The colour of money - healthcare financing in post-apartheid South Africa

How has healthcare provision changed following the fall of apartheid in South Africa? What impact have these changes had on healthcare financing? Research at the University of Witwatersrand shows that changes in the provision and financing of healthcare have been an important component of wider action since 1994 to tackle the legacy of apartheid.

How far has the goal of delivering healthcare to the poorest of the poor been achieved? The study found that the new government initiated a radical overhaul of the health system during the first five years in office, but there have also been setbacks and missed opportunities.

A range of policies under apartheid contributed to inequality in access to healthcare based on race, household income, employment status and geographical location. The election of the first democratic government in 1994 heralded an unprecedented wave of policy reform and institutional changes across all sectors to redress this legacy of inequality and inefficiency.

Key features of health sector reform were the provision of free healthcare to pregnant women and children under six and the extension of free primary healthcare to everyone. There was also a phased re-allocation of resources between regions. In the first phase, a needs-based formula was developed to determine provincial health department allocations. In the current second phase, the Department of Finance determines the total block grant allocated to each province, and provincial administrations allocate resources to each sector, including health.

These reforms had the potential to tackle some of the equity and sustainability problems within the health system, the analysis suggests. They also necessitated changes in healthcare financing, which had both benefits and drawbacks. Examples include:

• Free healthcare policies improved financial access to public health services for specific vulnerable groups.
• The resource allocation formula allowed redistribution of public sector health budgets in favour of formerly under-resourced provinces.
• Critical problems within the private health insurance industry were also tackled.
• However, reforms have generated planning uncertainties, poor provider morale, declining quality of care and public disaffection with the health system.
• The current process of allocating unconditional block grants to provinces jeopardises the favourable early trends in health budget re-allocation.

Lessons for the future include the need to:

• strengthen policy formulation with an awareness of implementation issues assisted by better technical and strategic support
• improve implementation through clear central leadership, advance planning, and monitoring and evaluation systems.

The study highlighted six key principles to guide the development of a policy process that will lead to improved delivery. Financing reform should:

• respond to both political and technical analyses
• figure centrally in health system development
• develop through an open and transparent process
• involve the collection of information
• incorporate the input of different groups of advisors with clearly defined roles
• address implementation as an integral element of policy development.

Source(s):
‘The dynamics of policy change: health care financing in South Africa 1994-1999’ by L. Gilson et al., University of Witwatersrand, Centre for Health Policy, Monograph 66 (1999)

Funded by: USAID; The European Union; South African Medical Research Council

id21 Research Highlight: 14 February 2002

Further Information:
Lucy Gilson
Centre for Health Policy
University of Witwatersrand
P.O. Box 1038
Johannesburg 2000
South Africa

Tel: +27 11 489 9941
Fax: +27 11 489 9900
Contact the contributor: lucyg@mail.saimr.wits.ac.za

University of the Witwatersrand, South Africa

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