The Healthcare System and Expenditure in India

Findings of National Health Accounts (NHA) Report :-

• 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 :-

• 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 :-

• 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.