Our health in brief - part three: What we spend on health

Illustration: Lisa Nelson

This is the third of a four brief series on health expenditure in the public and private sectors. This brief sets out the information on the pattern of health expenditure from 1 April 2019 to the 31 March 2020.

It is possible to piece together most health expenditure between 1 April 2019 and 31 March 2020. While this presents most components of health care expenditure, 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.

The main findings are: Aggregate expenditure on health is estimated at R462 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.

Spending by provincial governments 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 both the Western Cape and Gauteng and it should have funded a better system than in either of the two provinces. It didn’t.

[I WANT TO REMOVE THIS SENTENCE - NATHAN] The estimates in this brief support an analysis of the prospects of health system to 2023/24, presented in a companion brief.

Table 1: Health expenditure and to whom it is provided

Agency

Amount (R million)

Public

Private

All

Medical aid members

Medically insured

Others

Central government

              

Administration

660.2

1

  

1

      

National Health Insurance

1,094.9

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 *

1,242.5

1

        

1

Governance and human resources *

5,986.9

1

  

1

      

Provincial governments

              

Eastern Cape

25,189.6

1

        

1

Free State

11,142.4

1

        

1

Gauteng

50,767.2

1

        

1

KwaZulu-Natal

45,037.0

1

        

1

Limpopo

20,777.1

1

        

1

Mpumalanga

14,386.8

1

        

1

Northern Cape

5,197.3

1

        

1

North West

12,273.7

1

        

1

Western Cape

24,757.4

1

        

1

Compensation Fund

2,741.0

1

        

1

Road Accident Fund

3,350.0

1

        

1
Table 2: Health expenditure 2019/20
     

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

1,716.6

              

Aggregate household expenditure 2019/20

  

3,091.9

            

Population (thousands)

  

58,558

    

58,558

8,990

1,063

48,505
                 

Summary

    

Public

Private

All

Medical aid members

Medically insured

Others

Grand total by sector

    

225.2

236.9

8.3

202.9

9.4

241.6

Provincial expenditure

    

209.5

          

Per cent public expenditure provincial

    

93.0%

          

Grand total

      

462.2

      

462.2

Medical aid benefit expenditure

      

185.9

        

Per cent spent on medical aid benefit expenditure

      

40.2%

        

Per cent spent on health (public/private)

    

48.7%

51.3%

        

Per cent spent on health (population segment)

        

1.8%

43.9%

2.0%

52.3%

GDP 2019/20

      

5,148.3

        

Per cent spent on health

      

9.0%

        

Notes

1. The sources are:

  • 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 (LCS) 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. The time period is 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:

  • 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.

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.

Table 3: Financing of provincial expenditure 2019/20 (amounts are in R million)

Province

Equitable share

Conditional grants

Departmental receipts

Other sources

Total

Eastern Cape

20,649.2

4,298.0

242.5

  

25,189.7

Free State

7,621.9

3,330.9

189.6

  

11,142.4

Gauteng

39,196.9

11,570.3

536.8

  

50,767.2

KwaZulu-Natal

35,375.8

9,661.3

300.3

  

45,037.1

Limpopo

17,183.6

3,073.3

193.6

326.6

20,777.1

Mpumalanga

11,053.9

2,664.6

668.3

  

14,386.8

Northern Cape

3,711.8

1,485.5

55.0

  

5,197.3

North West

9,557.9

2,478.8

85.1

152.1

12,273.9

Western Cape

17,413.8

6,497.7

485.1

360.8

24,757.4
           

All

161,764.8

45,060.4

2756.3

839.5

209,528.9
 

77.2%

21.5%

1.3%

    
Table: Provincial per capita expenditure 2019/20

Province

Total expenditure (R million)

Population 2019 (‘000)

Expenditure per capita (rand)

Personnel expenditure

Eastern Cape

25,189.6

6,712.3

3,753

16,962.3

Free State

11,142.4

2887.5

3,859

7308.8

Gauteng

50,767.2

15,176.2

3,345

29560.5

KwaZulu-Natal

45,037.0

11,289.1

3,989

28,942.2

Limpopo

20,777.1

5,982.6

3,473

15,808.9

Mpumalanga

14,386.8

4,592.2

3,133

8,467.3

Northern Cape

5,197.3

1,263.9

4,112

3,136.8

North West

12,273.7

4,027.2

3,048

7,774.0

Western Cape

24,757.4

6,844.3

3,617

14,707.6

All

209,528.5

58,775.3

3,565

132,668.4
         

National

9,612.5

    

880.5

National and provincial

219,141.0

    

133,548.9

Per cent compensation expenditure

      

60.9%