The Treasury director general Dondo Mogajane. Picture: ESA ALEXANDER
The Treasury director general Dondo Mogajane. Picture: ESA ALEXANDER

The Treasury has dug into the National Health Insurance (NHI) indirect grant to fulfil President Cyril Ramamphosa’s promise to fill critical health vacancies and procure extra beds and linen, which he made when he announced his economic stimulus package in September.

Ramaphosa has placed health high on his agenda, frankly acknowledging the problems that riddle the sector, and convened a high level health summit last weekend.

However, the fact that the Treasury has been so easily able to find the money within the health budget highlights problems with the pace at which the health department is rolling out NHI initiatives. Treasury documents show that spending on the NHI indirect grant has been extremely slow: only 10.4% of the R2.3bn allocation for the current fiscal year had been spent by the end of September.

As a result, the reasury has redirected R546m of the grant, of which R350m is set aside for hiring specialists and other healthcare professionals, during the current fiscal year. The rest goes to beds and linen.

Over the medium term, 2,200 critical medical posts will be created in provinces, and the number of medical internship posts will expand, according to the medium-term budget policy statement (MTBPS).

Treasury director-general Dondo Mogajane said the health department would purchase inexpensive hospital linen from an initiative in Cullinan supported by the department of labour, rather than going out on tender.

Finance minister Tito Mboweni said the public health sector had considerable assets, but they were badly managed. Echoing the inclusive tone of last weekend’s presidential health summit, he said the private sector had a lot to offer.

“Are we managed correctly? The answer is no, we are not. If health services businesses said can we help you manage your hospitals, surely you have to say yes,” he said, adding that the state alone could not deliver services.

Universal healthcare

The Treasury emphasised the need to improve the public healthcare system as part of implementing the NHI, which aims to provide universal healthcare that is free at the point of service for everyone.

“NHI is the policy that will drive future reform in the health sector. NHI will reshape the purchase and delivery of health services to increase the quality of care and improve equity. Although NHI pilots are being tested, problems continue to plague the health sector, which needs to be overhauled as part of the NHI implementation,” it said in the statement.

The Treasury said it was working with the department of health on a new payment mechanism for contracting private sector GPs in preparation for the NHI, which would compensate doctors on the basis of the number of patients they served. It drew attention to the pressures facing provincial health departments, as they confront constrained budgets and increasing demands for services, emphasising the risks posed by unpaid bills and medico-legal costs.

The national health department plans to establish expert teams to bolster the capacity of provinces to manage medico-legal claims, it said.

Revenue generated from the government’s new tax on sugar-sweetened beverages, which came into effect on April 1, has exceeded expectations, said the Treasury’s chief director for economics and tax analysis, Christopher Axelson. “It’s doing very well. We are happy to note some sugary beverage producers have reformulated to bring their sugar down, which is really in line with the policy intention.” 

Consolidated health expenditure is set to rise by 7.9% over the medium term. It will grow from R205.1bn in 2018-2019 to R223.7bn in 2019-2020, and will then rise to R243.5bn in 2020-2021, and to R257.7bn in the outer year.  

An extra R166m has been added to the NHI grant in the adjustment appropriation to procure medical equipment and design a new 488-bed academic hospital in Limpopo. The Treasury said that construction of the facility is expected to begin in 2019-2020. A minimum wage is to be implemented for community health workers, with funding allocated to the provinces from 2021-2022 to support this. 

Section27 budget analyst Daniel McLaren said the department had failed to build the requisite capacity to spend the grant.

"The department hasn't built a team of skilled people to implement and spend the money," he said.

The health department's deputy director general for NHI Anban Pillay said spending on the indirect grant had been slow due to delays in awarding tenders to service providers. However the figures were not quite as bad as those reflected in Treasury's documents, as a strike at the department had delayed the processing of invoices.

More money been spent than was reflected in the information available to Treasury, he said, but was unable to provide the exact figures.

Pillay said his NHI team had just three technical staff, and its size was constrained by the freeze on the department's salary bill.

"We could do with more people in the NHI unit [but] Treasury will only commit [more funds] once the NHI Bill is passed," he said.

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