next phase of NHI implementation. The review announced the establishment of the NHI Fund during this financial year. It remains to be seen what type of fund this will be – however the review outlined an initial focus on maternal health services, increasing the availability of hearing aids and spectacles at schools, improved psychiatric care and services for people with disabilities and the elderly.

As a matter of urgency, to ensure the success of NHI, we must reform our budgetary system in ways that use need as the basis for the allocation of public funds. This cannot simply result in shrinking the budgets in one area to expand allocations in another. In the development of this financing mechanism we urge the government to be cognisant of the need to increase financial resources in all areas of the public system. To redress the historical imbalance between provinces based on apartheid era health budgeting. To resolve the structural inequalities facing the most rural and deprived communities.

NHI in itself will not solve the dysfunction plaguing our public healthcare system in many provinces. NHI must go together with a new era of professionalism and an end to cadre-deployment in the public healthcare system.

– Enough money to ensure #Treatment4All?

We welcome the announcement that additional financing of R885.3 million will be put towards “Test and Treat” in order to treat 5.5 million people. Treatment for all is something we have campaigned for and that the scientific evidence supports – both to benefit the health of people living with HIV and to prevent many new HIV infections.

However, many questions still remain. Will everyone living with HIV actually be able to access a stable supply of ARVs? Will they get the counselling and support they need? Will there be enough community healthcare workers to ensure those in rural and hard to reach areas access treatment? We demand to know how this money will be broken down and spent in order to ensure that the policy becomes a reality. Ultimately this increase means nothing without a proper functioning health system that can service everyone.

– High price tags of medicines

The budget highlights the substantial savings being made by government in buying medicines through their central procurement system. Since the National Department of Health took over management of the tenders – and made significant reforms – the cost of medicine procurement has been dropping year by year. However, these savings are being lost.

R1.6 billion – which could be used in other parts of the collapsing health system – is being lost through high medicine prices and a depreciating currency. For instance the cost of 1st line ARVs increased by more than R20 per person per month in the last tender[1]. While currency depreciation has no quick fix, the government can act now to ensure that medicine prices are more affordable.

In South Africa, medicines for many diseases including cancer, diabetes, mental health and TB remain unaffordable. They aren’t available in the public sector due to high costs and medical aids refuse to cover them. People are forced to pay out of pocket, or in most cases to go without.

These excessive prices are a result of our outdated patent laws. This impacts not only the health budget but also the trade deficit (as many of our medicines are imported from other countries[2]). TAC demands that the Department of Trade and Industry urgently finalise a national policy on intellectual property that will lead to a rapid process of law reform. These reforms must ensure that all WTO sanctioned safeguards aimed at protecting the right to health are effectively incorporated in our laws.

Furthermore, we urge the National Minister of Health to issue compulsory (government use) licenses on a range of medicines that are currently priced out of reach. For instance, trastuzumab to treat HER2+ breast cancer costs over R200,000 in the public sector and is currently unavailable. Tobeka Daki, a leading activist in the fight for affordable trastuzumab tragically passed away last year without ever having a chance to access the medicine. The government should take a clear stand against the profiteering of the pharmaceutical industry in order to protect the lives of our people. Widespread compulsory licensing would significantly reduce the cost of procuring medicines. It is integral to the future success of NHI.

– Medical research and development

The budget announced R9.3 billion towards research and development (R&D). We demand to know how much of this will go towards medical R&D efforts? And how will these efforts be prioritised?

The government must commit new funding towards TB R&D. Currently we spend less than R100 million annually on TB R&D yet we have one of the highest TB burdens globally. The BRICS countries—Brazil, Russia, India, China, and South Africa—accounted for 46% of the world’s new TB cases and 40% of TB-related deaths in 2014, but only 3.6% of public funding for TB R&D. South Africa has a moral responsibility to invest much more in TB R&D that could save millions of lives in our country.

– Increase in subsidies to private healthcare

We note with concern that medical tax credit – a subsidy on private healthcare – is increasing at a higher rate than even social grants servicing the poorest in South Africa. We question whether this is the best place to forgo additional tax revenue, particularly as the review goes on to suggest this as the only source of revenue to establish the National Health Insurance Fund. R16.8 billion of potential revenue was lost to the state as a result of the subsidy in 2014 – with these increases the losses are set to rise.

– Sugar tax to curb obesity

We welcome the implementation of the Sugar Tax (a tax on intrinsic and added sugar) to attempt to address issues of obesity and non-communicable diseases in South Africa. However, the 2017 budget remains vague in outlining where the additional tax revenue will be allocated. We urge that funds raised go specifically and in whole towards treating and supporting people living with non-communicable diseases as well as further prevention efforts.

– Better communication between clinics, hospitals and departments

SA Connect implementation is discussed in the 2017 budget, however little is taken into account for the poor implementation in NHI pilot districts to date and the reasons for this. We hope that better ICT connection between public buildings from a clinic level up to provincial offices will support in highlighting issues to do with staffing shortages and could foresee and prevent medicine stockouts and shortages.

– Corruption

Mismanagement of the healthcare system and rampant corruption has meant that budgets are no longer sufficient to support the full range of healthcare services that provinces should provide. A good start would be to start taking swift and decisive action against those officials who continue to loot the public health purse for their own gain. Dealing with corruption would rescue billions of rand and go a long way in improving access to healthcare through better management of resources.

The overall dynamics of the 2017 budget are at times unclear and many questions remain unanswered through our analysis. As a result of this TAC will be paying close attention to the health budget in parliament and call on the National Minister of Health to provide clarity on our concerns. Ultimately, TAC is concerned that the 2017 budget is being balanced on the backs of the poor.

For more information and to arrange interviews please contact

Lotti Rutter | lotti.rutter@tac.org.za | 081 818 8493

[2] Strict IP protection not only impedes the growth of local industry, but also contributes to a negative balance of trade. The Department of Trade and Industry has noted the contribution of imported medicines to the trade deficit as a key area of concern – pharmaceuticals are the 5th largest contributor to South Africa’s trade deficit (DTI, 2011). tac.org.za/news/tac-research-paper-economic-social-case-patent-law-reform-south-africa

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