The National Health Accounts data for 2013-14 present fresh evidence that India continues to have a non-serious approach to the provision of universal health coverage to all its citizens.
India’s health system is one of the most privatised in the world, poorly regulated and accessible only to those with income levels well above the average.
All these attributes are, once again, strongly borne out by the NHA data, which lay bare the extremely low government spending on health which, at 1.15 per cent of GDP, compares poorly with even Sub-Saharan Africa.
The share of State governments, which are largely responsible for provision of health care, in government health expenditure is estimated at 0.75 per cent of GDP.
Evidently, a health policy that fails to pool the financial risk of illness at the population level results in impoverishing payments made out of personal funds — and the NHA figures confirm that despite rising government revenues, the bulk of Indian health spending, a staggering 64.2 per cent of health expenditure, is met by households out-of-pocket.
That such OOP expenses declined by five percentage points over a decade is encouraging, but this is insignificant in comparison with the achievement in, say, Thailand, where 75 per cent of the population was brought under UHC in just one year.
Details :-
n 2013-14, the Total Healthcare Expenditure (THE) of India was Rs. 4.5 lakh crores, which amounts to 4 per cent of the Gross Domestic Product (GDP).
The Draft National Health Policy 2015 recognises this to be a problem. It says: “Global evidence on health spending shows that unless a country spends at least 5-6 per cent of its GDP on health and the major part of it is from government expenditure, basic health care needs are seldom met.”
Of the total amount of Rs. 4.5 lakh crores, Current Health Expenditure (CHE) constituted Rs. 4.2 lakh crores (93 per cent). Rs. 31.9 thousand crore (7 per cent) went to Capital Expenditure.
Key Findings:-
- Households continue to be the dominant contributors (73 per cent of CHE) to health finance in India. The bulk of the total money circulating in Indian healthcare – around 69 per cent – comes from Out Of Pocket (OOP) payment by households. OOP is the money which individuals pay out of their own.
- High OOP spending is a result of abysmally low government spending on health, constituting just 1.15 per cent of GDP and 30 per cent of CHE – the lowest among the BRICS nations.
- It has long been argued that government spending on health should increase to 2.5 per cent of GDP, a figure also envisaged by the Draft National Health Policy 2015.
- Around 45 per cent is spent on outpatient care (including both general and special treatment) as compared to 35 per cent in inpatient care.
- Overall, the current expenditure on curative care is estimated at Rs 3.4 lakh crores (80.4 per cent) whereas. In contrast, a meagre 9.6 per cent – is spent on preventive care.
- All the government-funded national health programmes such as the National Disease Control Programmes are covered under this category. However, it does not include spending on sanitation or providing access to clean drinking water.
Raising government expenditure on health, in conjunction with the States, should form the basis of policy change; the road map for this was proposed by the Planning Commission’s High Level Expert Group in 2011.
Remedial policies in two key areas can quickly scale up to reduce the OOP burden on households.
- One is to put in place a centralised system for procurement of essential drugs, relying mainly on quality generics and distributing them through the State government system.
- The other is to arrive at the cost of all medical procedures for different classes of hospitals, laying down standards and forming regulatory authorities at the State and district levels under law to enforce the rules.
It was estimated by the Planning Commission group, for instance, that spending 0.5 per cent of GDP (compared to 0.1 per cent spent by the public health system) could ensure the availability of essential medicines free of cost to all Indians.
Regulatory controls would automatically lead to a reduction in costs, and curbing of unethical and corrupt practices by hospitals and diagnostics centres.
It should then be easier to quickly extend free health insurance to more classes of people, such as senior citizens, children and the disabled, and achieve universal coverage early.
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Steve Ovett, the famous British middle-distance athlete, won the 800-metres gold medal at the Moscow Olympics of 1980. Just a few days later, he was about to win a 5,000-metres race at London’s Crystal Palace. Known for his burst of acceleration on the home stretch, he had supreme confidence in his ability to out-sprint rivals. With the final 100 metres remaining,
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]Ovett waved to the crowd and raised a hand in triumph. But he had celebrated a bit too early. At the finishing line, Ireland’s John Treacy edged past Ovett. For those few moments, Ovett had lost his sense of reality and ignored the possibility of a negative event.
This analogy works well for the India story and our policy failures , including during the ongoing covid pandemic. While we have never been as well prepared or had significant successes in terms of growth stability as Ovett did in his illustrious running career, we tend to celebrate too early. Indeed, we have done so many times before.
It is as if we’re convinced that India is destined for greater heights, come what may, and so we never run through the finish line. Do we and our policymakers suffer from a collective optimism bias, which, as the Nobel Prize winner Daniel Kahneman once wrote, “may well be the most significant of the cognitive biases”? The optimism bias arises from mistaken beliefs which form expectations that are better than the reality. It makes us underestimate chances of a negative outcome and ignore warnings repeatedly.
The Indian economy had a dream run for five years from 2003-04 to 2007-08, with an average annual growth rate of around 9%. Many believed that India was on its way to clocking consistent double-digit growth and comparisons with China were rife. It was conveniently overlooked that this output expansion had come mainly came from a few sectors: automobiles, telecom and business services.
Indians were made to believe that we could sprint without high-quality education, healthcare, infrastructure or banking sectors, which form the backbone of any stable economy. The plan was to build them as we went along, but then in the euphoria of short-term success, it got lost.
India’s exports of goods grew from $20 billion in 1990-91 to over $310 billion in 2019-20. Looking at these absolute figures it would seem as if India has arrived on the world stage. However, India’s share of global trade has moved up only marginally. Even now, the country accounts for less than 2% of the world’s goods exports.
More importantly, hidden behind this performance was the role played by one sector that should have never made it to India’s list of exports—refined petroleum. The share of refined petroleum exports in India’s goods exports increased from 1.4% in 1996-97 to over 18% in 2011-12.
An import-intensive sector with low labour intensity, exports of refined petroleum zoomed because of the then policy regime of a retail price ceiling on petroleum products in the domestic market. While we have done well in the export of services, our share is still less than 4% of world exports.
India seemed to emerge from the 2008 global financial crisis relatively unscathed. But, a temporary demand push had played a role in the revival—the incomes of many households, both rural and urban, had shot up. Fiscal stimulus to the rural economy and implementation of the Sixth Pay Commission scales had led to the salaries of around 20% of organized-sector employees jumping up. We celebrated, but once again, neither did we resolve the crisis brewing elsewhere in India’s banking sector, nor did we improve our capacity for healthcare or quality education.
Employment saw little economy-wide growth in our boom years. Manufacturing jobs, if anything, shrank. But we continued to celebrate. Youth flocked to low-productivity service-sector jobs, such as those in hotels and restaurants, security and other services. The dependence on such jobs on one hand and high-skilled services on the other was bound to make Indian society more unequal.
And then, there is agriculture, an elephant in the room. If and when farm-sector reforms get implemented, celebrations would once again be premature. The vast majority of India’s farmers have small plots of land, and though these farms are at least as productive as larger ones, net absolute incomes from small plots can only be meagre.
A further rise in farm productivity and consequent increase in supply, if not matched by a demand rise, especially with access to export markets, would result in downward pressure on market prices for farm produce and a further decline in the net incomes of small farmers.
We should learn from what John Treacy did right. He didn’t give up, and pushed for the finish line like it was his only chance at winning. Treacy had years of long-distance practice. The same goes for our economy. A long grind is required to build up its base before we can win and celebrate. And Ovett did not blame anyone for his loss. We play the blame game. Everyone else, right from China and the US to ‘greedy corporates’, seems to be responsible for our failures.
We have lowered absolute poverty levels and had technology-based successes like Aadhaar and digital access to public services. But there are no short cuts to good quality and adequate healthcare and education services. We must remain optimistic but stay firmly away from the optimism bias.
In the end, it is not about how we start, but how we finish. The disastrous second wave of covid and our inability to manage it is a ghastly reminder of this fact.