Towards equity in health in an unequal society.

South Africa is one of the world's most unequal societies and its health sector mirrors these inequalities. Since the first democratic elections in 1994 the government has been under enormous pressure to diminish disparities between population groups in access to health services. This paper documents the structural inequalities in the health sector and discusses the strategic options that are being considered for reducing them. The overall level of health expenditure is high, amounting to 8.5% of GDP. However, less than 40% of expenditure is on public health services and three quarters of that is on acute care hospitals. A more detailed analysis of public health expenditure reveals large differences between census districts. The districts where household incomes are low tend to have fewer public health services. Public health expenditure per capita was lower than the estimated cost of providing basic primary health care in a fifth of districts. The most urgent need is to improve the services likely to reduce excess mortality and morbidity. This will involve additional funding of primary health service services, particularly in underserved localities. Government cannot increase public health rapidly and it will have to re-allocate funding from hospitals. The paper discusses options for achieving this, including the introduction of social health insurance. It argues that restructuring the health sector is complex and there is a risk of failure. Governments should base their strategies on a good understanding of the health sector and of the likely impact of different reform options.