Unhealthy spending

Unhealthy spending
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First Published: Thu, Jul 10 2008. 10 19 PM IST

Illustration: Jayachandran / Mint
Illustration: Jayachandran / Mint
Updated: Thu, Jul 10 2008. 10 19 PM IST
With private health care in India projected to become a success story similar to pharma and software by 2012, the growth of investor interest, as Mint reported on Thursday, is increasingly visible. Yet, among the many dichotomies defining the rural-urban divide in India, health care is one of the most glaring.
Even with some — so far largely domestic — companies entering/increasing their health services in rural areas, the problem doesn’t get fully solved as out-of-pocket spending goes up. The financial consequences include not only those of spending more, but also of borrowing/asset sales to do so, even as their earnings get dented. Insurance alone cannot cover the associated risks and costs; and the role of public spending in access to quality health services, therefore, cannot be emphasized enough.
Illustration: Jayachandran / Mint
Unfortunately, even after recognizing the need to raise public spending on health care — and doing so via the National Rural Health Mission (NRHM) since 2005 — the status updates provided by the government itself continue to be unacceptably poor. There are several reasons—the key being that a spending target-centric approach doesn’t seem to be working.
In their paper in the Economic and Political Weekly, 28 June, two World Bank economists Peter Berman and Rajeev Ahuja discuss how, while NRHM does incorporate some strategies to raise and better utilize health allocations, the uptake has been far from satisfactory.
Although total public expenditure on health was 41% more in 2006-07 than the Rs28,000 crore outlay in 2004-05 — it still only amounted to a rise from 0.97% of GDP to 1.05%. But far more important is that the gap between allocation and disbursal ranged between 8% and 96% across various components of NRHM — which forms a major part of health spending. And disbursal doesn’t ensure actual — and effective — utilization.
Here, Berman and Ahuja highlight the lack of goals for outcomes and the critical role of enhancing capacities at the state and district levels to use the resources effectively.
They ask some broader, important questions worth noting especially by policymakers. One is whether the right approach is being used. They find NRHM falls short in overhauling the approach of budget-financing the institutions of service delivery. They point to the global experience: increasing interest in a “pay- for-performance” approach”.
How can public health spending be improved? Write to us at views@livemint.com
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First Published: Thu, Jul 10 2008. 10 19 PM IST