Financing health care for all: challenges and opportunities
India's health financing system is a cause of and an exacerbating factor in the challenges of health inequity, inadequate availability and reach, unequal access
This post is for awareness purpose only. Copyright license obtained by NIMT vide License Number 4807811164001Well known weaknesses in India's health financing system are the cause of insufficient provision and reach of good-quality health services and inadequate financial protection against ill health for the Indian people. Public spending on health–0·94% of the gross domestic product (GDP) in 2004–05–is among the lowest in the world and the reason for private expenditures accounting for 78% of total health spending in the country, resulting in serious inequities in health. The Indian public receives low value for money in terms of the quantity and quality of health-care services in the public and private sectors. Health services in the public sector that can be accessed free or for a nominal fee are grossly inadequate. As a result, most Indians access private health care that is expensive, unaffordable, unreliable, and impoverishing. Good-quality health care in the private sector is also not available, particularly in rural and other remote parts of India. Most private practitioners are not qualified and work in substandard facilities. The Government of India has made a commitment to increase public spending on health to 3% of GDP during the next few years. A major policy challenge will be to find out how best to invest augmented public funding.Large inefficiencies in public and private sectors that reduce efficiency and effectiveness of health expendituresPractically no financial protection for most Indian people against medical expendituresPolicy responses neededEnsure achievement of government's commitment to increase public spending on health from less than 1% to 3% of gross domestic productIntroduce policy and legislative changes to contain the rising costs of medical care and drugsIncrease insurance and risk pooling to include financial protectionAt first glance, India seems to spend an adequate amount on health care. In 2005, India's total health expenditure as a proportion of the GDP was less than the global average of about 6% but higher than that for the neighbouring countries such as Thailand, Sri Lanka, and ChinaThe situation, however, changes greatly when per person health expenditures are assessed. At purchasing power parity International $100 per person, India's health expenditure is only about half that of Sri Lanka's and a third of China's and Thailand's (figure 1).Insights for potential solutions to the problem of low public expenditure in the states that have a poor performance must begin with the Indian Constitution, which assigns health as a state subject. The state governments are primarily responsible for the funding and delivery of health services. Yet, the amount and type of public financing is jointly determined by both the centre and the state. The state government bears 64% of the total government health expenditure, whereas the centre accounts for the remaining third. Even though the centre's financial contribution is small, the central government's influence can be substantial.Way forwardSuch a medical insurance scheme for health care could be supported by public financing from a combination of tax revenues, private insurance (mandatory for all employers), and income-indexed compulsory personal insurance payments integrated to provide funds for a universal health-care fund. Existing government-sponsored insurance schemes will, however, need to be integrated into the universal medical insurance scheme for health care.Last, the value for the money spent on health that an individual gets will depend on the organisation, management, and productivity of health-care services in different states. The extraordinary performance spread within the public and private sectors makes use of additional public expenditures for galvanising a judicious mix of public and private providers for the delivery of health care by India imperative. Additional financial and human resources are needed to ensure better returns on investments already made in the public sector. Increased public investments will be needed to strengthen the provision of primary health care, which is largely the domain of the public sector. Public financing of health care could ensure that affordability does not become a barrier to access of needed health care that draws on the strengths and complementarities of India's public, private, and voluntary sectors.
