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India Health Expenditure

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September 26, 2024

Why in News?

The National Health Accounts Estimates for 2020-21 and 2021-22 was released recently by the Union Health Ministry.

What is the status of Health Expenditure in India?

  • The total health expenditure in India has risen to 3.8 % of the GDP.

Total Health Expenditure

Government Health Expenditure (GHE)

 

Expenditures from Union Government, State Governments, Rural and Urban Local Bodies including quasi-governmental organisations and donors in case funds are channeled through Government organisations.

Out-of-pocket expenditure (OOPE)

Expenditures directly made by households at the point of receiving health care.

Social Security Expenditure (SSE)

 

It includes government-funded health insurance (both Center and State) and medical reimbursement to government employees.

Private Health Insurance (PHE)

 

Spending through health insurance companies where households or employers pay a premium to be covered under a specific health plan.

 

                                                                                            Health Spending

  • Decline in OOPE - It declined to 39.4 % of total health expenditure (THE) in 2021-22 from 48.8 % in 2017-18.

National Health Policy aims to reduce OOPE as a proportion of total health expenditure to 35 % by financial year 2025-26 (FY26).

GHE OOPE

National Health Account

  • National Health Account provides a systematic description of the financial flows in India’s health system by different sources.
  • Released by Ministry of Health and Family Welfare.
  • It shows how the money is spent, how healthcare is provided, and the nature of healthcare services that are used.
  • The NHA estimates are based on the globally accepted framework of ‘A System of Health Accounts (SHA 2011), 2011’ which facilitates inter-country comparisons.
  • SHA 2011 is developed by World Health Organization (WHO).

What are the reason for reduced OOPE?

  • Increased government contribution - Government Health Expenditure (GHE) rose marginally from 1.35 % of GDP, in 2017-18 to 1.84 % in 2021-22.

                                                                                      GHE

National Health Policy has targeted 2.5 % of GDP for public health expenditure by 2025.

  • Share of government health expenditures in total health expenditures has also shown a significant increase from 29.0 % in 2014-15 to 48.0 % in 2021-22.
  • Increased per capita GHE - In per capita terms, GHE has tripled, from Rs. 1,108 to Rs. 3,169 between 2014-15 to 2021-22.
  • Expanded private health insurance - Coverage of private health insurance rised from 5.8 % in 2017-18 to 7.4 % in 2021-22.
  • Increased social security spending – The proportion of total health expenditure allocated to social health insurance programs has increased from 5.7 % in 2014-15 to 8.7 % in 2021-22.
  • Government Health Schemes - More than Rs 1 lakh crore savings have accrued from the Ayushman Bharat PMJAY.
  • Free Dialysis scheme, launched in 2015-16 have benefited 25 lakh people.

What are the benefits of reduced OOPE?

  • Universal Health Coverage - decrease in OOPE is a constructive sign of realising Universal Health Coverage (UHC) as postulated in the National Health Policy, 2017.
  • Prevents financial ruin - Reduced OOP protects against Unexpected medical expenses can lead to bankruptcy or severe debt.
  • Enables savings - With lower healthcare costs, individuals can allocate more of their income towards savings or other financial goals.
  • Increases access to care - Lower costs can encourage people to seek preventive care and timely treatment, leading to better health outcomes.
  • Reduces delayed care - Reduced OOPE can encourage people to seek treatment when needed without worrying about financial constraints.
  • Reduces poverty - Reducing OOPE costs can help alleviate poverty and improve overall societal well-being.
  • Increases productivity - Reduced OOPE can contribute to a healthier workforce and a stronger economy thus improving the productivity.

What lies ahead?

  • Expand health insurance programmes to cover outpatient and preventive health services.
  • Include people above the poverty line also under the social security schemes to achieve universal coverage.
  • Cover the whole household irrespective of the number of members living in the household.
  • Enrol urban poor e in health insurance programmes without at the earliest.

References

  1. Business Standard | Out-of-pocket health spend falls
  2. PIB | National Health Accounts
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