In the Midst of Soaring Costs, Andhra Pradesh is Trying to Stem Private Healthcare Expenses

Other than free diagnostics and generic drugs, the state is also keeping track of its programme impacts year-on-year.

The World Economic Forum has just finished. Oxfam’s report on inequality is out, shining a light on the obscene inequality that is aggravating year-on-year. In 2014, the 85 richest people owned as much as poorest half of the world’s population. In 2018, it has turned more obscene at 26 richest people owning as much as the poorest half of the world’s population. In the case of India, the report states nine richest Indians own as much as the bottom half of the country’s population.

The Oxfam report is more ambitious this time and actually counts the cost of this inequality in terms of unfunded/under-funded public services like healthcare, education, water sanitation, care work and feminisation of poverty. In a powerful reflection piece, Max Lawson, the policy lead on Inequality, at Oxfam International, writes, the actual cost of this inequality is life itself! 25 years of life foregone, thanks to shrunken public health and public education investments.

The catastrophic cost of healthcare expenditure has been a cause of concern for sometime. This WHO study explains catastrophic expenses’ inverse relationship with public expenditure in healthcare:

“… There is a negative correlation between the proportion of people experiencing financial catastrophe and the extent to which countries fund their health systems by some form of prepayment, such as taxes or insurance. Hence, catastrophic payments are more common in low-income countries where health care is mainly financed by direct payments and less common in high-income countries with established prepayment methods.

In many low-and-middle-income countries, a large proportion of health expenditure is paid out-of-pocket by households. Excessive reliance on out-of-pocket payments can lead to financial barriers for the less well off, thereby increasing inequalities in access to health care, or can result in financial catastrophe or impoverishment… ”

India makes the lowest public investment in healthcare from amongst the BRICS block (Brazil, Russia, India, China, South Africa). It also makes lower investments (as a proportion of GDP) vis-à-vis South Asian neighbours like Sri Lanka and Bangladesh. The result: In India, 70% of healthcare expenses are met by out-of-pocket expenses (OOPE) of the individuals, as this earlier report in The Wire states. Seven percent of Indians are pushed into poverty because of healthcare expenses.

In this context, Andhra Pradesh is taking a close and detailed look at OOPE for health and tracking it year-on-year to design programmes to reduce the same. Society for Elimination of Rural Poverty (SERP), of the Andhra Pradesh’s rural development department has just put out a detailed study on OOPE incurred in healthcare.

The baseline study was done in December 2015 just before the roll-out of “Health for All” package, i.e. NTR Vaidya Seva scheme and Arogya Raksha. These health interventions were launched in January 2016. To capture the impact, the end-line survey was conducted in August 2017 – after 20 months of interventions. The survey was repeated again in August 2018 to ensure there aren’t any programme slippages.

This survey was conducted in the entire state – covering all 13 districts in the selected 26 villages and 14 urban areas. The baseline survey, a total of 10,803 households were screened and 1,166 households were interviewed. In the end-line survey, total 13,629 households were screened and 1,266 households were interviewed.The numbers are with a 30-day recall period and self-reported by the respondents.

There has been a significant reduction in OOPE across the board (from consultation to diagnostics, medicines and consumables), as the numbers below reveal:

Rolling out key interventions like free diagnostics across all tiers of healthcare and opening many Jan Aushadhalayas selling generic drugs, were some strategies. In fact, according to Dr Madhur Gupta of WHO, India, Andhra Pradesh was the first state to roll out free diagnostics, in tandem with its global release of the Essential Diagnostics List. The evaluation of Andra Pradhesh’s free diagnostics programme set the template for the free diagnostics’ roll-out across the country.

For some perspective, nationally 52% of OOPE is incurred on medicines and 10% for diagnostics. Hence, a comprehensive and thorough roll-out of these interventions was guaranteed to reduce OOPE by over 60%. While SERP’s findings are encouraging, the government of Andra Pradesh is keen to review access to health programmes for the most marginalised communities.

It is about time the mainstream media started reporting on these independent studies and not just the National Health Accounts. These studies generated by states have more current data-sets, influence programme designs on a real time basis and deserve more reportage and re-analysis.

Going back to the Oxfam Inequality report, it recommends if the super-rich in India are taxed just a bit more, India will have resources to increase the public health budget by 50%. This is Food for thought for the Andhra government, too, for advocacy with central government and progressively planning revenue streams in the state.

Biraj Swain is a Senior Fellow with the Kalam Institute of Health Technology. She works on international development and human rights in South Asia, East Africa and the UN. Jitendar Sharma is Chief Executive Officer and Managing Director of Andhra Med Tech Zone (AMTZ) and leads the institutes incubated by AMTZ. Poonam Malakondaiah (IAS) is Special Chief Secretary, Health, Medical and Family Welfare, government of Andhra Pradesh and Chair of the Board of AMTZ. The authors can be reached at