Redressing dis-advantage: Promoting vertical equity within South Africa

This paper represents the first attempt to apply vertical equity principles to the South African health sector. A vertical equity approach, which recognises that different groups have different starting points and therefore require differential treatment, appears to offer an appropriate basis for considering how best to redress the vast inequities which exist in post-Apartheid South Africa. Vertical equity principles are applied in critically analysing two areas of recent policy action which are particularly relevant to health sector equity in South Africa, namely public-private sector cross-subsidies and the allocation of government resources between provinces. Despite a strong political commitment to redressing historical inequities, recent government policy actions in these two areas appear to fall short of desirable goals when viewed through a vertical equity lens. In particular, policies since the first democratic elections in 1994 have done little to reduce the extent of government subsidies to the private health sector, which serves a minority of the population. In addition, recent proposals for a Social Health Insurance will allow minimal cross-subsidies between high- and low-income earners and would not adequately redress the currently inequitable public-private cross-subsidies. With respect to the allocation of government resources between provinces, a vertical equity approach would suggest that the most historically dis-advantaged provinces have an even greater claim on government resources than reflected in the current formula, as developed by the Department of Finance. This paper also considers the potential benefits of engaging with societal views in determining what constitutes dis-advantage in the South African context, in order to identify those who should receive priority in resource allocation decisions. It concludes with a review of a number of practical steps that can be taken to draw vertical equity principles into policy action.