SAHR 2007 - Health Systems Trust

Introduction
This chapter presents a brief overview of health care financing
and expenditure in South Africa. It considers the funding
flow in the overall health system, reviews key issues in relation
to the public and private health sectors and explores
the public-private health care mix. By considering financial
resources in the overall health system, this chapter provides
an important context for the discussion of issues relating to
the private health sector covered in the other chapters.
Overview of health care financing
and expenditure
Health care expenditure in South Africa was slightly more
than R100 billion in 2005. This was equivalent to 7.7% of the
Gross Domestic Product (GDP) in that year. This has declined
from a level of 8 to 8.5% of GDP throughout the 1990s and
early 2000s, largely due to the rapid growth in GDP in recent
years. Despite this decline in health care expenditure relative
to GDP, South Africa’s level of spending is relatively high
by international standards; it exceeds that in the majority of
countries of a similar level of economic development and is
similar to that in some high income countries (see Table 1).
However, health status indicators (such as infant mortality)
in South Africa are far worse than that in other uppermiddle
income countries. There is, therefore, a strong basis
for arguing that the key challenge facing the South African
health sector is not one of a lack of resources, but rather a
great need to use the existing resources more efficiently and
equitably.
Figure 1 provides an overview of the flow of funds between
key financing intermediaries (i.e. organisations that receive
funding and purchase health services) and health care
providers. Approximately 40% of total health care funds in
South Africa flow via public sector financing intermediaries
(primarily the national, provincial and local departments of
health), while 60% flow via private intermediaries.
Table 1:
Comparison of health care expenditure and health status indicators in selected high and middle income
countries
Country
Health care expenditure
as % GDP, 2002
Life expectancy
at birth, 2003
Infant mortality rate per
1 000 live births, 2003
South Africa 8.3 48 53
High income countries
Australia 9.5 80 6
Canada 9.6 80 5
United Kingdom 7.7 78 5
Middle income countries
Brazil 7.9 71 33
Chile 5.8 78 8
China 5.8 72 30
Costa Rica 9.3 78 8
Cuba 7.5 77 6
Egypt 4.9 70 33
Estonia 5.1 71 8
Malaysia 3.8 73 7
Thailand 4.4 70 23
Source:
UNDP, 2005; 3 WHO National Health Accounts database.
World Health organization estimates for country National Health
Accounts (1996-2005). Available at:
http://www.who.int/nha/country/ZAF.pdf
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