PRE-MTBPS STATEMENT: DEAR MINISTER OF FINANCE, WILL THE ONGOING BUDGET CRISIS IN HEALTH BE ADDRESSED OR DO WE NEED TO BRACE FOR FURTHER DECLINE?

PRE-MTBPS STATEMENT: DEAR MINISTER OF FINANCE, WILL THE ONGOING BUDGET CRISIS IN HEALTH BE ADDRESSED OR DO WE NEED TO BRACE FOR FURTHER DECLINE?

This week, Minister Malusi Gigaba will deliver his maiden Medium Term Budget Policy Statement (MTBPS) at National Parliament. The MTBPS is a crucial part of government’s budget cycle and provides an update on the government spending plans for the next three years. A lot has changed since February when the former minister Mr Pravin Gordhan tabled his final budget; the country’s sovereign credit rating was downgraded, key tax revenue targets have been missed and a shortfall of R 50 billion has already been reported. The ongoing crisis at state-owned enterprises has intensified and as the final guarantor, the government has already provided bailouts to SAA in excess of R 5 billion this year and continued challenges at other state-owned enterprises such as Eskom may present further risks to the fiscus in the months ahead.

Against this declining economic landscape, South Africa continues to face massive social challenges. One out of every two South Africans is currently living in poverty. The rate of unemployment in the country continues to grow – 64% more people are in long-term unemployment today than in 2008.The state is accruing debt faster than it is collecting revenue. Yet-to-be denied reports of obligations in terms of a shadowy nuclear deal that has the potential to cripple our economy are equally alarming.

To mitigate against the drastic effects that these factors will have on ordinary people, the Minister is faced with a significant challenge in balancing the needs against a background of increasingly vociferous calls for radical economic transformation as well as providing the necessary stimulus to a failing economy while at the same time maintaining state expenditure on key socio-economic priorities such as health, education and social services. Notwithstanding these challenges, the minister and his advisers must address the ongoing crises in the delivery of health services.

FIX THE HRH CRISIS

As the Rural Health Advocacy Project (RHAP), we have long advocated for rational approaches to the implementation of austerity measures. In our 2015 working paper, on the causes and implications of the implementation of staffing moratoria, we argued that the causes behind the freezing of posts were primarily budget-related and without clear guidance for the protection of critical frontline health posts [1]. While this warning resulted in guidance from national treasury to protect critical posts, recent admissions from the minister of health and evidence reported by the different provinces demonstrate that health departments did freeze and cut critical health posts. With budget constraints cited as the causes, this has certainly led to mounting pressures on the health service delivery platform. The final National Health Insurance policy document released earlier this year, if implemented, will shape the needed radical transformation of the health care system which would ensure that quality healthcare is available to all regardless of socio-economic status or geographical location. But as with most things, the success of this project is reliant on an efficient public health system, without healthcare workers, a health system cannot function. In a report commissioned by the minister of health investigating service delivery in public hospitals across the country, key findings included the on-going freezing of critical health posts, underinvestment in the maintenance of key infrastructure including medical equipment which has led to a deterioration in the quality of care delivered. [2]

We call on the minister of finance to help resolve the HRH crisis by availing the necessary resources that will ensure that all critical health posts are fully funded.

ADDRESS THE SOLVENCY CRISIS IN PROVINCIAL DEPARTMENTS OF HEALTH

In our submission in response to the tabling of the national budget in February this year, we drew attention to the growing financial crisis in provincial health departments across the country. We called for the reform of the provincial equitable share formula specifically for the inclusion of rural adjusters that would mitigate the increased cost of service delivery in rural provinces. These added rural costs are the result of the varied implementation context which is influenced by lower population densities, large distances between facilities and resulting diseconomies of scale. We further reported on the failure of provinces to implement sound financial policies in addressing the impact of fiscal consolidation resulting in the growth of unfunded commitments in a number of provinces. Unfunded commitments or accruals are expenditures that have been incurred but in the absence of sufficient funding and are rolled over to the following financial year. This practice has a significant impact on the delivery of healthcare as in meeting these commitments; a significant slide of the operational health budgets is lost to commitments from the previous year, leading to a vicious cycle of underfunding often with disastrous consequences. The Life Esidimeni crisis may be a case in point. [3]

In a joint sitting of the portfolio committees of health and finance investigating the coordination between the national and provincial departments, a number of provincial departments most notably the Eastern Cape, Kwazulu Natal and Limpopo provinces reported unfunded commitments in excess of R13 billion and growing. What this suggests, is that despite nominal increases in health budgets, when adjusted for medical inflation, wage increases and expanding HIV / AIDS coverage, current provincial allocations for health are insufficient. Urgent reform is needed in how we allocate resources for health but more immediately we need to protect the health service delivery platform. There is evidence that points at high levels of unmet need and regression in access to health in some parts of the country. Minister Gigaba can demonstrate his commitment to a healthy life for all South Africans by prioritising the estimated R13 billion needed to address the funding crisis in provincial departments of health.

CENTRAL FUND TO MANAGE MEDICO LEGAL CLAIMS

Medico-legal claims have increased significantly in recent years with lodged claims amounting to R57 billion. The causes of these claims have been widely documented however what is clear is that the large majority of these claims have been as a result of health system failures. Currently, the Public Finance Management Act does not allow for the provision of contingent liabilities emanating from medical negligence. This means that while provinces are aware of impending settlements they are unable to budget for the expense. In order to settle these claims, provincial departments of health have to redirect funding from other programs to pay these claims. For example, in the 2016 financial year, the Eastern Cape Department of Health settled claims in the region of R195 MILLION. In order to meet this obligation, money was shifted from various health programmes including primary health care services. Perversely a large portion of medico-legal claims in the Eastern Cape occurs as a result of failures in care during high-risk pregnancies which are largely preventable if we adequately resourced care for pregnant women and infants at primary care level.

While victims of health system failures need to be compensated, it is irrational to pay medico-legal claims from service delivery budgets. We, therefore, urge the minister to investigate proposals to centralize the management of medico-legal claims to national institutions such as national treasury as well as the allocation of additional resources to deal with the settlement of these claims.

We will be looking out for an MTBPS that addresses these systemic concerns within health, failing which we expect to see further regression in the years ahead at a time when hopes are high for a National Health Insurance that enables equitable access to health care for all who need it.

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For more information contact:

Russell Rensburg

Programme Manager: Health Systems and Policy

Rural Health Advocacy Project

A partnership between Wits Centre for Rural Health, RuDASA and SECTION27

Tel: +27 010 601 7427

Fax: +27 010 591 0499

Cell: 0795443317

Email: russell@rhap.org.za

Web: www.rhap.org.za

Facebook: Rural Health Advocacy Project

Twitter: RHAPnews

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[1]RHAP_Working_Paper_Frozen_posts_July_2016 (1)
[2]http://www.rhap.org.za/rhap-response-ministerial-task-team-committee-report-investigation-service-delivery-select-hospitals/
[3]www.rhap.org.za/time-fix-way-fund-healthcare