Financing local level health services
by Sue Valentine
2002-03-27
Although the South African Constitution stipulates that all municipalities are ultimately expected to take responsibility for district health services, there is still widespread uncertainty as to the extent or limits of such services - and especially how they should best be financed. Financing of local government health services is the chief concern of researchers Di McIntyre and Sandi Mbatsha in their chapter in the 2001 South African Health Review. Their findings were based on interviews with key actors in national, provincial and local government health services in three provinces - the Western Cape, Mpumalanga and Free State. They write that for many municipalities to achieve the constitutional goal of assuming responsibility for local health services will require substantial development of their capacity. Some will simply need to expand the range and type of health services they provide, while others will need to develop the capacity to provide health services in the first place.
The main source of local government funding is own revenue - finances raised from levying local taxes, property rates and charges for water and electricity. However, given the differing abilities of local governments to generate own revenue, McIntyre and Mbatsha argue that there is a need for increased national government intervention and resource allocation to ensure equitable provision of basic services by local government. In 2000/2001 transfers from national government accounted for about 7 percent of total local government expenditure. Apart from own revenue and grants from national government to improve the equitable share or on other conditions, the only other source of funding for local government is through provincial grants-in-kind. These are subsidies for municipal health services or payments for ambulance or emergency services made by provincial government to the local level. One of the greatest weaknesses of the provincial grants, say the authors, is that they often rely on historical budgeting processes as prescribed in the Health Act of 1977. This offered little room to address the unfair distribution of resources which has been practised for decades.
The newly introduced mechanism of Integrated Development Planning will change the way in which local government budgeting takes place. It covers a five-year period and should be reviewed annually to respond to changing needs and circumstances. McIntyre and Mbatsha say although preparation of an Integrated Development Plan (IDP) by each local government is a legal requirement under the Municipal Systems Act of 2000, only one of the municipalities interviewed claimed to have an IDP in place. The authors conclude that most interviewees agreed that the provincial allocations were a problematic means by which to finance local government. More preferable was the option of integrating health service funding into the equitable share allocations from the national Treasury. They argue that there should be serious consideration of mechanisms for building equity considerations into the allocation process in all provinces, such as taking into account the relative need of communities in each municipality for primary care services and the differential ability of local governments to generate 'own revenue'. The gradual shifting of resources to historically disadvantaged areas should be accompanied by efforts to develop capacity at local government level to provide a more uniform package of primary health care services.
The full text of the SA Health Review can be found at: http://www.hst.org.za/sahr/2001/ (Source: Health-e, 26 March 2002)
Although the South African Constitution stipulates that all municipalities are ultimately expected to take responsibility for district health services, there is still widespread uncertainty as to the extent or limits of such services - and especially how they should best be financed.
Financing of local government health services is the chief concern of researchers Di McIntyre and Sandi Mbatsha in their chapter in the 2001 South African Health Review. Their findings were based on interviews with key actors in national, provincial and local government health services in three provinces - the Western Cape, Mpumalanga and Free State.
They write that for many municipalities to achieve the constitutional goal of assuming responsibility for local health services will require substantial development of their capacity. Some will simply need to expand the range and type of health services they provide, while others will need to develop the capacity to provide health services in the first place.
The main source of local government funding is own revenue - finances raised from levying local taxes, property rates and charges for water and electricity. However, given the differing abilities of local governments to generate own revenue, McIntyre and Mbatsha argue that there is a need for increased national government intervention and resource allocation to ensure equitable provision of basic services by local government.
In 2000/2001 transfers from national government accounted for about 7 percent of total local government expenditure.
Apart from own revenue and grants from national government to improve the equitable share or on other conditions, the only other source of funding for local government is through provincial grants-in-kind. These are subsidies for municipal health services or payments for ambulance or emergency services made by provincial government to the local level.
One of the greatest weaknesses of the provincial grants, say the authors, is that they often rely on historical budgeting processes as prescribed in the Health Act of 1977. This offered little room to address the unfair distribution of resources which has been practised for decades.
The newly introduced mechanism of Integrated Development Planning will change the way in which local government budgeting takes place. It covers a five-year period and should be reviewed annually to respond to changing needs and circumstances.
McIntyre and Mbatsha say although preparation of an Integrated Development Plan (IDP) by each local government is a legal requirement under the Municipal Systems Act of 2000, only one of the municipalities interviewed claimed to have an IDP in place.
The authors conclude that most interviewees agreed that the provincial allocations were a problematic means by which to finance local government. More preferable was the option of integrating health service funding into the equitable share allocations from the national Treasury.
They argue that there should be serious consideration of mechanisms for building equity considerations into the allocation process in all provinces, such as taking into account the relative need of communities in each municipality for primary care services and the differential ability of local governments to generate 'own revenue'.
The gradual shifting of resources to historically disadvantaged areas should be accompanied by efforts to develop capacity at local government level to provide a more uniform package of primary health care services.
The full text of the SA Health Review can be found at: http://www.hst.org.za/sahr/2001/
Source: Health-e,
26 March 2002
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