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Business News/ Politics / Policy/  Will budget 2017 go beyond insurance to address India’s huge health challenge?

Will budget 2017 go beyond insurance to address India’s huge health challenge?

Providing health insurance or setting more AIIMS-like institutions alone cannot take care of India's health problems

World Bank data shows that public health expenditure in India is abysmally low at 1.4% of GDP as of 2014, compared to a world average of 6%. Photo: MintPremium
World Bank data shows that public health expenditure in India is abysmally low at 1.4% of GDP as of 2014, compared to a world average of 6%. Photo: Mint

In an interview to Mint last month, Esther Duflo, one of the world’s leading development economists, said, “I feel a deep sense of crisis when I think about education and health, especially for the poor. These concerns are not shared widely enough at any level of government and that’s unfortunate."

Dulfo’s concerns seem to be completely justified when one looks at health-related statistics in India.

World Bank data shows that public health expenditure in India is abysmally low at 1.4% of GDP as of 2014, compared to a world average of 6%. This is much higher for Brazil at 3.8%, Russian Federation at 3.7% and China at 3.1%, among others. In fact, in 2014-15, the healthcare budget was further slashed by nearly 20% due to fiscal strains. According to the 2015-16 Economic Survey released by the ministry of finance, combined health expenditure by the Central and state governments was just 1.3% of GDP for that year.

Costs of a weak healthcare infrastructure are further exacerbated by poor sanitation in India. There is reason to believe that the neglect of healthcare and sanitation might be imposing a significant cost on the Indian economy. An August 2016 report called ‘The True Cost of Poor Sanitation’ published by LIXIL Group Corp., Water Aid and Oxford Economics estimated that poor emphasis on sanitation had cost India 5.2% of its GDP in 2015. India’s estimated losses, which were to the tune of $106.7 billion, were close to half of total global losses of $222.9 billion in 2015. Poor sanitation standards also accentuate problems such as stunting among children by adversely affecting their ability to absorb nutrients. Malnutrition can lead to reduction in both physical and cognitive abilities for future workforce, entailing significant loss in productivity.

Such findings are supported by the fact that India has a much higher disease burden than its peers in the world. We measure disease burden by looking at disability adjusted life years (DALY) statistics from the World Health Organisation (WHO). DALY measures the total number of years lost due to ill health, disability or early death. A break-up of DALY shows that India has a disproportionally high share of DALY due to communicable diseases, which are likely to be a result of poor sanitation standards.

What makes matters even worse in India is the fact that when illness strikes, most people have little choice but to bear the cost of treatment from their own incomes.

A 2016 report by Brookings India, Health and Morbidity in India (2004-2014), shows that only 15.2% of the population in India had any form of health insurance in 2014. These figures are supported by World Bank data which indicates that the share of Out of Pocket (OOP) expenditure in private health expenditure in India remains exceptionally high in India.

This makes the Indian population extremely vulnerable to income shocks due to health expenditure. An earlier Plainfacts column had pointed that the share of households which saw at least one-fifth of their annual incomes wiped out due to health-related expenditure ranged from 2.7% to 6.6% in various parts of the country. More than 90% of households reported health-related expenditure in the country. The Brookings report cited above also states that OOP health expenditure accounted for an addition of around seven percentage points to India’s poverty figures.

To be sure, the government seems to be taking steps to address these problems. An allocation of Rs1,500 crore for towards health insurance was announced in last year’s budget. Under the National Health Protection Scheme, the finance minister also announced a cover of Rs1 lakh per family and an additional cover of Rs30,000 for senior citizens.

However, it would be unrealistic to assume that increasing health insurance coverage alone can be a panacea for India’s health-related problems. The Brookings report suggests that while health insurance coverage ensures higher chances of treatment, it has been ineffective in lowering overall health expenditures. Countries such as Thailand, Brazil, China and Vietnam, which have witnessed significant improvement in the health sectors over the past few decades, underscore the importance of increasing government expenditure on health along with increasing health insurance coverage.

In addition to inadequate health spending, India does not have enough doctors to ramp up its healthcare infrastructure. An earlier Plainfacts column had shown India fares poorly in terms of meeting WHO’s requirement of having one doctor per thousand people. At the state level, only eight states meet the WHO criteria.

Even the quality of existing doctors and health infrastructure is suspect, to put it mildly. A recent report published in The Hindu said that students from newly established All India Institute of Medical Sciences (AIIMS) Bhopal are on the verge of passing out without having any experience in handling emergency cases or basic experience in surgery. The institute, which is in its fifth year, does not even have a blood bank or gynaecology department, the report said. AIIMS is considered to be one of the best medical institutions in the country.

Last but not the least is the question of producing credible health indicators for keeping track of health-related indicators in the country. Full results of the fourth round of the National Family and Health Survey (NFHS), which was conducted more than a decade after the NFHS 3, are yet to be declared.

Speaking at a public programme last year, Dr Krishna Kumar, deputy director general in the Ministry of Statistics of Programme Implementation pointed out that India currently has the capacity to produce data for only 23 out of the 230 Sustainable Development Goal indicators. The indicators include ending poverty, ending hunger, achieving food security and improved nutrition and reducing inequality.

Niti Aayog has reportedly asked for a significant increase in government spending on social sectors such as health in the forthcoming budget. While an increase in government spending on health is warranted, it also needs to be seen whether the increased allocation would go towards building an accountable and holistic healthcare infrastructure in India or continue with half-baked plans such as setting AIIMS Bhopal which is lacking in infrastructure and would produce poorly trained doctors.

This is the second of a two-part series on India’s social infrastructure deficit. The first part focussed on the need for improving accountability in India’s school education.

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Published: 26 Jan 2017, 09:28 AM IST
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