Don’t neglect healthcare budget

It is regrettable that even nearly 70 years after Independence, health care is appalling and the country is struggling to apportion 2 percent of GDP for the critical sector in the budget. Statistics are none too comfortable. India still has world’s largest number of women dying during childbirth; the world’s highest deaths of children under the age of five; a health system that ranks 112 among 190 countries; one doctor for 1,700 people; 21 percent of the world’s burden of disease, worsened by poor basic health and sanitation.

As the saying goes, health is wealth and India’s record seems to be none too impressive. Of course India has come a long way from what we were at the time of Independence. But in a huge country with large 1.25 crore population, what has been done so far has not had the trickle-down effect to provide the health care for particularly the poor. It is unfortunate that vast percentage of the meager income of the poor is spent only on food.

Other countries have done much better. Countries like China, South Korea and many other emerging economies were able to develop much faster simply because their investment on health as a proportion of GDP was much higher than India particularly in the early stages of development. This provided the right platform and perhaps the stepping stone for a take-off in economic development.

The said part is that India spends much more on leaky subsidies like oil, food, and fertilisers. The 2.2 percent of GDP spent subsidies hardly reach actual and poor beneficiaries. It went to those who did not require it. Year after year, salaries and pensions to sarkari babus keep on increasing for which resources are found. But for the health sector, the government struggles to find resources and in the last budget the allocation shrunk to 1.2 percent of GDP in the face of burgeoning fiscal deficit which had to be contained within the budgeted levels. The government would have done well to divert part of the amount spent on subsidies to healthcare.

In such a scenario and that too with the government struggling to kick-start the economy by pumping more money into public investment like infrastructure, the government may not be in a position to make a huge jump in allocation in the forthcoming budget for the health sector as a proportion of GDP. But at the same time taking cues from some of the state governments which have done reasonably well in the health sector (like Kerala and Tamil Nadu), the Union government can attempt to replicate the states’ health insurance programmes in the rest of the country. Tamil Nadu in particular, which began investing more in health and education sectors two or three decades ago are reaping the benefits today in pushing economic development, just as in the case of China and South Korea.

With the government not having enough resources, it makes sense for the budget to make special efforts to promote health insurance, which may serve the twin objective of moving towards the cherished goal of health for all without a substantial jump on the allocation of resources to the health sector. More specifically, the government could right away look up three or four options that are already available.

To begin with, the budget should allow corporates to opt for either ESI or Health insurance. This was announced in the last budget but later dropped by the government. It would be worthwhile to revisit this proposal in the forthcoming budget as it is a well-known fact that health delivery is pathetic in ESIs.

Secondly, the budget can look at mandatory health insurance for all. Say, a health insurance cover for INR 50,000. This can operate similarly to motor insurance. Just as Jan Dhan Yojana brought about financial inclusion in the country by opening 15 million bank accounts, this mandatory health insurance cover will bring about a sea change in providing basic and universal health cover to all.

The cashless health scheme provided in Tamil Nadu, Karnataka, Gujarat, and now in Maharashtra was studied by the centre in the run-up to the Budget. It is quite possible the Finance Minister may try to replicate this model to provide universal health cover for the poor.

The budget should also look at Government sponsoring health insurance cover for all newborns in the country. The cost could be Rs 500-1000 crores for the government but this would create awareness about health insurance and increases penetration.

As R Indranil Mukhopadhayay, senior research fellow in public health foundation points out that in terms of out-of-pocket expenditure in India, if Rs 100 is spent on health, 60 percent comes from people’s pocket. Globally, it is recognised that out of pocket is the most regressive form of financing—the idea is that those who can afford healthcare, can, and those who cannot, should suffer. India has the worst record globally when it comes to out-of-pocket trend.

The country has, therefore, to do a lot more on health care reform. Prime Minister Narendra Modi’s election promises in 2014 on health care got very little attention in his government’s first full budget last year. One only hopes Finance Minister Arun Jaitley takes big strides in this year’s budget to push health care giving emphasis to universal health insurance cover. 

There is also need to ensure that there is a health regulator so that their standardisation of practices. With increasing health insurance coverage, there are some unhealthy practices like patients made to undergo - at times unnecessary - tests and examinations in some private hospitals because they are insured resulting in wasteful spending. These malpractices can be checked if there is proper regulation. The budget should, therefore, also look at setting up a health regulator.IPA