ATC200713: Report of the Select Committee on Health and Social Services on the Adjusted Budget Vote 18 of the Department of Health, dated 13 July 2020

NCOP Health and Social Services

REPORT OF THE SELECT COMMITTEE ON HEALTH AND SOCIAL SERVICES ON THE ADJUSTED BUDGET VOTE 18 OF THE DEPARTMENT OF HEALTH, DATED 13 JULY 2020

 

The Select Committee on Health and Social Services (the Committee), having considered the 2020/21 Adjusted Budget of the Department of Health(the Department),together with the Portfolio Committee on Health, on a meeting held virtually on 8 July, reports as follows:

 

1. Introduction

 

On 15 March 2020, President Cyril Ramaphosa declared the coronavirus (COVID-19) a national disaster in terms of the Disaster Management Act (No. 57 of 2002) and implemented a number of measures and protocols aimed at prevention and mitigation of the spread of the disease.

 

On 21 April 2020, the President announced that there will be a relief fund of about R20 billion for health care. On 30 April 2020, the National Treasury published a report titled “Economic Measures for COVID-19”, detailing the funding sources for the package which include baseline reprioritization in the 2020/21 financial year.

 

On 24 June 2020, in response to the effect of COVID-19, and the measures taken to contain the spread of the pandemic, the Minister of Finance tabled the special adjustment budget. The adjusted budget has a dual purpose, namely to report on the COVID-19 fiscal measures and the resultant adjustments to the Division of Revenue and the Departmental allocations, as well as to set out Government’s commitment to strengthen public finance and position the economy for recovery and growth.

 

The purpose of this report is for the Committee to report on itsdeliberations, considerations and make recommendationson the Department of Health’s adjusted budget.

 

 

 

1. Implications of the COVID-19 Pandemic on the Mandate of the Department

 

The preliminary costed plan (budgetary implications) for the National Department of Health (henceforth, the Department)was submitted to National Treasury on 17 April 2020 following a special Chief Financial Officers Forum involving National Treasury on 15 April 2020. 

 

The plan presented two scenarios, the optimistic scenario with anestimateof R14 billion and the pessimistic scenarioestimate ofR26 billion. Exclusions of other critical costed COVID-19 elements or need were made.

 

Following the President’s announcement of the relief fund of R20 billion for healthcare, the Department’s costing model was recalibrated and the middle ground scenario was opted for the adjusted budget submission which was submitted to National Treasury on 27 May 2020.

 

1. Reprioritisation Focal Areas

 

The following areas are expected to be fully or partially funded through the new COVID-19 component under the HIV Grant (Direct Grant):

• Personal protective equipment (PPE);
• Contracting of private critical care beds where needed;
• Laboratory tests performed by National Health Laboratory Services (NHLS); and
• Procurement of thermometers for Community Health Workers and the Cuban Medical Brigade.

 

The reprioritization affected four grants in provinces, namely the:

• National Tertiary Services Grant (NTSG),
• HIV, TB, Community Outreach Services, Malaria and Human Papillomavirus Vaccination Grant (HIV Grant),
• Health Facility Revitalisation Grant (HFRG), and the
• National Health Insurance (NHI)Grant.

 

As shown in Table 1, the total allocation for the new COVID-19 component is R3.45 billion, which comprises of R604.7 million reprioritised funds within the HIV Grant. The Cuban Brigade is allocated R283.1 million based on the number of cadres per province.

 

Table 1: Provincial Allocation of HIV Grant: COVID–19 Component

Provinces	HIV Grant Reprioritised by provinces	Cuban Programme	Additional Allocation	Total Allocation
Eastern Cape	55 000	33 400	447 676	536 076
Free State	26 182	28 559	96 600	151 341
Gauteng	143 213	43 490	563 952	750 655
KwaZulu-Natal	86 847	44 326	402 438	533 611
Limpopo	138 005	22 641	200 788	361 434
Mpumalanga	47 245	22 640	150 421	220 306
Northern Cape	38 526	19 469	42 106	100 101
North West	32 985	22 640	152 460	208 085
Western Cape	36 708	45 995	506 225	588 928
Total	604 711	283 160	2 562 666	3 450 537

 

About 29 million is reprioritised from Indirect Grants to the COVID-19 component; and R2.8 billion from new National Treasury funding.

 

The following national priorities will be funded from earmarked funds (R411 million):

• COVID-19 communication;
• Information Communication Technology (ICT) for COVID-19;
• Buffer stock;
• Port Health Services; and
• Cuban Medical Brigade.

 

1. Analysis of the Adjusted Budget by Programme

 

This section provides detail on the revisions and reallocations within the programmes. It must be noted that no funds in the Department were suspended for COVID-19 purposes.

 

Table 2 indicates the national Department’s adjusted allocation for 2020/21. In February 2020, the Health Department was allocated R55.5 billion. After downwards revisions and reallocations, the total net changes proposed equals an additional R2.9 billion; which is the additional once-off COVID-19 allocation. The proposed total allocation for Health totals R58.4 billion, an increase of 5.2%.

 

Table 2: Adjusted budget of the national Department of Health, 2020/21

As shown in Table 2, three of the six programmes received increased allocations. In terms of nominal amounts (that is, without taking inflation into account), Programme 3: Communicable Diseases and Non-Communicable Diseases receives the biggest adjustment allocation with an increase of R3.1 billion. This is followed by Programme 6: Health Systems Governance and Human Resources with an increase of R108.9 million, and Programme 4: Primary Health Care receives an increase of R50.6 million.

 

Conversely, the three remaining programmes’ allocations have been reduced. Programme 5: Hospital Systems allocation is reduced by R220 million, followed by Programme 2: National Health Insurance, which declines by R86.8 million and Programme 1: Administration which declines by R6.8 million.

 

Programme 1: Administration was allocated R672.2 million in the February budget allocation. R6.8 million is a virement from Programme 1 for COVID-19 purposes. No new funds are allocated. The net effect is a reduction of this programme’s budget by R6.8 million or 1% to R665.5 million.

 

Programme 2: National Health Insurance was allocated R1.4 billion in the main budget. R141.2 million is a virement from Programme 2 for COVID-19 purposes; and R54.4 million is a virement to the programme. The net effect is a reduction of R86.8 million or 6.2%, to anadjusted allocation of R1.3 billion.

 

Programme 3: Communicable Diseases and Non-Communicable Diseases was allocated R25.2 billion in the main budget. R681.8 million is a virement from Programme 3 for COVID-19 purposes; while R2.8 billion is reallocated; and R932.4 million is a virement to the programme. The net effect is an increase of R3.1 billion or 12.2%, to an adjusted allocation of R28.3 billion.

 

Programme 4: Primary Health Carewas allocated R238.3 million in the main budget. No virement effected from Programme 4 for COVID-19 purposes; whileR50.6 million is a virement to the programme. The net effect is an increase of R50.6 million or 21.2%, to an adjusted allocation of R289 million.

 

Programme 5: Hospital Systems was allocated R21.8 billion in the main budget. R1.8 billion is a virement from Programme 5 for COVID-19 purposes; and R1.6 billion is a virement to the programme. The net effect is a reduction of R220 million or 1%, to an adjusted allocation of R21.6 billion.

 

Programme 6: Health Systems Governance and Human Resources was allocated R6.3 billion in the main budget. R17.8 million is a virement from Programme 2 for COVID-19 purposes. While, R96.7 million is allocated to for COVID-19 purposes, and R30 million is a virement to the programme. The net effect is an increase of R108.9 million or 1.7%, to an adjusted allocation of R6.4 billion.

 

1. Observations and Findings 

 

Having considered the adjusted budgetof the Department of Health, this section summarizes the Committee’s observationsand findings:

 

• The Committee welcomed the adjusted budget of the Department as presented (to the Committee).

 

• The Committee noted with concern the surge in COVID-19 cases in the country confronted by shortage of staff, exacerbated by the rise in the number of infected healthcare workers, andthe shortage of PPE and intensive care unit(ICU) beds in health facilities.

 

• The Committee observed that R21 billion will be allocated to provinces for COVID-19 response and raised concern on whether provinces will be assisted in the planning and reprioritization to ensure that funds are notmisallocated.

 

• The Committee noted with concern the consolidated budget allocation to provinces, and indicatedthe need for provinces to be funded equitably to bolstertheir COVID-19 response.

 

• The Committee noted with concern the severe shortagesof Emergency Medical Services (EMS) personnel and ambulances insome provinces.

 

• The Committee raised the need for training of EMS personnel and ambulance operators in dealing with COVID-19 cases.

 

• Given historicalpoor spending patterns on the Infrastructure Grant by provinces, the Committee was concerned on whether provinces will properly spend their allocations on infrastructure.

 

• The Committeenoted a concern in relation to the lack of field hospitals in some provinces,with the Eastern Cape having only one field hospital.

 

• The Committee noted that the infrastructure budget will be reduced by R220 million and was concerned about the impact of this reduction on the provision of isolation facilities and quarantine sites.

 

• The Committee welcomed the budget allocation to the Cuban Medical Brigade in light of the long standing relationship between Cuba and South Africa.

 

• The Committee noted the reduction of the HIV Grant by R604 million and raised concern regarding apotential surge ofother health issuesas a result of thereprioritization.

 

• The Committee raised concern regarding access tosexual and reproductive health services.

 

• The Committee was concerned on whether infected healthcare workers are being offered psychological support.

 

1. Recommendations

 

The Committee recommendsthe following to the Minister of Health, and the Department:

 

• Provincial financial planning and management: Assist provincial departments to strengthen financial planning and management, develop mechanisms to prioritise and spend their budgets accordingly.

 

• Emergency Medical Services: Priority should be given to addressing challenges relating to the provision of EMS services in provinces, including the training of EMS personnel.

 

• HIV, AIDS and STIssub-programme: Derive plans to source more condoms in order to mitigate potential spikes in other health issues which may overwhelm the health system in future.

 

• Infrastructure spending:Assist provinces to prioritize suitableisolation and quarantine facilities for COVID-19.

 

• Preventative healthcare: Prioritize health promotion and disease preventionrather than thehospital-based curative approach.

 

• Psychological health of healthcare workers: Strengthen and invest in the psychologicalhealth of frontline healthcare workers.

 

• Monitoring and reporting: Continuously monitor and report on theimplementation of programmesand budget spending.

 

1. Conclusion

 

The Committee notes the budgetary constraints in relation to a comprehensive response to the pandemic. However, the Committeecommends the Ministry and Department of Health for the incessanteffort in responding to the COVID-19 pandemic.

 

Unless otherwise indicated, theDepartmentshould respond to the recommendations in three months from the day the report is adopted by the House.

 

Report to be considered.