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Business News/ Opinion / Healthcare funding options needed

Healthcare funding options needed

Every investment in combating non-communicable diseases is a means of promoting development

Experts predict that more than 60 million Indians will succumb to Non-communicable diseasess by 2020. Clearly, the government must strive to avert the health crisis looming on the horizon. Photo: Indranil Bhoumik/MintPremium
Experts predict that more than 60 million Indians will succumb to Non-communicable diseasess by 2020. Clearly, the government must strive to avert the health crisis looming on the horizon. Photo: Indranil Bhoumik/Mint

Providing every citizen access to healthcare is the dream of all governments. Indeed, the sustainable development of every nation depends upon the health of its population. While India can boast of rapid economic development, its unfinished public health agenda is still worrying. Non-communicable diseases (NCDs) such as cancer, heart disease, respiratory disorders and diabetes now jostle alongside infectious, communicable diseases such as tuberculosis and leprosy, causing more than 53% of all deaths in the country. Experts predict that more than 60 million Indians will succumb to NCDs by 2020. Clearly, the government must strive to avert the health crisis looming on the horizon.

But this is no small task, considering that India’s public spending on health is one of the lowest in the world. According to the World Health Organization’s (WHO) World Health Statistics 2015, India spent 1.16% of its gross domestic product (GDP) on health, ranking 187 among 194 countries. In per capita terms, India ranked 157, spending just $60 (purchasing power parity). The per capita public expenditure on health was 55% of Indonesia’s, less than 20% of China’s, and 11% of Mexico’s and South Africa’s.

Despite being the first country to adopt the Global Monitoring Framework on NCDs and including it in the draft Health Policy Action 2015, India’s current budgetary allocation for NCD programmes (targeted at “reducing the number of premature deaths from NCDs by 25% by 2025"), is a minuscule 3% of the total health budget. The allocation for communicable diseases and maternal and child health programmes is larger.

Even though successive governments have pledged their commitment to the provision of universal healthcare coverage (UHC), statistics reflect slow progress on this front. The majority of Indians lack access to affordable, high-quality healthcare. Thirty per cent of identified illnesses in rural India and 20% in urban areas go untreated because of financial constraints. According to the WHO Health Statistics 2012, 39 million Indians are pushed into poverty due to healthcare costs.

The latest WHO Global Health Expenditure Database says that 85.9% of total private health expenditure in India was paid out of pocket by individuals in 2013. Also, about 47% and 31% of hospital admissions in rural and urban India were financed by loans and sale of assets.

The impact of NCDs will only add to the financial burden in a resource-strapped country such as India with a young and vibrant workforce. According to reports from the World Economic Forum and the Harvard School of Public Health, India is slated to lose $4.58 trillion between 2012 and 2030 as a result of NCDs. Managing the long-term repercussions of NCDs is vital to economic and social progress. Ensuring universal healthcare coverage calls for a robust healthcare system, funded by a multi-payer approach.

Global evidence on health spending shows that unless a country spends at least 5-6% of its GDP on health, basic healthcare needs are seldom met. NCD programmes require significant fiscal resources. Though state governments are supposed to assume responsibility for the healthcare of their residents, the health budget varies widely from one state to another. Early diagnosis and management are the most cost-effective way of tackling NCDs. But the absence of facilities, manpower and resources make quick detection and preventive care a low priority. Late detection of NCDs increases the costs of treatment and management hugely across the country. This won’t change until we make integrated service delivery a reality in more health settings, and consider a new approach to funding that involves multiple stakeholders.

A developing economy such as India’s can’t afford to rely on a single public healthcare financing system to cover the entire population, especially in view of rising healthcare costs, and the limited access to private insurance policies and other options to fund healthcare. We need a comprehensive and diverse system of healthcare financing that pools financial risk and shares the cost burden. The government needs to consider a multi-payer approach that includes expansion of commercial health insurance plans and other innovative financing models that emerge out of public-private partnerships. In fact, strategic public-private partnerships between central and state governments and private stakeholders will drive global and national attention to NCDs, attract more funds and promote the establishment of stronger policies.

Public-private partnership will play a major role in ensuring wider healthcare coverage that serves the unique needs of diverse rural and urban populations. For example, a social health insurance programme designed to provide basic healthcare services for populations with limited financial means may be the answer for rural and underprivileged populations, whereas private health insurance schemes may serve employed urban groups more effectively. The government can assume an important regulatory role in the private financing of healthcare by assuring the financial viability of the provider and ensuring inclusive coverage to all.

Ultimately, the government’s ambitious intention to provide universal healthcare coverage calls for the kind of policy framework that provides an impetus to programmes designed to combat NCDs. Public investment in healthcare—the percentage expenditure of GDP on healthcare—must be raised from the current 1.1% to at least 2.5-3% by 2025, at the state and federal level, with a greater appropriation of the budget for NCDs. The new health policy must attract private investment in the healthcare sector through incentives such as tax benefits, underwriting and facilitating bank loans to supplement care in remote and underserved regions. Every investment in combating NCDs is a means of alleviating poverty and promoting development in the end, since every rupee spent on NCDs will add to the productive years of life.

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Published: 25 May 2016, 01:54 AM IST
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