The Healthcare System and Expenditure in India

The National Health Accounts (NHA) report for 2017-18 was just issued by the Technical Secretariat of the National Health Accounts (NHA). The report is frequently praised since it indicates an increase in overall public health spending as a proportion of GDP.

The research also reveals that out-of-pocket spending (OOPE) as a percentage of overall health spending has decreased to less than 50%.

Even if these advances are welcome, the state of India’s public expenditure remains dire. The results of the NHA study should also be scrutinised carefully.

Findings of National Health Accounts (NHA) Report :-

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  • Increase in Public Expenditure, Decline in OOPE: According to the NHA, the government has increased health-care spending, resulting in a decrease in OOPE from 64.2 percent in 2013-14 to 48.8 percent in 2017-18.
  • It indicates that overall public health spending as a proportion of GDP has risen to an all-time high of 1.35 percent of GDP, breaking through the 1%-1.2 percent threshold.
  • Share of Primary Health Care: Primary and secondary care accounts for more than 80% of current Government health spending, up from 51.1 percent in 2013-14 to 54.7 percent in 2017-18. 3 o Primary and secondary care accounts for more than 80% of current Government health expenditure.
  • Social Security Expenditure on Health: The percentage of social security expenditure on health, which includes the social health insurance programme, government-sponsored health insurance schemes, and medical reimbursements to government workers, has grown.
  • Causes of Increase in Health Expenditure: The increase in NHA 2017-18 is mostly owing to an increase in Central government expenditure, which accounted for 40.8 percent of overall public health expenditures in 2017-18.
  • A large portion of this increase is due to a threefold rise in Defense Medical Services spending (DMS).

Issues Highlighted by the Report :-

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  • Expenditure on Health, Still One of the Lowest: India’s overall public spending on health, as a percentage of GDP or in per capita terms, is still one of the lowest in the world.
  • Despite the fact that there has been a policy agreement for more than a decade to raise it to at least 2.5 percent of GDP, no meaningful rise has occurred thus far.
  • Lesser Priority on Women’s and Children’s Health: The National Health Mission’s spending rose by just 16 percent from 2016 to 2018.
  • In comparison to families covered by the DMS, the health of women in reproductive age and children under the age of five, who make up a third of the population, has been given less emphasis.
  • Furthermore, the percentage of current health expenditure in government spending has decreased from 77.9% in 2017-18 to 71.9 percent in 2017-18. (in 2016-17).
  • Inclusion of Capital Expenditure Leads to Overcounting: For example, a newly constructed hospital will serve people for many years. As a result, the expenditure made is employed over the lifespan of the capital generated, rather than being confined to the year in which it is incurred. When capital expenditures are counted for a certain year, there is a lot of overcounting.
  • As a result, the World Health Organization suggests that capital expenditure be excluded from health account estimates and that current health spending be prioritised.
  • However, capital spending is included in NHA estimates in India to indicate bigger public investments. As a result, Indian estimations are no longer comparable to those of other nations.
  • If capital expenditure is excluded from health calculations, current health spending amounts to just 0.97 percent of GDP.
  • Decline in OOPE as a Result of Lower Healthcare Utilization: The OOPE fell in nominal and real terms in 2017-18, not just as a percentage of total health expenditure, but also as a percentage of overall health expenditure.
  • According to the NSSO 2017-18 data, hospitalisation care utilisation has decreased for virtually all States over this time period when compared to 2014 NSSO estimates.
  • The drop in OOPE is mostly attributable to a drop in use.
  • Lack of authority given to state governments: In India, health is a state matter, and state spending accounts for 68.6% of total government health spending.
  • However, because the principal entities with technical competence are under its authority, the central government ends up being the dominant player in public health administration.
  • Due to the vast variety in per capita health expenditure, states have a lot of budgetary room to react with events like the Covid-19 epidemic.

Way Forward :-

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  • More Public Investments in Healthcare: The experience of numerous developing nations implies that as public expenditure on health grows, so does the usage of care, because there is always a lot of latent demand for health care that was previously unmet because people couldn’t pay it.
  • As a result of increasing public investment, health care will become more inexpensive and accessible, and people will be more likely to use it.
  • Strengthening Urban Local Bodies: More government financing for health is needed in India’s health system. When it comes to Urban Local Bodies, however, a combination of modest budgetary allocations and elected officials that exhibit health leadership is required.
  • It also necessitates more citizen participation in health, the establishment of accountability systems, and the oversight of the process by a multidisciplinary committee of technical and health specialists.
  • Investments in More Medical Colleges: In order to reduce expenses beyond a few islands of excellence, such as the AIIMS, investments in other medical colleges should be promoted in order to potentially reduce costs and improve health care quality.
  • Tax reductions: Increasing R&D (Research and Development) incentives through extra tax deductions, as well as lowering GST (Goods and Services Tax) on life-saving and necessary pharmaceuticals, can help to promote higher expenditures in new drug development.
  • Training of Healthcare Workers: It is critical to devote substantial attention to the existing healthcare workforce’s training, re-skilling, and knowledge upgradation in order to prepare them to supply the planned healthcare facilities to the people.