Budget 2018: India's Healthcare System Needs More Money and an Urgent Overhaul

This is the last full budget of the present government and the last opportunity for it to demonstrate its commitment to India's health and nutrition.

The deaths of children in a public hospital in Gorakhpur due to alleged disruption of oxygen supply highlighted the systemic failures in public health provision. Credit: PTI

Slow improvements in basic indicators of maternal and child mortality, double burden of communicable as well as non-communicable diseases, high out-of-pocket expenditure, a failing public sector and heavily commercialised private sector characterise the healthcare crisis in India.

The year 2017 saw a number of incidents in the health sector across the country which highlight each of these issues.

While the deaths of children in a public hospital in Gorakhpur due to alleged disruption of oxygen supply highlighted the systemic failures in public health provision, the cases of excessive billing and negligence in big corporate hospitals (e.g. the case of dengue death in Fortis Hospital, Gurugram) showed that the unregulated private sector is no solution to India’s healthcare problems. The protests against the NEET examination, mainly in Tamil Nadu, brought forth the complexities involved in ensuring a fair and inclusive system of medical education. On the other hand, the resistance to the Karnataka Private Medical Establishments Act (KPME) demonstrated the difficulty in regulating the private sector and the influence of doctors working in the private sector.

The list is long and endless, but what all of these point to is that the health sector in India needs serious overhaul and much greater attention.

Public spending on health

One of the central problems has been the low levels of public spending on health and as a result the poor access to affordable and good quality healthcare for the majority of India’s population. The public expenditure on health at about 1.2% of the GDP is amongst the lowest in the world. Public health facilities suffer from poor infrastructure and human resource inadequacies. For instance, according to the Rural Health Statistics 2017, 13% of the sanctioned health worker (female) posts and 37% of the health worker (male) posts remain vacant. Overall, only 11% of sub-centres and about 13% of primary health centres (PHCs) are functioning as per Indian Public Health Standards (IPHS). There is therefore an urgent need for more resources to be allocated for public healthcare along with measures to strengthen the delivery of health services.

The National Health Policy 2017 aims to “increase health expenditure by Government as a percentage of GDP from the existing 1.15% to 2.5 % by 2025”

Although it has already been reported that the health budget is not going to see a significant increase, it has to be noted that without a substantial enhancement in the allocations much of the needed reforms in healthcare provision will not be possible. Achieving this, requires not just an enhancement in the central budget but also increases in each of the state budgets as well. However, the central government can play an important role.

Further, it also needs to be recognised that a number of states currently do not even have the spending capacity (one big reason for this is also the lack of human resources) and therefore along with the increase in allocations, a number of steps need to be taken towards strengthening the public health system.

A linear projection based on current trends of health expenditure as a percentage of GDP shows that if the current trend continues, then health expenditure will only go up to 1.7% of GDP by 2025, while the national health policy aims to increase it to 2.5%.

High 0ut-of-pocket expenditures

63% of total health spending in India is out of pocket expenditure (OoPE) according to National Health Accounts, 2014-15. As a share of private spending, OoPE is almost 90%. Health expenditure can be catastrophic with one estimate suggesting that OoPE on health accounts for an addition of around seven percentage points to India’s poverty figures.

More recent data from National Family Health Survey (NFHS-4, 2015-16) also show the burden of health expenditure on people, with the average out of pocket cost of a delivery being close to Rs 8,000. The spending is quite high even in the case of public facilities where Rs 3,198 is spent on a delivery compared to Rs 16,522 in private facilities. The Janani Suraksha Yojana which provides a cash incentive of Rs 1,400 to poor women for institutional delivery does not even cover half the expenses that women have to bear. Going by previous budgets, it seems as if this government hopes to reduce out of pocket spending primarily through insurance schemes such as the Rashtriya Swasthya Bima Yojana (RSBY) although there is ample research now available which shows that RSBY has not contributing towards reducing OoPE. Currently, the coverage of insurance is also very low. NFHS-4 shows less than one-third (29%) of households have at least one member covered under health insurance or health scheme.

The high dependence on private healthcare is also because of the absence of accessible and good quality public provision. NFHS-4 data show that 55% of households do not generally use government health facilities. As reasons for the same, 45% of them state that there is no nearby facility and 48% feel that the quality of care in government facilities is poor.

Cost of inaction

Poor nutrition is the underlying cause for many health problems. Along with increasing health budgets and improving delivery of public health services, the government’s commitment of health for all also needs to be reflected in the budgets for nutrition interventions. One important new initiative in this regard is the Pradhan Mantri Matritva Vandana Yojana (PMMVY) which provides Rs 5000 cash benefit to pregnant and lactating women (PLW). This is supposed to be the scheme through which the entitlement of at least Rs. 6000 for PLW under the National Food Security Act (NFSA) is ensured. While the scheme itself is truncated, covering only the first live birth, it has been slow to take off with hardly any woman yet to have benefited from it.

Maternity entitlements serve multiple purposes including enabling women to exclusively breastfeed, an important nutritional input for young children. In India where more than 95% of women work in the informal sector, such a cash entitlement is the only maternity benefit available. It has been argued by many that restricting this to only one birth excludes the most vulnerable women. Further, the amount also needs to be pegged to minimum wages as well as include the principle of inflation indexing. The upcoming budget must make adequate allocations for the scheme so that it can cover all PLW and not just a small proportion.

Over the last few years, the central budget on other nutrition schemes such as the ICDS and school meals has been reducing with new cost sharing norms putting a greater burden of expenditure on these schemes on state governments. Both these schemes, especially the ICDS, are already under-funded and desperately need more resources. With the setting up the National Nutrition Mission and the announced increase in the unit costs for supplementary nutrition, the budget should reflect substantial increases in the allocations towards ICDS as well.

This is the last full budget of the present government and therefore also the last opportunity for it to demonstrate its commitment to the health and nutrition of people.

However, given the slowdown in growth and revenue receipts not matching expectations, the outlook for health and nutrition budgets is not very positive. Here, it has to be remembered that these expenditures must be looked at as investments with very high returns. Improved nutrition and health will contribute to a more productive workforce and hence higher national incomes in future.

According to a recent paper by Assocham and consultancy firm EY, India loses nearly 4% of GDP due to different forms of malnutrition. The delivery of health services also creates much needed employment opportunities. For instance, the Niti Aayog’s three-year action agenda states that according to a report by the National Skills Development Corporation, healthcare in India has the potential to generate an additional 7.5 million direct job opportunities by 2022.

Dipa Sinha teaches at School of Liberal Studies, Ambedkar University Delhi.