Health Expenditure In The 2019/20 Financial Year

It is possible to piece together most health expenditure between 1 April 2019 and 31 March 2020. Detailed information is presented in the Annexure. The brief summarizes the results.

1. Coverage. The brief covers most components of health care expenditure. However, no information is available on the following items:

• Local government expenditure directly on health services financed out of own revenue
• Out of pocket expenditures by the medically insured
• Out of pocket expenditures by medical aid beneficiaries not captured by medical aid information systems.

Every effort has been made to avoid double counting,

2. Main findings. Aggregate expenditure on health is estimated at R 462 billion in 2019, representing 9.0% of gross domestic product in that year. Of this total, 48.7% was spent in the public sector and 51.3% in the private sector. 1.8% of aggregate health expenditure benefited all South Africans, 43.9% benefited medical aid beneficiaries, 2.0% the medically insured and 52.3% people covered neither by medical aid nor by medical insurance. 40.2% of aggregate expenditure was financed by medical aid benefit expenditure.

3. Expenditure by provincial government. Spending by provincial government accounted for 90.3% of all government spending on health. 77.2% of health expenditure was financed from provincial equitable shares, 21.5% from conditional grants from national government and 1.3% from provincial departmental receipts. This pattern of funding means that provincial expenditure per capita does not depend on provincial GDP. Indeed, per capita Eastern Cape health spending was higher than that in both the Western Cape and Gauteng and it should have funded a better system than in either of the two provinces. It didn’t.

Conclusion

The estimates in this brief support an analysis of the prospects of health system to 2023/24, presented in a companion brief.

Charles Simkins
Head of Research
charles@hsf.org.za

Annexure

Notes

1. Sources:

• National government: Budget 2020, Estimates of National Expenditure: Health
• Provincial government: Budgets 2019, Estimates of Provincial Revenue and Expenditure: Health
• Private health expenditure by people not covered by medical aid or medical insurance: Living Conditions Survey 2014/15, adjusted to 2019 levels using aggregate household expenditure from the LCS and the national accounts
• Medical insurance: Living Conditions Survey 2014/15, adjusted to 2019 levels using aggregate household expenditure from the LCS and the national accounts
• Medical aids: Council for Medical Schemes: 2019/20 Annual Report

2. Time period: 1 April 2019 to 31 March 2020.

3. To avoid double counting, transfers to provinces are netted out of the asterisked national programmes.

4. Expenditures are allocated in two ways: by sector providing (public and private) and by beneficiary group (all, medical aid beneficiaries, the medically insured, and other). The all category is used for overarching national expenditures which benefit everyone. The other category refers to people who are neither medical aid beneficiaries nor covered by medical insurance.

5. Exclusions:

• Employer contributions to medical insurance schemes
• Payments by compensation funds other than the Compensation Fund and the Road Accident Fund
• Out of pocket expenditures by the medically insured
• Out of pocket expenditures by medical aid beneficiaries not captured by medical aid information systems.

6. Simplifying assumption:

Provincial health expenditures are assumed to accrue entirely to people not beneficiaries of a medical aid or medically insured. This is not completely accurate since some members of the bottom of the range medical aid options or medical insurance schemes may be treated in public facilities. As the table below on financing of provincial expenditures shows, only 1.3% of provincial health expenditure is financed from departmental receipts, and these include more than user fees. Use of these facilities by medical aid beneficiaries and the medically insured is very limited.

7. In the table below, the items in italics under ‘departmental receipts’ are not included in total financing.