Health Budget 2024 fails to address poverty-related health issues and build trust for NHI – SAMRC

Health Budget 2024 fails to address poverty-related health issues and build trust for NHI – SAMRCFinance Minister Enoch Godongwana tables his 2024 Budget during a joint seating of the National Assembly in the Cape Town City Hall. (Photo: National Treasury)
Comment & Analysis

The 2024 national budget offer some glimmers but allocations for direct health benefits fall short of making a difference to people’s health and wellbeing. These include a ring-fenced allocation to crack down on corruption in health to inspire trust for the National Health Insurance, taxing accessories for e-cigarettes, a jacked up child-support grant, clarity on plans dealing with climate change and its impacts on human health, and finally greater investment to enhance women’s capabilities alongside the Covid-19 grant, researchers from the South African Medical Research Council write exclusively for Spotlight.

The 2024 national budget presented last week by Finance Minister Enoch Godongwana contained several key elements that have an impact on systems, services and wellbeing from a health perspective.

Importantly, not only direct health spend, but budget allocated to social protection and climate infrastructure has implications for health outcomes such as nutrition, growth and food security. Health taxes, to address illness caused by alcohol, cigarettes and e-cigarettes amongst others, are also key revenue streams with taxation intended to deter use.

As researchers at the South African Medical Research Council we are dedicated to improving the health of people in South Africa through research and innovation. We wish to share some insights into positive areas in the budget and to point out areas where there are gaps with potentially dire consequences for the health of our nation.

Health has been allocated a total of R848-billion over the medium-term expenditure framework. This includes R11.6-billion to address the 2023 wage agreement, R27.3-billion for infrastructure and R1.4-billion for the National Health Insurance (NHI) grant.  Compared to the medium-term budget policy statement in October last year, government is now adding R57.6-billion to pay salaries of teachers, nurses and doctors, among other critical services.

In real terms, the health budget is shrinking. The allocation to cover last year’s higher-than-anticipated wage settlement is a positive step to try to fill posts for essential health workers. But this allocation falls short of fully funding the centrally agreed wage deal, meaning that provincial health departments will be unable to fill all essential posts.

Treasury’s Chief Director for Health and Social Development, Mark Blecher, was quoted as saying that the “extra money would not be sufficient to hire all the recently qualified doctors who have been unable to secure jobs with the state, and provincial Health Departments will need to determine which posts should be prioritised”. He added: “There will be less downsizing, and more posts will be filled, but it is unlikely they all will be.”

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South Africa has a ratio of only 7.9 physicians per 100 000 people in the public health system, while it has been estimated that there are more than 800 unemployed newly qualified doctors. Considering the health-workforce shortfalls, the amount of money allocated appears optimistic for service coverage for the increasing population.

The World Health Organization (WHO) considers building a health workforce a highly cost-effective strategy. Salaries continue to consume the largest share of provincial health budgets, estimated at 64% since 2018. The Human Resources for Health strategy lacks clarity on the implementation of workforce-planning approaches with significant implications for how provinces prioritise workforce cadres to keep up with the increasing needs – particularly in light of NHI.

Nutrition support  on the decline

The Minister described protecting the budgets of critical programmes such as school-nutrition programmes, which includes almost 20 000 schools. He noted that the early childhood development (ECD) grant will be allocated R1.6-billion rising to R2-billion over the medium term.

Ensuring nutrition support to children under-five for optimal physical and cognitive growth is vital. The 2023 National Food and Nutrition Security Survey by the Human Sciences Research Council found that 29% of children under five in South Africa are stunted (short for their age). The proportion of children experiencing both acute and chronic under-nutrition has increased over the past decade. Stunted children are more likely to earn less and have a higher risk of obesity and non-communicable diseases such as diabetes and heart disease as adults.

School meals as part of the National School Nutrition Programme at Soga Primary School near Qolora on the Eastern Cape’s Wild Coast. (Photo: Black Star/Spotlight)

Currently, only registered or conditionally registered Early Learning Programmes (ELPs) serving poor children (determined by income-means testing) are eligible to receive the ECD subsidy. This is not aligned with inflation and the real value of the R17 per child per day subsidy and the contribution to nutrition costs  have decreased over time. The subsidy is not enough to cover the costs of running quality programmes, let alone the costs of providing nutritious meals. The World Bank suggests a minimum of R31 per child per day.

There is also concern about the children missed who attend informal or unregistered programmes. According to the 2021 Early Childhood Development Census, only 41% of ELPs are registered and only 33%, registered or not, receive the subsidy. Unregistered ELPs are more likely to be based in vulnerable communities and attended by children from vulnerable households. Further, although about 1.7 million children are enrolled in ELPs, enrolment rates vary across provinces from 40% in Gauteng to 26% in the Eastern Cape. This means many young children are not enrolled, and, of those enrolled, most do not benefit from the subsidy.

Child grants increase not keeping up with inflation

Child grants appear in the budget every year, but the increases do not keep up with inflation, and particularly not with the basket of goods needed for a growing child. In real terms grant amounts are decreasing – visible in the way hunger is increasing throughout the country, particularly in the Eastern Cape where uptake of social grants is very high.

We urgently need the child-support grant to be based on a realistic assessment of the needs of children.

A recent Department of Social Development report – Reducing Child Poverty: A review of child poverty and the value of the Child Support Grant – recommended, as a minimum, an immediate increase of the child-support grant to the food poverty level (R760 last year), as more than 8 million children receiving it were found to be going hungry/missing a meal at least once a day. The R20 increase falls far short of that recommendation.

The Social Relief of Distress Grant and women’s economic empowerment

As part of pandemic recovery efforts, we commend government for the roll-out of the Social Relief of Distress (SRD) grant and its plans to extend this beyond March 2025. While SRD continues to suffer implementation challenges related to the amount and roll-out; it  presents an opportunity for renewed attention to a comprehensive and inclusive approach to women’s economic empowerment.

Women in the Xhora Mouth area of the Eastern Cape often have to make their way through thick forests risking their lives to get to a clinic. (Photo: Lulama Zenzile)

The recent Stats SA labour survey reported a higher unemployment rate among women (35.7%) versus men (30.7%). Our research also finds that women caregivers of children and adolescents living with HIV are particularly vulnerable to poor health and economic outcomes. Greater investment in programmes that enhance women’s opportunities alongside the SRD could promote the sustainability of pandemic-recovery efforts.

The NHI, health-system reforms and dealing with corruption in health

The Minister indicated that the allocation for NHI – government’s policy for implementing universal health coverage – demonstrates commitment to this policy. He also noted that there are a range of system-strengthening activities, that are key enablers of an improved public healthcare system, including:

  • Strengthening the health-information system;
  • Upgrading facilities;
  • Enhancing management at district and facility level; and
  • Developing reference pricing and provider payment mechanisms for hospitals.

He recognised that these require further development before NHI can be rolled out at scale.

The NHI allocation must show a tangible commitment to health-system reforms. Funding needs to be allocated for the creation of organisational infrastructure that ensures transparent, trustworthy decisions will be made about the benefits package and programmes to be funded. Specifically, funding for conducting Health Technology Assessments with credible processes that manage interests and ensure coverage decisions are informed by independent appraisal of the best-available evidence, measures of affordability, and with public input. Some areas of government already undertake such work, for example the National Essential Medicine Committee, but how these processes will expand beyond medicine to include decisions about health-systems arrangements and public-health interventions remain unclear, and apparently unfunded.

Undoubtedly, facilities need to be upgraded. It’s positive to see this as a named activity. It is however unclear how the upgrade of health facilities and quality of care will be ensured, given that tertiary infrastructure grants have been reduced due to underspending of conditional grants. Currently, health facilities’ quality is assessed by the Office of Health Standards Compliance whose role is to inspect and certify facilities. This is a prerequisite for accreditation under NHI. This means the watchdog agency will need adequate budget. Implementation research is also required to test out the different NHI public-private contracting models. Furthermore, a ring-fenced allocation to deal with corruption in health, would be welcomed and inspire trust for NHI.

‘Sin’ taxes vs ’health taxes’

The Minister proposed excise duties and above-inflation increases of between 6.7 and 7.2% for 2024/25 for alcohol products and indicated that tobacco-excise duties will be increased by 4.7% for cigarettes and cigarette tobacco and by 8.2% for pipe tobacco and cigars. And, based on inputs from citizens, the Minister also tabled an increase in excise duties on electronic nicotine and non-nicotine delivery systems (vapes).

For these ’sin-taxes’ which should be termed ’health taxes’, the SAMRC team noted some anomalies.  While it is to be commended that several alcohol products had excise taxes increased above the consumer-price index, excise taxes on sorghum beer products continue to be eroded in real terms.  These also contain ethanol and the opportunity to address the negative externalities associated with their use has yet again been missed.

While there may be a concern that increasing taxes on products consumed by the poor is regressive, there are ways to direct revenue gained back to those sub-populations and it’s not fair to deny them the benefits of consuming less alcohol products.

It is notable that excise taxes on wine have been increased to a greater percentage than spirits, but the health effects of alcohol come from the ethanol not the type of liquor product so it would make more sense to make the excise tax rate per litre of absolute alcohol equal across all products. The budget has not moved this forward in any meaningful way.

The proposed tax on tobacco products is not in line with WHO recommendations and is below inflation. This should be at least 70% of the retail price to have a positive impact on public health by reducing tobacco use, especially in a country with one of the highest tobacco-use rates in the region. In South Africa, the tax is currently between 50 – 60%. Although the tax on electronic cigarettes has increased, it is still below inflation. We hope that this increase will deter more young people from starting to use e-cigarettes and encourage current users to quit. We also hope that this increase is not just once-off and that future increases are made with the goal of reducing e-cigarette use.

Additionally, accessories for e-cigarettes should also be taxed.

Overall, the taxes on tobacco products and electronic nicotine and non-nicotine delivery systems are below inflation. This means that manufacturers can absorb the increases, and consumers may not be deterred from using them. This is a missed opportunity, as there is a clear link between these products and the development of non-communicable diseases, like hypertension, and the worsening of communicable diseases, like tuberculosis.

The impact of climate change on lives and livelihoods

Climate and health are closely related, with more attention being paid by the global research community  to potential impacts of climate change and natural disasters on lives and livelihoods. The Minister noted a multi-layered risk-based approach to manage some of the fiscal risks associated with climate change. These include:

  • A Climate Change Response Fund;
  • Disaster-response grants; support and funding from multilateral development banks and international funders to support climate adaptation,
  • Mitigation, energy transition and sustainability initiatives; and,
  • Municipal-level adaptation and mitigation initiatives.

From a climate and health perspective, the budget speech demonstrates positive steps towards addressing climate change and its impacts on human health nationally.

More clarity on specific strategies, such as reducing air pollution or strengthening healthcare infrastructure to cope with extreme weather events, are needed.

There are numerous health co-benefits to these strategies. For example, investing in renewable energy sources can improve air quality, leading to reduced respiratory illness. There is a need to highlight these co-benefits and to foster intersectoral collaboration.

Overall, from the perspective of health researchers, we note the mention of NHI plans, social protection, nutrition, health workforce, health taxes and climate. However, we all agree that the allocations for direct health benefits and to address social determinants of health, such as education and poverty-alleviation, fall short of what is recommended, from global and national research evidence, to make a difference to people’s health and wellbeing.

*SAMRC researchers: Wanga Zembe, Donela Besada, Funeka Bango, Tanya Doherty, Catherine Egbe, Charles Parry, Darshini Govindasamy, Renee Street, Caradee Wright and Tamara Kredo.

Note: Spotlight aims to deepen public understanding of important health issues by publishing a variety of views on its opinion pages. The views expressed in this article are not necessarily shared by the Spotlight editors.

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