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 reco gnises that different groups have different starting points and therefore r equire differential treatment, appears to offer an appropriate basis for co nsidering how best to redress the vast inequities which exist in post-Apart heid South Africa. Vertical equity principles are applied in critically ana lysing two areas of recent policy action which are particularly relevant to health sector equity in South Africa, namely public-private sector cross-s ubsidies and the allocation of government resources between provinces. Desp ite a strong political commitment to redressing historical inequities, rece nt government policy actions in these two areas appear to fall short of des irable goals when viewed through a vertical equity lens. In particular, pol icies since the first democratic elections in 1994 have done little to redu ce the extent of government subsidies to the private health sector, which s erves a minority of the population. In addition, recent proposals for a Soc ial Health Insurance will allow minimal cross-subsidies between high- and l ow-income earners and would not adequately redress the currently inequitabl e public-private cross-subsidies. With respect to the allocation of governm ent resources between provinces, a vertical equity approach would suggest t hat the most historically dis-advantaged provinces have an even greater cla im on government resources than reflected in the current formula, as develo ped by the Department of Finance. This paper also considers the potential b enefits of engaging with societal views in determining what constitutes dis -advantage in the South African context, in order to identify those who sho uld receive priority in resource allocation decisions. It concludes with a review of a number of practical steps that can be taken to draw vertical eq uity principles into policy action.