On 23 February 2022, Minister of Finance Enoch Godongwana delivered his maiden Budget Speech, praised by some economists for reaching debt reduction targets sooner than anticipated while providing tax relief for corporate and personal income taxpayers.

Rather than fund tax breaks for the well off, the fiscal space created by R141-billion of additional revenue projected for the 2022/23 financial year alone should have been used to avoid retrogression in funding for government’s core socioeconomic rights obligations, including healthcare. The fiscal policy choices made in Budget 2022 demonstrate government’s fidelity to austerity budgeting even when the revenue outlook improves. Funding for healthcare services – as well as other socioeconomic rights – will be cut back in real terms over the next three years, to create a primary budget surplus that can be used to reduce public debt. This will have foreseeable and serious negative impacts on access to healthcare services for the 50 million people in South Africa who rely on public healthcare when they are sick.

This article, and others in the series that will follow, will give some insight into how these budget cuts will affect specific programmes and performance areas in healthcare.

Public health sector funding reduced by 4.3%

Alarmingly, in real terms (ie, after adjusting for CPI inflation), the public health sector will face an average 4.3% reduction in funding each year for the next three years. When the projected growth in public healthcare users is factored in, the 2022 budget proposals equate to a reduction in funding per healthcare user from R5,267 in 2021/22, to R5,036 per user in 2022/23, and then very sharply down to R4,538 per user in 2023/24, and R4,465 in 2024/25 (in constant 2022/23 Rands).

For the health sector to recover not only from Covid-19 but to address the many pre-existing structural issues limiting the quality of care available to the majority of people in South Africa, a fully costed and funded recovery plan for the sector is needed. Budget cuts are inevitably experienced differently by different groups of people, with the most vulnerable most at risk of harm. By taking into account the needs of various groups, human rights impact assessments can limit the unequal impact of budget cuts on peoples’ right of access to health services. This recovery plan must be based on a transparent and participatory assessment of needs in a post-pandemic world. This can – and must– be developed now and factored into the 2022 Medium-Term Budget Policy Statement.

Healthcare Personnel

The budget provides a much-needed investment of R1-billion per year over the medium term for medical interns and community service doctor posts, a move to be welcomed owing to the crucial role of junior doctors in our public health sector.

But these allocations do not address the dire overall trend in personnel funding for the sector. The 2022 budget has only proposed a 1.2% increase in compensation of healthcare employees over the next three years when accounting for inflation. This amounts to an average reduction in spending on compensation of healthcare workers over the medium term of 3.3% annually. The trend of freezing healthcare posts and salaries, which provinces have implemented in reaction to funding shortfalls over the past decade, will undoubtedly continue. National Treasury itself notes in the budget review that cuts to the personnel budget may “limit the ability of provincial health departments to employ more frontline staff” and encourages provinces to, “if needed, reduce personnel numbers to sustainable levels”. No information is provided about what the Treasury defines as “sustainable” or how this relates to the quality of care.

These cuts to compensation of healthcare employees could not have come at a worse time. They occur in a context where there was a pre-existing shortage of healthcare staff, with the Human Resources for Health Strategy published by the National Department of Health in 2020 stating that South Africa then needed an additional 97,000 healthcare workers to address chronic human resources shortages.

The pre-existing problem of healthcare staff shortages has been amplified by the early retirements and tragic losses of healthcare workers during the Covid-19 pandemic. The Democratic Nursing Organisation of South Africa (Denosa) has noted with concern that nurses were burnt out trying to make up for the shortfall in capacity. Furthermore, the country’s hospitals are often not able to meet the 1:1 patient to intensive care nurse ratio, resulting in non-ICU-trained nurses filling those gaps.

The Eastern Cape Department of Health’s inability to retain hundreds of nurses and 91 doctors who had just completed their community service in December 2021 is a prime example of the dire situation that this budget should have confronted head on. An investment in medical interns and community services doctors, which is not balanced by an investment in medical practitioners and specialists to train and supervise them, is a disaster waiting to happen.

Healthcare Infrastructure and goods and services

Along with systemic challenges such as poor management of hospitals, the impact of this budget on the provision of healthcare is already being felt and will deepen challenges with the provision of healthcare goods and services. The recent picket by some staff of Chris Hani Baragwanath Hospital in Soweto left huge question marks over hospitals’ basic ability to provide the necessities such as biological waste disposal, food for patients, and paid staff to take care of them.

With efforts to bring back services to pre-pandemic levels, hospitals are expected to address several backlogs, including surgeries. For example, Chris Hani Baragwanath has announced a backlog of more than 7,000 patients requiring surgery. Last month, Groote Schuur Hospital stated that it needs R60-million to clear a backlog of 6,000 surgeries for patients on its waiting list. The proposed cuts to healthcare spending in the 2022 budget will make it difficult for government to address these backlogs.

There is also a desperate need to address backlogs in non-surgical treatments for chronic illnesses like HIV, TB, and diabetes, but the estimates of national expenditure for health in this budget brazenly admit that the target of 5.7 million people living with HIV remaining on treatment by the end of 2022 is “unlikely to be achieved” because of funding challenges. Shockingly, backlogs in delivery of HIV services meant that the department noted a shortfall of 500,000 fewer people on treatment than their target by the end of the third quarter of 2021.

Following serious challenges with people accessing chronic medications during Covid-19, the allocation of a further R1.9-billion to programmes such as the distribution of chronic medicines, the improvement of patient information systems, and the electronic management of medicine stocks is long overdue. However, over and above the increases to these specific programmes, general funding to healthcare goods and services is cut in real terms by 7.1% over the next three years.

For those depending on public healthcare services, cuts to these allocations will be suffocating. Over the past two years, insufficient provision of life-saving medical equipment saw many hospitals unable to implement the oxygen therapy escalation plan during Covid-19 due to an absence of oxygen masks, rebreather masks, and ventilators. Looking at this year’s budget, we can only anticipate more shortages of life-saving medical equipment. In the Eastern Cape alone, thousands of patients have died or suffered during the Covid-19 pandemic as a result of these shortages.

District Health Programme Grant

The 2022 budget announced a consolidation and renaming of the HIV, TB, malaria, and community outreach conditional grant into the District Health Programme Grant (DHPG). The DHPG has now been restructured into two main components: An HIV and AIDS component, responsible for the delivery of antiretroviral therapy and TB and HIV prevention and treatment; and a district health component to provide community outreach, malaria, HPV, and Covid-19 vaccine sub-programmes.

While a consolidation and restructuring of the grant may signal opportunities for improvements in grant performance, the budget proposes a reduced allocation to the grant over the next three years. After accounting for the reallocation of around R300-million to the NHI grant because of its absorption of oncology and mental health services, in real terms, the budget for District Health Programmes is expected to fall by about 4.2% on average each year for the next three years. This means that less funding is allocated over time to HIV/AIDS prevention, treatment, and delivery of ARVs and TB treatment.

South Africa faced disrupted access to prevention, care and testing for HIV owing to the pandemic which raised concerns of a spike in infections. A post-crisis budget that does not allocate an increase in expenditure to address this backlog reflects a poorly conceptualised recovery plan for healthcare.

National Health Insurance (NHI)

The vision going forward for healthcare in the country raises some opportunities and some concerns. With the legislative process for the NHI Bill still under way in Parliament, Treasury has indicated some willingness to start putting in place some of what is needed to realise the Bill’s vision. Jumping from underspending and budget cuts to NHI in 2020 and 2021, the 2022 Budget proposes a 54% nominal increase in allocations towards NHI over the medium term, reflecting some willingness to start putting in place what is needed to move towards NHI. This injection includes R8.8-billion (R6.5-billion of which goes through the NHI indirect grant) for NHI related activities, R4.4-billion to health infrastructure, and R1.9-billion to programmes such as the distribution of chronic medicines, the improvement of patient information systems, and the electronic management of medicine stocks. These are all important components to achieve system-wide readiness for NHI.

While these increased allocations – and the beginnings of system reform they represent – are welcome, concerns around the governance, financial management of the scheme as well as the strategy for its rollout remain. The vision for NHI seems more based on vague rhetoric than on a real understanding of the current issues facing the healthcare sector following the pandemic, with Godongwana stating that the impact of Covid-19 has not been factored into the NHI cost model. This, coupled with a lack of any mention of time frames or guidance to provinces on phased introduction of programmes to inform the future NHI, risks this large-scale reform being ineffective and not financially prepared to respond to the healthcare needs of South Africa in a post-pandemic climate.

Universal health coverage in South Africa remains far off. The proposed budget cuts to healthcare averaging 4.3% annually each year over the MTEF will affect the progressive realisation of the right to access healthcare services for more than 50 million people in the country. Treasury has not undertaken human rights impact assessments called for by civil society organisations of its proposed budget cuts. Such assessments would enable the government to better understand the impact of austerity on people’s socioeconomic rights, including the right to healthcare services, and provide valuable information on how to mitigate the unequal impact of these cuts. Government needs to consider not only the immediate costs of healthcare provision in the budget but also the future impact on health and the economy of an under-capacitated healthcare system, buckling under the weight of backlogs caused by the Covid-19 pandemic.

*Lencoasa, Mapipa and Chaskalson are all with SECTION27.

**This is the first in a series of articles on how budget cuts will affect specific programmes and performance areas in healthcare. 

Note: This is an article written by employees of SECTION27. Spotlight is published by SECTION27 and the Treatment Action Campaign but is editorially independent, an independence that the editors guard jealously. The views expressed in this article are not necessarily those of Spotlight.

*This article was published by Spotlight – health journalism in the public interest.