This information sheet provides basic facts about financing of health care in South Africa. Health care financing is based on tax, which, in South Africa, is relatively progressive. Tax revenue is the only funding in South Africa that is used for health services that benefit all. Out-of-pocket payments or direct payments to health care providers are regressive. Medical scheme contributions are the biggest single share of health care financing in South Africa. Lower income medical scheme members contribute a higher percentage of their income than higher income medical scheme members. The greatest burden of funding health services rests on medical scheme members, particularly the lowest income scheme members, and the largest part of this burden takes the form of medical scheme contributions.
Resource allocation and health financing
This fact sheet notes that donor funding and general tax revenue are the main sources of health financing in Tanzania. Funding for health care may be progressive or regressive. Tax revenue in Tanzania is relatively progressive. Income tax is the most progressive, but Value Added Tax (VAT), import and excise tax are also marginally progressive. VAT contributes the most to tax revenue. About 10% of tax revenue goes to health care. Regressive payments include out-of-pocket payments, or direct payments to health care providers, represent a significant share of total health care financing and over half of household contributions to health care. Health insurance contributions are still a relatively small share of total health financing due to the limited coverage of insurance (less than 10% of the population). Contributions to the National Health Insurance Fund are progressive as members are concentrated among higher income groups and contributions are proportional to income. The Community Health Fund is regressive as membership is concentrated among lower income groups and the contribution is a flat rate irrespective of income.
Estimated funding needs for the implementation of the World Health Organization strategy on global public health and intellectual property total more than US$2 billion for the years 2009 to 2015 in order to build capacity to innovate and to deliver health products, engage in technology transfer and in the application and management of intellectual property, promote new research and development and sustainable financing mechanisms for that research and development (R&D), and establish monitoring systems. It also budgets an additional US$147 billion for the actual cost of research, including education of researchers and infrastructure building, noting that this number is difficult to determine ahead of time.
According to this study, a major challenge in the governance of research funding is agenda-setting, given that the priorities of funding bodies largely dictate what health issues and diseases are studied. The challenge of agenda-setting is a consequence of a larger phenomenon in global health, namely “multi-bi financing.” Multi-bi financing refers to the practice of external funders choosing to route non-core funding - earmarked for specific sectors, themes, countries, or regions - through multilateral agencies such as the World Health Organisation (WHO) and the World Bank and to the emergence of new multistakeholder initiatives such as the Global Fund to Fight AIDS, Tuberculosis and Malaria and the GAVI Alliance. These new multistakeholder initiatives have five distinct characteristics: a wider set of stakeholders that include non-state institutions, narrower problem-based mandates, financing based on voluntary contributions, no country presence, and legitimacy based on effectiveness, not process. The author concludes that this shift to multi-bi financing likely reflects a desire by participating governments, and others, to control international agencies more tightly.
In this article, the authors compare domestic resource mobilisation (DRM) with foreign direct investment (FDI), arguing that developing countries, like those in Asia, that have achieved and sustained high rates of growth have typically done so largely through the DRM, and not through FDI. DRM at a significant level is essential to solidify ownership over development strategy and to strengthen the bonds of accountability between governments and their citizens. In effect, it provides ‘policy space’ to developing countries, which is often constrained under the terms and conditions of external funders. In contrast, FDI tends to be pro-cyclical and volatile, particularly affecting African countries with smaller economies, and typically flows into sectors and projects dictated by the commercial interests of the foreign investors, like natural resource extraction. While external funding or trade and investment opportunities can make significant contributions to development, they alone will not be sufficient for Sub-Saharan Africa to achieve sustainable, equitable growth and poverty reduction, the authors conclude. As happened in the 90s with Malaysia, South Korea and the other ‘Asian Tigers’, development success depends primarily on the efforts of developing countries themselves, which ultimately means enhancing their ability to mobilise their own human and financial resources.
The author of this book argues that, along with its many benefits, government aid to Africa has often meant more poverty, more hungry people, worse basic services and damage to already precarious democratic institutions. The author proposes that calls for more aid are drowning out pressure for action that would really make a difference for Africa’s poor. Rather than doubling aid to Africa, it is suggested in the book that it is time to reduce the continent's aid dependency.
In an informal address to the 4th International Conference on Priorities in Health (Oslo, 23 September 2002), Professor Jeffrey Sachs – Chairperson of the WHO Commission on Macroeconomics and Health – maintained that the real causes of the inability of the world's poorest people to receive help for the lethal diseases that burden them did not include the "usual suspects" (corruption, mismanagement, and wrong priorities). Rather, the root cause was argued to be an inherent lack of money, indicating that the burden of disease would be lifted only if rich countries gave more money to poor ones. Without taking exception to anything that Sachs said in his address, there nevertheless remain a number of justifications for efforts to improve priority setting in the face of severe shortages of resources, including the following three defences: prioritisation is needed if we are to know that prioritisation is insufficient; prioritisation is most important when there is little money; prioritisation can itself increase resources.
In 1978, from a little-known region of what was then the USSR, emerged a WHO/UNICEF statement of intent with the slogan "Health for all by the year 2000". That year has passed, leaving the Alma-Ata declaration largely unfulfilled. Indeed in some parts of the world the situation has worsened, and not just because of AIDS and civil unrest. Yet the failure of Alma-Ata is often viewed positively: the declaration was never meant to be taken literally as a target that everyone would be healthy by last year, and it is argued, reasonably, that the slogan has kept the issue of primary care to the forefront of the debate in WHO and other United Nations agencies. But this is a card--labelling a failure a success because the matter was worth raising--that must be played sparingly. As this week's Lancet shows (pp 1671,1685), The world health report 2000, published a year ago, continues to attract critical attention. Does it matter that the criticisms are serious provided the underlying objective, which is the use of national performance indices to improve health in all countries, is worthy, as it clearly is? If WHO is to become a science-led global policy body, the answer has to be Yes.
The South African Budget and Expenditure Monitoring Forum meeting in February 2010 was reported to raise a number of issues relevant to antiretroviral (ARV) tenders to ensure adequate supplies of appropriate medicines at the lowest possible prices. The meeting noted the need for co-operation between treasury and health departments to achieve a scale of procurement to use the leverage of the world’s largest ARV treatment programme to get the best possible deals from drug companies.
Ten years since its founding, the Global Fund is facing a serious financial shortfall, and the Fund’s board voted recently not to accept new grant requests until at least 2014. The author states that the question is not whether the Global Fund works, but how to ensure it keeps working for years to come, according to this article. There are four reasons this is imperative. First, the world needs to expand, not contract, access to health care because of the sheer burden of disease. Second, the Fund doesn’t simply give handouts: it takes the longer road of investing in and working with health ministries to build (or rebuild) local health systems. Third, the Global Fund proves how much multilateral organisations can accomplish, when one looks at the many lives it has helped save. While the usual players like the G-8 bear the greatest financial burden, the author urges some of the recipient countries to consider themselves partners of and contributors to the fund – India, Russia and China can play meaningful roles as both external funders and as recipients of grants. Fourth, a global recession is not an acceptable excuse for external funders to avoid the responsibility of meeting their financial commitments to the Fund.