Health gets big slice of budget pie

February 24, 2011

by Troye Lund (Fin24)

Cape Town – Finance Minister Pravin Gordhan’s 2011 budget will allocate R112bn to health.

This represents a 9.8% slice of the total R577.3bn social services expenditure, and includes measures to lay the foundations for the proposed national health insurance (NHI) scheme.

While total spending on public health services has increased strongly over the past three years, from R63bn in 2007/08 to R113bn projected for 2012, Gordhan conceded that the NHI plan came with significant cost implications and would require substantial organisational and financial reforms.

The government, he said, was considering all options on how to fund this system.

Some of the options include a payroll tax (payable by employers), an increase in the VAT rate and a surcharge on individuals’ taxable income.

“The fiscal and financial implications of health system reform, and alternative revenue sources, will be examined in the year ahead,” Gordhan said.

The phasing in of the NHI, Gordhan stressed, will require substantial reforms to address “imbalances across the public and private sectors” and expand health professional training.

During a press conference with journalists before delivering his speech, Gordhan was at pains to emphasise that the government was not rushing into the NHI without weighing up all the options and without overhauling the way in which the current system operates.

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