Protecting resources for primary health care under fiscal federalism: options for resource allocation
1Health Economics Unit, University of Cape Town, South Africa.
2Department of Health Policy and Management, Trinity College, Dublin, Ireland.
*Corresponding author. Health Economics Unit, School of Public Health and Family Medicine, University of Cape Town, Anzio Road, Observatory 7925, Cape Town, South Africa. Tel: +27 (0)21 406 6576. Fax: +27 (0)21 448 8152. E-mail: Okore.Okorafor{at}uct.ac.za
The introduction of fiscal federalism or decentralization of functions to lower levels of government is a reform not done primarily with health sector concerns. A major concern for the health sector is that devolution of expenditure responsibilities to sub-national levels of government can adversely affect the equitable distribution of financial resources across local jurisdictions. Since the adoption of fiscal federalism in South Africa, progress towards achieving a more equitable distribution of public sector health resources (financial) has slowed down considerably. This study attempts to identify appropriate resource allocation mechanisms under the current South African fiscal federal system that could be employed to promote equity in primary health care (PHC) allocations across provinces and districts. The study uses data from interviews with government officials involved in the budgeting and resource allocation process for PHC, literature on fiscal federalism and literature on international experience to inform analysis and recommendations. The results from the study identify historical incremental budgeting, weak managerial capacity at lower levels of government, poor accounting of PHC expenditure, and lack of protection for PHC funds as constraints to the realization of a more equitable distribution of PHC allocations. Based on interview data, no one resource allocation mechanism received unanimous support from stakeholders. However, the study highlights the particularly high level of autonomy enjoyed by provincial governments with regards to decision making for allocations to health and PHC services as the major constraint to achieving a more equitable distribution of PHC resources. The national government needs to have more involvement in decision making for resource allocation to PHC services if significant progress towards equity is to be achieved.
Key Words: decentralization, financing, Fiscal federalism, primary health care, resource allocation
Accepted for publication 9 July 2007.