Wanted: Really generous health checks for underprivileged Indians

India’s annual health budget has been barely above 1% of gross domestic product (GDP) for the past decade. In the financial year 2019-20, it was 2.57 trillion or 1.3% of GDP. This ratio also compares unfavorably with emerging market counterparts such as Indonesia (1.4%), China (2.9%), Russia (3.2%) and South Africa (3.6%).

It is therefore hardly surprising that in 2019, the World Health Organization (WHO) ranked India 57 out of 195 countries in its Global Health Security Index, pointing to weak spots in India’s health preparedness. The pandemic further exposed these messes, bringing the existing healthcare system to the brink of collapse during the second wave.

Yet, in the financial year 2020-21, when the pandemic broke out on the scene, India’s government health expenditure was only 1.5% of GDP. And even worse, this fiscal year, the central and most state governments have budgeted for less health expenditure. Interestingly, despite the health budgets of the Center and states having increased in absolute terms in the last financial year, their share in the total expenditure was almost flat. Total general government expenditure as a ratio of GDP increased from 31.2% in FY 2019-20 to 37.6% in FY 2021-22. But health expenditure was sluggish (1.3% versus 1.5%).

What do all these figures mean for the Indian public and policy makers?

Lower government spending means that Indians spend more out of their pocket on health care. According to the WHO’s health financing profile for 2017, India accounts for nearly two-thirds of health spending from its own pocket, which is almost four times the global average of around 18%.

Given historically low public health spending, coupled with high out-of-pocket spending, a catastrophic health event like this pandemic would have only pushed vulnerable people into poverty. Therefore, the need to prioritize health care spending in the current and subsequent years in both state and central budgets cannot be emphasized enough.

In line with the National Health Policy, 2017, and the latest Economic Survey, both have recommended a national public health expenditure target of 2.5-3% of GDP by 2025. But the states’ trajectory in health spending attracts less attention. Health is a state subject. Three-fourths of India’s public health expenditure is actually done by state governments. The National Health Policy, in addition to recommending an increase in overall public health spending, also proposed that states increase their health expenditure by 8% or more in their respective budgets by 2020.

Our own assessment reveals three emerging trends. First, states have not achieved their policy targets. However, our analysis of data from the last decade shows that most states are making slow progress. On an average, the share of health expenditure (on medical and public health, and family welfare) for the 17 large states increased from 4.4% in FY 2009-10 to 5.5% in 2019-20. To be sure, the pandemic accelerated that pace in most states in 2020-21. State-wise, the increase was generally related to the intensity of the COVID infection in that state. Yet, surprisingly, the share of medical and public health expenditure in some states such as Telangana and Gujarat remained slow in 2020-21 as compared to the previous three-year average.

Second, wealthier states spend more on healthcare. We get this by comparing the share of per capita income and health in total expenditure across states. For example, Goa, Kerala and Gujarat were relatively high spenders, while Bihar, Uttar Pradesh, Jharkhand, Madhya Pradesh and Odisha spent less.

Third, higher per capita health expenditures clearly result in better health outcomes, albeit with a lag. An analysis of data taken from NITI Aayog’s Progressive India Report on Healthy States, 2019 shows that states with higher average per capita health expenditure as compared to 2012-17 reported “Health Outcomes” in the financial year 2017-18 (latest available). with better health outcomes. Defined on the basis of 10 health-related variables. The findings should serve as an incentive for states that are currently spending less on health to rework their priorities. It also merits better resource mobilization and/or more targeted transfers to the country’s poorer states to help them. Catch.

The experience of many advanced as well as emerging countries shows that there is no shortcut to spending on health – which is essential for overall well-being and productivity.

As the highest goal, India should focus on achieving universal health coverage. The focus on non-communicable diseases will need to be balanced with infectious diseases like COVID-19. The benefits of technology seen during the pandemic can be leveraged to provide last-mile healthcare, especially through telemedicine. This is an additional reason why both state and central governments should spend on healthcare infrastructure to complement the country’s new digital health mission.

In this context, the recently announced PM Ayushman Bharat Health Infrastructure Mission, which aims to spend 64,180 crore to fill critical gaps and improve long-term health care infrastructure over the next five years, is a welcome step. But a lot will need to be done to achieve anything close to decent standards of healthcare for all.

Dharmakirti Joshi and Adhish Verma are, respectively, Chief Economist and Senior Economist at Crisilo