The Treasury has instituted unprecedented cuts to the health budget as it seeks to rein in government spending.
Despite shoring up funding to tackle the coronavirus pandemic, Treasury has instituted a R67.2bn cut to consolidated health expenditure over the medium-term expenditure framework, deepening the R3.9bn cut that had already been worked into the 2020 budget.
The 2020/2021 special adjustments budget allocated and re-prioritised roughly R20bn to the health sector for Covid-19 interventions. This year’s budget sees R9bn allocated to the government’s Covid-19 vaccine rollout and another R8bn is allocated to provinces for coronavirus prevention, testing and care, including hospitalisations during a possible third wave of infections.
But consolidated health expenditure shrinks 0.3% between 2020/2021 and 2023/2024. Using the Treasury’s estimates of consumer price inflation, which average 3.95% over the period, this represents a cut in real terms of 4.25%.
The lion’s share of the cuts to health spending will be felt in the compensation bill, but there are also planned cuts to conditional grants for HIV/Aids, hospital infrastructure and training.
The HIV/Aids component of the HIV/Aids, tuberculosis, malaria and community outreach grant is to be cut by R6.4bn over the medium term, reflecting slower-than-anticipated expansion of the government’s HIV treatment programme. The estimated number of people on treatment stands at 5.7-million, and the government aims to reach 6.7-million by 2023/2024. The HIV/Aids component of this grant is allocated R69.3bn over the medium term.
The national tertiary services grant is to be cut by R3.5bn to R41.7bn, leaving less money for specialised health care, while the human resources and training grant is trimmed by R1bn.
Consolidated government health expenditure is set to rise from a revised estimate of R247bn in 2020/2021 to R249bn in 2021/2022, and will then drop to R246bn in 2022/2023 before dropping slightly to R245bn in the outer year.
This year’s Budget Review is notably silent on National Health Insurance (NHI), the government’s plan for achieving universal health coverage. But the Treasury has set aside R7.5bn over the next three years for the NHI indirect grant, which makes provision for improving the health system, funding infrastructure projects and bolstering capacity in the national health department.
Medical tax credits are to be increased in line with inflation, rising from R319 to R322 for the first two medical scheme members, and from R215 to R224 for all subsequent members.
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