India’s health accounts: Public policy perspective

Recently, the Government of India released National Health Accounts for 2017-18. National Health Accounts, an important estimation to draw many inferences for a country. In simple terms, NHA means a sum of total resources spent on health in a year. These estimates show how the health expenditure is met, considering both through public and private sources. They play a vital role in policymaking and help governments design the schemes and programmes to manage the healthcare system.

The Total Health Expenditure (THE) for India is estimated to be Rs 5,66,644 crore in 2017-18. However, we can draw little inferences from these numbers unless we see the share of private and government expenditure and compare it with GDP. The Government Health Expenditure (GHE) during 2017-18 was Rs 2,31,104 (40.8%) and the rest of health expenditure was sourced by private spending with minor support of external agencies. This implies that a major portion of health expenditure was met through private spending.

It is interesting to analyse India’s total health expenditure with GDP. NHA-2017-18 has stated that India spent 3.3% of its GDP on health combining private and public spending. However, comparing India with its partner nations in the BRICS group, India provisioned the least resources for health, whereas Brazil (9.51%), Russia (5.32%), China (5.35%) and South Africa (8.25%). Most of the OECD and advanced nations dedicate 10% or even more of their GDP to health. It is also understood that there is a constant decline in the Total Health Expenditure (THE) as a percentage of GDP from 4.2 % in 2004-05 to 3.3% in 2017-18.

The Government Health Expenditure as a percentage of GDP has marginally increased from 1.15 % in 2013-14 to 1.35% in 2017-18. The positive message from the estimates is that government health expenditure as a percentage of total health expenditure is steadily increasing from 28.6% in 2013-14 to 40.8% in 2017-18. More resources are being allocated to healthcare and related sectors from the Government budgetary sources.

National Health Policy-2017 has strongly urged state governments to spend at least 8% or more of their total budget on health to achieve better health outcomes by 2020. Under the constitutional arrangement, public health and sanitation; hospitals and dispensaries are State subjects. States are required to enhance their budgetary support in provisioning hassle-free healthcare services to citizens. Recent NHA has also indicated that 59.2% of the government health expenditure is sourced by the states and they are still dependent upon the Union government for funding which is mainly met through National Health Mission and other key flagship programmes. Further, there is a wide variation from state to state in terms of government health expenditure as a percentage of general government expenditure (Total Budget). In addition to the budgetary support, there is a necessity for the states to mobilise resources through other innovative financing mechanisms.

One major takeaway from these estimates is that Indians still pay directly to the health care provider, without a third-party (insurer, or State) generally known as ‘Out of Pocket Expenditure’ (OOPE) for their health services. It is estimated that 48.8% of total health expenditure is met from OOPE and if we consider indirect expenditure including pre-payments as health insurance contributions and premiums, the figure stands at 54.3%. This implies Indians pay from their pockets for receiving healthcare services including medicines, diagnostics and in-patient curative care. On many occasions, illness causes deprivation, pushing people back to poverty and higher personal debts. Therefore, a strong health system is a necessity.

New policies to reduce OOPE

Under Ayushman Bharat, PM- Jan Arogya Yojana was launched in 2018 which aims at providing a health cover of Rs. 5 lakhs per family per year for secondary and tertiary care hospitalization to 10.74 crore poor and vulnerable families based on the Socio-Economic Caste Census 2011. There are also efforts going on to expand this coverage of PM-JAY to include more beneficiaries based on more recent databases. It is expected to help mitigate catastrophic expenditure on medical treatment which pushes people into poverty. Further, the Janaushadhi scheme has been implemented to provide generic medicines at affordable prices. As of date, more than 8000 Jan Aushadi Kendras have been functional. Purchasing medicines has constituted 41.7% of out-of-pocket expenditure. These measures are expected to reduce the burden on pockets of the poor and to provide better health care.

National Health Policy 2017 has laid down strong objectives to improve health status through concerted policy action in all sectors and expand preventive, promotive, curative, palliative and rehabilitative services provided through the public health sector with a focus on quality. Merely provisioning higher budgetary resources alone may not reap better health outcomes. This policy should be complemented with the creation of awareness about the flagship programmes in local languages with FAQs so that a large percentage of citizens utilise the public services.

State governments have to play an active role in expanding the coverage of secondary and tertiary care in rural and tier-II and tier-III cities. With the setting up of new medical colleges, which is expected to boost the supply of medical doctors in the country, flagship schemes like PM-JAY, PM-ABHIM etc, may help in building a strong health system in the country. Future rounds of National Health Accounts are expected to show positive findings in terms of reduction in OOPE and increase in government spending on health as a percentage of GDP with all measures in place.

(The writer is Deputy Secretary (Health), NITI Aayog, Government of India. The views are personal.)