July , 2018
Health for all: Government needs to invest more
16:03 pm

Tushar K. Mahanti


“It is my aspiration that health finally will be seen not as a blessing to be wished for, but as a human right to be fought for” was how Kofi Annan, former United Nations Secretary-General and a co-recipient of the 2001 Nobel Peace Prize had looked at the growing health issue of the world. These are beautiful words; one wishes these were practised in reality. But they are not; millions of poor across the world are regularly deprived of the basic healthcare facilities. Millions of underprivileged children are dying due to lack of timely and proper immunisation; millions of women are suffering from the lack of basic healthcare facilities at the time of pregnancies.

But first, what is health? Way back in 1948, the World Health Organization (WHO) defined health with a phrase that is still used today. “Health is a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity.”

Good health would mean a state of physical and mental well-being – a state difficult to attain but what every country aspires for. Back in India healthcare has been a major social issue in its development goal. According to the World Bank estimates, India is one of the highest ranking countries in the world for the number of children suffering from malnutrition. The prevalence of underweight children in India is among the highest in the world and is nearly double that of Sub Saharan Africa.

Not a very good picture of the nation’s health. The country has recorded phenomenal economic growth since the beginning of the economic reforms in the early 1990s, but it has failed to improve the health status of its population on a similar term. Infant mortality and maternal mortality rates of the country are still among the worst in the world. According to the World Bank, the per capita healthcare expenditure in India is about $60 and this has been stagnant for a long time. This sum would look even smaller when compared with $1000 of Brazil or about $300 of China.

Things have, however, begun changing. If resource constraints have not always allowed the government to give the sector its due financial support, the involvement of the private sector has seen the sector grow at a brisk speed in recent years.

The increasing involvement of the private sector in the healthcare domain has significantly reduced the pressure on the government’s health infrastructure and the private sector has become a major component in the country’s healthcare delivery system. The government or the public healthcare system comprises limited secondary and tertiary care institutions in cities and focuses on providing basic healthcare amenities in the form of primary healthcare centres in rural areas. The private sector provides majority of secondary, tertiary and quaternary care institutions with a major concentration in metros, tier- I and tier- II cities.

Healthcare market growing at 16-18% annually

The responsibilities of the government, however, do not end at providing healthcare amenities alone. It has larger responsibility in running institutions to train medical professionals of various categories. In fact, India’s competitive advantage lies in its large pool of well-trained medical professionals.

This, on the one hand, has given India’s healthcare sector a huge cost advantage and on the other, the scope to grow at a high speed. Deloitte Touche Tohmatsu India, a UK-incorporated multinational professional services firm, has predicted that with increased digital adoption, the Indian healthcare market, which is growing at an annual compound rate of more than 16-18% will touch a huge $372 billion-mark by 2022.

FDI inflows to health sector rise

The sharp growth of the sector has made Indian companies entering into merger and acquisitions with domestic and foreign companies to drive growth and gain new markets. The change in government’s FDI policy has helped the sector to attract foreign capital. Now 100% FDI is allowed under the automatic route of Greenfield projects and for Brownfield project investments up to 100% is permitted under the government route. Demand growth, cost advantage and policy support have been instrumental in attracting FDI. As a result, the FDI inflows to hospitals and diagnostic centres has increased 134% in just two years from  Rs. 2,367 crore in 2014 to  Rs. 5,543 crore in 2016. And if the FDI inflows went down a little in 2017, the total FDI received by the sector of during January 2000 to December 2017 stood at a huge  Rs. 2,89,640 crore.

Share of healthcare in private final consumption grows steadily

There is a significant scope for enhancing healthcare services considering that healthcare spending as a percentage of India’s private final consumption expenditure is increasing. The final consumption expenditure on healthcare (at 2011-12 prices) has increased by about 70% in the last five years from Rs. 1.81 lakh crore in 2011-12 to Rs. 3.06 lakh crore in 2016-17. Helathcare’s share in private consumption expenditure has increased from 3.69% to 4.5% during the same period.

That the share of healthcare in total private final consumption expenditure is increasing is not surprising. With an estimated expenditure of about 1.7% of gross domestic product on health the country can hardly expect to meet its healthcare need. Of course, the government has been talking of increasing the share of health in GDP for years; government’s own documents like the draft National Health Policy 2017 as also the 12th Five Year Plan clearly stated of increasing health’s share to 2.5% of GDP.

The target of increasing health expenditure to 2.5% of GDP by 2025, however, is very low in comparison to what has been achieved by the neighbouring countries. Increasing health expenditure to 2.5% of GDP that too in a period as long as eight years is seen as a trifle variation from what it is now. World Bank data show that India is only ahead of Pakistan and Bangladesh in health expenditure and countries like China and Sri Lanka are way ahead of it in facilitating health care to the citizens. As per the report, India spends only 1.4% of its GDP, which is a few steps ahead of Pakistan and Bangladesh, the neighbouring nations that spend 0.9% and 0.8% of their GDPs respectively on the health sector.

Budget 2018-19 and the health sector

But raising healthcare’s share to even 2.5% of GDP seems a tall task, especially, after a paltry increase in allocation to this sector in 2018-19 Budget. In the Budget speech, the former Finance Minister Arun Jaitley introduced a new national health insurance scheme and declared it was “the world’s largest”–to insure 100 million households for Rs. 5 lakh per family per year. This “National Health Protection Scheme” is the latest avatar of the Rashtriya Swasthya Suraksha Yojana (RSSY), which was previously the Rashtriya Swasthya Bima Yojana (RSBY) under the labour ministry. The latest scheme includes 30 million more households than the RSBY, which had been renamed as the RSSY in 2017-18 and has now again been renamed as the National Health Protection Scheme.

This is a welcome move but the question arises about its implementation since only Rs. 2,000 crore was allocated for this scheme in the Budget. Simple arithmetic shows that even at Rs. 5,000 reimbursement per year per family would cost the exchequer some  Rs. 50,000 crore annually.

The total allocation to the health sector in Jaitley’s latest budget has increased 2.7% from Rs. 53,198 crore in 2017-18 (revised estimates) to Rs. 54,667 crore (Budget estimate).

Another negative was that there was a 2.1% decline in the allocation for the National Health Mission–a national health programme that funds infrastructure for primary healthcare–from Rs. 31,292 crore in 2017-18 (revised estimates) to Rs. 30,634 crore (budget estimate).

On the positive side, the budget for the National Nutrition Mission – a scheme that seeks to reduce stunting, undernutrition, anemia and low birth weight of babies – under the women and child development ministry, rose over three times, from Rs. 950 crore in 2017-18 (revised estimates) to Rs. 3,000 crore in 2018-19 (budget estimate). This restores the government’s commitment to the improving nutrition status among Indian children, after the programme’s budget was cut in the revised estimate for 2017-18. From an allocation of  Rs. 1,500 crore, the revised estimate came down 36.6 percent to Rs. 950 crore for that year.

Although India’s stunting rate has gone down by about 10 percentage points in a decade–from 48% in 2005-06 to 38.4% in 2015-16, an estimated 48 million Indian children are still stunted. At a time of declining economic growth and jobs, these children may have a greater disadvantage over those in other emerging nations with lower malnutrition and better healthcare.

Maybe the increase in private expenditure on healthcare will take care of the medical emergencies of the middle class Indians but the suffering children will almost exclusively depend on public healthcare for their medical needs. The government needs to improve its health networks to look after them.

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