Health Expenditure In The 2019/20 Financial Year

Health Expenditure In The 2019/20 Financial Year

Charles Simkins | Jun 15, 2021
This is the third of a four brief series on health expenditure in the public and private sectors. The first brief deals with commonly ignored components of health expenditure: provision in workplaces, and medical expenditure on health financed from the Compensation Fund and the Road Accident Fund. The second considers the impact of local government on health. This brief sets out the information on the pattern of health expenditure from 1 April 2019 to the 31 March 2020. This forms the baseline for examining the implications of the 2021 Budget for health expenditure over the medium term, the topic of the fourth brief.

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

Health expenditure 2019/20

               

R million

               
     

Provision

Coverage

Agency

 

Amount

R million

Public

Private

All

Medical aid

members

Medically

insured

Others

Central government

               

Administration

 

660.2

1

 

1

     

National Health Insurance

 

1094.9

1

 

1

     

Communicable diseases *

 

407.2

1

 

1

     

Primary health care:

               

Programme management

 

4.4

1

 

1

     

District health services

 

20.0

1

       

1

Environment and port health

 

187.5

1

 

1

     

Emergency medical services

 

8.9

1

       

1

Hospital systems *

 

1242.5

1

       

1

Governance and human resources *

 

5986.9

1

 

1

     

Provincial governments

               

Eastern Cape

 

25189.6

1

       

1

Free State

 

11142.4

1

       

1

Gauteng

 

50767.2

1

       

1

KwaZulu-Natal

 

45037.0

1

       

1

Limpopo

 

20777.1

1

       

1

Mpumalanga

 

14386.8

1

       

1

Northern Cape

 

5197.3

1

       

1

North West

 

12273.7

1

       

1

Western Cape

 

24757.4

1

       

1

Local governments (own sources)

 

3864.0

1

 

1

     

Compensation Fund

 

2741.0

1

       

1

Road Accident Fund

 

3350.0

1

       

1

Health expenditure 2019/20

               

R billion

               
     

Provision

Coverage

Agency

LCS 2014/15

R billion

Amount

R billion

Public

Private

All

Medical aid

members

Medically

insured

Others

Private health expenditure by people not

               

covered by medical aid or medical insurance

13.2

23.8

 

1

     

1

Medical insurance

5.2

9.4

 

1

   

1

 

Medical aids

               

Benefit expenditure

 

185.9

 

1

 

1

   

Out of pocket

 

17.0

 

1

 

1

   

Workplace

 

0.9

 

1

     

1

Aggregate household expenditure 2014/15

1716.6

             

Aggregate household expenditure 2019/20

 

3091.9

           

Population (thousands)

 

58558

   

58558

8990

1063

48505

Summary

   

Public

Private

All

Medical aid

members

Medically

insured

Others

Sector

               

Grand total by sector

   

229.1

236.9

12.2

202.9

9.4

241.6

Provincial expenditure

   

209.5

         

Per cent public expenditure provincial

   

91.5%

         

Grand total

     

466.0

     

466.0

Medical aid benefit expenditure

     

185.9

       

Per cent spent on medical aid benefit expenditure

     

39.9%

       

Per cent spent on health (public/private)

   

49.2%

50.8%

       

Per cent spent on health (population segment)

       

2.6%

43.5%

2.0%

51.8%

GDP 2019/20

     

5152.3

       

Per cent spent on health

     

9.0%

       

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.

Financing of provincial expenditure 2019/20

         

R million

         

Province

Equitable

share

Conditional

grants

Departmental

receipts

Other

sources

Total

Eastern Cape

20649.2

4298.0

242.5

 

25189.7

Free State

7621.9

3330.9

189.6

 

11142.4

Gauteng

39196.9

11570.3

536.8

 

50767.2

KwaZulu-Natal

35375.8

9661.3

300.3

 

45037.1

Limpopo

17183.6

3073.3

193.6

326.6

20777.1

Mpumalanga

11053.9

2664.6

668.3

 

14386.8

Northern Cape

3711.8

1485.5

55.0

 

5197.3

North West

9557.9

2478.8

85.1

152.1

12273.9

Western Cape

17413.8

6497.7

485.1

360.8

24757.4

All

161764.8

45060.4

2756.3

839.5

209528.9

 

77.2%

21.5%

1.3%

   

 

Provincial per capita expenditure 2019/20

       

R million

       

Province

Total

expenditure

Population

2019 ('000)

Expenditure

per capita
Rand

Personnel

expenditure

Eastern Cape

25189.6

6712.3

3753

16962.3

Free State

11142.4

2887.5

3859

7308.8

Gauteng

50767.2

15176.2

3345

29560.5

KwaZulu-Natal

45037.0

11289.1

3989

28942.2

Limpopo

20777.1

5982.6

3473

15808.9

Mpumalanga

14386.8

4592.2

3133

8467.3

Northern Cape

5197.3

1263.9

4112

3136.8

North West

12273.7

4027.2

3048

7774.0

Western Cape

24757.4

6844.3

3617

14707.6

All

209528.5

58775.3

3565

132668.4

National

9612.5

   

880.5

National and provincial

219141.0

   

133548.9

Per cent compensation expenditure

     

60.9%