Health budget flatlines

It is true that the 20% cut in the allocation to healthcare in the last quarter of the fiscal year had already reduced the funding for health and the present budget virtually flatlines it at that level


The underutilization of funds by the health ministry is cited by economists advising policymakers as the reason for reducing the allocation. Photo: Mint
The underutilization of funds by the health ministry is cited by economists advising policymakers as the reason for reducing the allocation. Photo: Mint

One can only cheer when the finance minister declares that it is essential to provide medical facilities to each and every village and city, while hoping that his vision of health services is not restricted to medical care for disease management when he says that. However, when the budget has a lower allocation for health than proposed last year, there is uncertainty about how this vision will be attained.

It is true that the 20% cut in the allocation to healthcare in the last quarter of the fiscal year had already reduced the funding for health and the present budget virtually flatlines it at that level.

The underutilization of funds by the health ministry is cited by economists advising policymakers as the reason for reducing the allocation.

While this seems logical on the surface, the stark reality is that the public sector in health has been progressively so enfeebled that it has low absorptive capacity. The correct response is to infuse more resources into strengthening infrastructure, expanding the health workforce and providing essential health services, including drugs and diagnostics, with assured access, financial protection and quality. Only then will the funds be adequately absorbed and appropriately utilized. Otherwise, it would be like starving a sick child and saying it has lost its appetite and energy.

The draft of the new National Health Policy has been on the health ministry’s website for the past eight weeks. One assumes it represents the vision of the government and not of the concerned ministry alone. The draft provides a grand vision of health system strengthening, with prioritization of primary health services, upgrade of district hospitals, expansion of health workforce, provision of essential drugs and diagnostics, and assuring continuity of care across well-integrated primary, secondary and tertiary services. It talks of the government undertaking strategic purchasing of medical care from both public and private care providers. How will this design for transformation of our health system be realized if there is no augmentation of financial resources for health? Creation of more All India Institutes of Medical Sciences, which provide tertiary care, will not redress the neglect of primary and secondary care.

The increase in tax exemption limits for medical insurance and medical reimbursement may provide some relief to the salaried class, but that too will be limited to what private healthcare and private hospitals can provide for some forms of illness care. Primary health services will be out of this ambit and the poor and informal workers will not benefit. What then of universal health assurance which Prime Minister Narendra Modi has been passionately advocating?

India should not make the mistake of depending on private health insurance as the principal vehicle to deliver universally accessible and affordable essential health services. William Hsiao is an eminent health economist from Harvard who advises China as well as some US states on health financing. His caution is worth heeding: “Empirical evidence indicates that a free market for insurance cannot achieve social equity. The serious market failure allows insurance to practice risk selection leaving the most vulnerable people uninsured... Moreover, the insurance market’s high transaction cost yields highly inefficient results.” Despite Obama Care, the US remains trapped by the pernicious legacy of multiple insurance providers channelling selective services at high cost. We cannot afford to create a similar system.

The emphasis on Swachh Bharat and yoga is welcome as it helps to promote healthy environments, bodies and minds. We need to ensure that health promotion extends to other vital areas too, like water and air quality, and good nutrition. That, however, will not obviate the need for a well-resourced health system that can assure a range of services—from universal immunization to life-saving surgery. The longer we leave health in the penumbra of our budgetary allocations, the greater the threat to our economic development.

The author is president, Public Health Foundation of India. Views expressed are personal.

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