Health budget cuts partially reversed, says Treasury in MTBPS

The Treasury has partly reversed the deep cuts to the health budget announced in February, but the extra money is not enough to keep pace with its inflation forecasts, and provincial health budgets will continue to shrink in real terms.

Consolidated government expenditure on health is set to rise by a nominal 2.6% over the medium-term expenditure framework, while the Treasury projects inflation will come in at 6.7% in 2022, 5.1% in 2023, and at 4.6% in both 2024 and 2025.

The health budget is set to rise from a revised estimate of R259bn in 2022/2023 to R256.1bn in 2023/2024, and then increases to R267.5bn in 2024/2025 and R279.4bn in 2025/2026. The February budget had allocated R248bn to 2023/2024 and R257bn in 2024-2025.

The extra money allocated to health in the 2023 budget will boost spending on personnel, medicines and laboratory services, address cancer and surgical backlogs and improve HIV/Aids and tuberculosis services, the Treasury said. Additional funds will also be provided to build the new Limpopo Central Hospital in Polokwane, a project that has been in the pipeline for the past decade.

The Treasury warned that its spending plans were dependent on the government and public-sector unions reaching a wage agreement that does not breach the available budget.

“Given that higher-than-anticipated wage increases would have cost implications for each year of the 2023 medium-term expenditure framework, spending on policy priorities might need to be reallocated to compensation budgets,” it said in the medium-term budget policy statement (MTBPS).

In a detailed analysis of the public-sector wage bill published with the MTBPS, Treasury said spending on compensation for government employees had risen much faster than headcounts. In health, the number of full-time equivalent posts rose just 1% between 2015/2016 and 2021/2022, while wages and salaries rose 7.6% over the six-year period.

The modest growth in the size of the public health workforce failed to keep pace with population growth, the Treasury said, noting that the number of nurses per 100,000 uninsured population had fallen slightly, from 299 per 100,000 to 294 per 100,000 over this time.

Treasury warned the high level of medical negligence claims facing provincial health departments posed a risk to their spending plans. The contingent liabilities associated with these claims (the amount government would have to pay out if all claims were successful) rose to R109bn in 2021/2022, up from R106.3bn the year before, while pay outs declined from R1.7bn to R1bn over the same period. The auditor-general said earlier in October that the drop in payouts to successful claimants was partly due to delays in finalising claims.

kahnt@businesslive.co.za