Adjustments Appropriation Bill: Department of Health briefing; with Deputy Minister

Meeting report

Deputy Minister’s comments

Dr Sibongiseni Dhlomo, Deputy Minister of Health, said the Department aimed to highlight the socio-economic implications of the R1.6 billion budget cut and the progress being made on the National Health Insurance (NHI) scheme. The Department had received a R50 billion budget allocation and would highlight how they procured services to the Committee. He warned that the level that the Department of Health (DoH) was at right now was probably not at the level that the Committee expected from the Department.

DoH on Adjustments Appropriation Bill

Budget reduction

Mr Phaswa Mamogale, Chief Financial Officer, DoH, said that the budget reductions, as tabled by the Minister of Finance, of R1.645 billion, were as follows:

• R205 million from the National Department of Health's voted funds, indirect conditional grants, and earmarked funding.
• R1 billion from HIV/AIDS conditional grants.
• R440 million from the Health Facility Revitalisation grant.

R84 million had been received as self-financing for the Covid-19 vaccination programme expenditure.

Budget cuts impact

• The reduction of R30 million for the compensation of employees had affected the filling of critical posts in the Department.
• The reduction of R99 million on goods and services, including catering, travelling and subsistence, which would affect the support to provinces, and the strengthening of capacity building through workshops.
• Transfers and subsidies included R1 billion from the comprehensive HIV/AIDS component, R440 million from the Health Facility Revitalisation Grant, and R72.140 million from departmental agencies.

The R4 million reduction in capital would delay the procurement of tools of trade/equipment, which included computers and office furniture.

HIV & Aids conditional grant

• A budget cut was implemented on the HIV treatment programme. Anti-retroviral virus (ARV) spending had declined due to new contracts with better rates. Savings were estimated at R6.5 billion over the contract period.

• The biggest proportion of the R1 billion cut was taken from Gauteng and Kwa-Zulu Natal (KZN) due to their high budget allocation, in line with the caseload.
• Smaller provinces were protected from the cut to ensure continuity of service delivery.
• Risk mitigation actions included:
  • ARV consumption and spending by all provinces would be closely monitored.
  • The Global Fund was donating R350 million worth of ARVs to provinces.
  • A further R150 million could be made available on request by the NDoH.
  • Spending on medical male circumcision (MMC), condoms, compensation of employees (COE) and training could be slightly lower due to cost containment.

Progress NHI legislative process

Mr Mamogale said the National Assembly had adopted the Bill on 13 June, and referred it to the National Council of Provinces (NCOP). On 20 June, the NDOH presented the B-Bill to the NCOP Select Committee on Health and Social Services. Briefings on the NHI B Bill at all nine provincial legislatures were completed by 20 September. Public hearings in all the provinces were conducted by the NCOP, and were completed by the end of October. The meeting of the Select Committee on Health and Social Services of the NCOP for the final provincial mandate negotiations on the Bill took place on 21 November.

In anticipation of the finalisation of the NHI Legislation, a draft model for capitation was developed, and the process of consultation with stakeholders commenced. A draft framework for a primary health care (PHC) benefit package has been developed and presented to the National Health Council. The framework is currently being finalised, and would be consulted with stakeholders. Phase 1 of PHC benefits to be covered under the NHI had been drafted and coded to harmonise the public sector PHC package and private general practice (GP) service packages, including the portion of the revised prescribed minimum benefits (PMBs) from the Council for Medical Schemes (CMS)

He said the South African Law Reform Commission was finalising a report on legal reform to manage the medico-legal claims, which constituted a significant financial risk. As per discussions with senior National Treasury officials, R17.5 billion would be allocated to the Departments of Health and Education for the wage bill increase, of which around R6.8 billion would be allocated to the health sector. The health sector would need to improve efficiency in areas such as overtime payment, medical supplies and security services, and delay infrastructure projects.

(For the full presentation, see attached document).

Discussion

Chairperson Buthelezi commented that the reason for budget cuts and reprioritisation was the state of the economy, and a failure of receivers to collect what had been allocated to them. The solutions in the Department's presentation were short term, and the goal should be to grow the economy. He asked what the biggest assets were that were purchased by the Department, and that it further highlighted which assets were produced locally and which were imported. He asked how much money was spent on imported goods, and when these would be locally produced. Were there any impediments preventing the localisation of the production of these goods?

Ms T Tobias (ANC) said that the NHI should move to the point of implementation, because it had been in the planning stages for too long, and all the necessary procedures for implementation had been completed. She raised a concern about the Department being able to ensure that enough people could receive ARVs in light of the budget cuts. She said it was unfortunate that budgets were cut on special programmes- this was dangerous because of the important role health practitioners play in the country. She acknowledged that it was a temporary measure, but maintained that cutting money on infrastructure was not the best idea because South Africa did not have enough beds for its patients. She asked for an indication of the type of projects that would be affected by the budget cuts.

Mr O Mathafa (ANC) asked if the full implementation of the NHI would be supported by an adequate number of staff and expertise. He referred to the moratorium that had been implemented by the Department, and asked what impact this would have on the implementation of the NHI. He agreed with Ms Tobias's concern about the availability of adequate ARVs. He asked if the Department had seen an improvement in the collection of ARVs after the Department's media campaign. If not, what other plans did the Department have to improve collection? Did the Department believe that the current infrastructure was good enough to implement NHI?

Mr Z Mlenzana (ANC) asked what the current allocated budget was for getting infrastructure ready for implementation of the NHI. He asked about the Health Facility Revitalisation grant, and how it would be implemented. What mechanisms would the Department implement to ensure that the delay in infrastructure development would not prohibit quality healthcare provision?

The Acting Chairperson asked if the reprioritisation had been discussed with National Treasury. He also mentioned the issues of NHI and the prevalence of HIV/Aids in South Africa, and asked how the distribution of condoms and male circumcision would be reduced. He maintained that it did not make sense to reduce the budget for HIV/Aids prevention methods if there was such a high prevalence of HIV/Aids.

He highlighted that the price of medication had escalated drastically in South Africa, and this was negatively affecting the poor. He asked if the Department had not considered creating a state-owned pharmaceutical company that would reduce the cost of medication for South Africans.

Responses

Dr Sandile Buthelezi, Director-General, DoH, said localisation did not necessarily translate to low prices. The overarching issue was that there was no flexibility, and therefore he welcomed the Adjustments Appropriation Bill. The Department strived to procure locally and was willing to pay money to local Industry. National Treasury guided the DoH. There were no active pharmaceutical ingredients (APIs) in South Africa, so South Africa needed to get APIs. A lot of work needed to be done, not just by the DoH, but by the Department of Trade, Industry and Competition (DTIC) as well.

The HIV survey was done by the Human Sciences Research Council (HSRC), and this survey provided more accurate figures on the HIV numbers in South Africa. The Department was pleased that HIV prevalence in the country had dropped. South Africa was close to achieving their 95/95/95 targets, and this would achieve epidemic control. The country was currently sitting on 90/91/94, and this was a huge improvement for the country. The Department was taking a targeted approach to finding people who were not taking their treatment. It aimed to find one million people by the end of the financial year. The cutting of the ARV budget allocation had been because of the better spending of the Department. He assured the Committee that there would not be a shortage of ARVs; there were buffer stocks. The Department would make sure that they did not run out of condoms and facilities for male circumcision, and had reserve stock at the national level.

Concerning the moratorium, a number of posts have been created to try to get the right skills needed for the implementation of the NHI. Some people had already been appointed, and others were still in the process of being appointed. The Department would not be affected negatively by the moratorium.

Mr Mamogale said that the DoH had engaged with National Treasury, and presented the impact that the cuts would have on service delivery and infrastructure. The budget reductions had come from the National Treasury, and the Department had to take this directive and try to check appropriately on which things to cut back on. He asked if he could provide the Committee with the full numbers in written form at a later stage. The spending on medical supplies was currently sitting at R10 billion, and the spending on infrastructure was at R11 billion. Most medical equipment and medicines were not produced locally.

Prof Nicholas Crisp, Deputy Director General, NHI, DoH, said that an administrative body would run the NHI. At the moment, the project has 50 people, and they are busy preparing for the transition once the Bill is enacted. The implementation of the project would need 70 to 80 people. It was important to keep in mind that the Department would not lead the NHI. This administrative body would be established in the upcoming three-year transitional period. This was a less complicated process. It would require a lot of money, but he believed this would be less expensive for the country. The country did have the capacity to implement NHI. The primary responsibility was to ensure that medication was provided to society at a cheaper price.

The Rev Gift Moerane said that the Department aimed to ensure they expanded collection points to reduce the shame and stigma of young people living with HIV/Aids. There were R2 million people who still needed to be put on treatment, and maintained on treatment to achieve viral suppression. It was important to increase the prevention measures to ensure the number did not increase. The final details would be provided to the Committee in a few days in written form.

The Acting Chairperson said he appreciated that the Department had considered working with the DTIC. He agreed that the lack of APIs in South Africa was a serious problem. He looked forward to the written response. He excused the Department from the meeting.

Committee matters

The Committee considered and adopted the minutes of 17 and 21 November.

The Committee secretariat reminded the Members of the upcoming meeting with the Department of Basic Education the following morning.

The meeting was adjourned.