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India’s changing health financing narrative: Insights from Health Accounts

Author: Dr. Rahul S. Reddy Kadarpeta. He is a Health Systems and Financing expert, presently National Coordinator with the Health Systems Transformation Platform. 

Health Accounts is a standard tool used to track and report a country’s spending on healthcare in a year. It presents estimates on who pays for healthcare, through which methods, to which healthcare providers and for which services. This information is most useful to determine resource allocations for health services and plan targeted policy interventions for achieving universal health coverage. The World Health Organization (WHO) annually publishes these internationally comparable standard indicators for about 190 countries on the Global Health Expenditure Database (GHED). Most countries conduct this annual exercise to update the GHED with a reporting lag time of at least one year and India has a lag time of two years because audited finances are used in computing estimates. In addition, countries also publish detailed reports on National Health Accounts Estimates with context-specific information for policy discussion. India produced reports on Annual Health Accounts for the last five consecutive financial years (FY 2013-14 to FY 2017-18) under the leadership of the National Health Systems Resource Centre, an institution providing technical support to the Ministry of Health and Family Welfare and the Government of India for more than a decade.

India’s Health Accounts are most useful for researchers and policy makers as the indicators on government spending and out of pocket expenditures (OOPE). The related expenditure ratios play a  key role to facilitate decision making and charting progress towards the National Health Policy, 2017 goals and Universal Health Coverage. This report for FY 2017-18, published recently is of greater importance as it incorporates household healthcare expenditures for 2017-18 from the 75th Round National Sample Survey, allowing scope to estimate the real trend of aggregate estimates in the last five years since the 71st round NSSO survey, 2014. Until recently, the household healthcare expenditure estimates year-on-year were extrapolated using 2014 as a base year. The report also improves upon estimates for vaccines and pharmaceuticals with details available from better data sources and estimation methods.

The trend estimates presented in the recent report, suggest government health expenditures increased to 40.8% in 2017-18 from 28.6% in 2013-14 occupying a larger portion in the overall pie. There is an increase in terms of ratio to GDP (1.15 to 1.35) and per capita (Rs.1042 to Rs.1753) too. The Government also prioritised health spending within the general government allocation over the years (3.78% in 2013-14 to 5.12% in 2017-18). A positive trend is observed in social health insurance expenditures (6% to 8.9%), because of targeted national and state level government health insurance programs. Growth in private health insurance expenditures (3.4% to 5.5%) coupled with increasing coverage as reported by IRDAI[1]denotes the industry’s increased penetration.

Household out of pocket expenditures (OOPE) as proportion of total health expenditure show a downward trend. OOPE occupied 70% in 2004-05, 64% in 2013-14 and 49% in 2017-18. This suggests a temporal shift in the way health financing is organized in India, moving away from reliance on OOPE, the burden the households to pay at point of receiving a health service is the most regressive form of paying for healthcare.

A steady downward OOPE trend suggests India’s health policy interventions in the last decade (Increased over all government and social security investments, the National Health Mission, Rashtriya Swasthya Bima Yojana, Pradhan Mantri Swasthya Suraksha Yojana, Rashtriya Arogya Nidhi and several state level governments sponsored health insurance programs) are showing promise in alleviating burden of health payments for households. According to Muraleedharan et al, between the two NSSO survey periods (2014 and 2017-18), utilization of public sector services increased both in urban and rural India, average OOPE decreased in public facilities and incidence of catastrophic health expenditures (at 10% household consumption threshold) decreased by almost half in both public and private health facilities.

Globally, it is proven that targeted government investments in health accelerate country’s progress to universal health coverage (UHC). Recent initiatives usher a positive trend in India’s path towards achieving the National Health Policy, 2017 targets of government spending dearer. Government’s Pradhan Mantri Jan Aarogya Yojana (PMJAY) providing Rs. 5 Lakhs annual health coverage per family, for almost 40% of the population has been able to serve to almost 2.28 crore enrolees in 3 years of implementation. Strengthening primary healthcare through health and wellness centres (50% of 1.5 lakh are functional already) is universalizing service delivery free to users, closer to the community. Anchored by the National Digital Health Mission and the Ayushman Bharath Health Infrastructure Mission with a vision to spend Rs 64,180 crore in the next five years, have the potential to further decrease household payments for health in the future.

The institutionalization and standardization of the process for arriving at these yearly health accounts estimates is commendable. Soon as we move towards government steered, integrated, and digitally supported health system, we can strengthen our estimation approach and methods for out-of-pocket expenditures based on the National Health Resource Repository (NHRR), by measuring proxies such as administrative data available for drugs and diagnostic sales, routine public and provider surveys capturing utilization and OOPE (in addition to relying on self-reported health expenditure surveys like the NSSO Health Round).



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