Govt has no option but to increase share of public health expenditure

The government's stated goal is to increase public health expenditure to 2.5 per cent of the GDP by 2025. Will Finance Minister increase public health allocation exponentially or will the target be moved forward?

A global pandemic has swept through the country killing lakhs of people in the last two years, but the government is showing no urgency to increase the share of public health expenditure. Pic PTI representational image

A global pandemic has swept through the country killing lakhs of people in the last two years, but there seems to be little urgency from the government in increasing the share of public health expenditure. So, while the amount the Central government spent on public health was 0.9 per cent of GDP in 2015-16, its share had merely increased to 1.1 per cent in 2020-21, the first full year of COVID-19.

Also, the government’s own authoritative economic policy document, the Economic Survey 2020-21, has said that we are at the 179th rank in 189 countries in terms of prioritising healthcare in the government budget.

India already has a National Health Policy 2017 document where the stated aim is to increase public health expenditure to 2.5 per cent of the GDP by 2025, or in three years. Will the Finance Minister increase public health allocation exponentially in these three years to reach the goal by 2025 or will the target be moved forward?

Higher public health spends reduce the overall out-of-pocket (OOP) expense by patients, specially enabling access to healthcare for the poor and the marginalised. Out-of-pocket expenditure is the payment made directly by individuals at the point of service where the entire cost of the health service is not covered under any financial protection scheme.

In India, OOP expense was 60 per cent of the total expense on public health (one of the highest in the world) in 2021-22, as per the Economic Survey. If we were to increase public health spend to 2.5 per cent-3 per cent of GDP, OOP would be halved to just 30 per cent.

Also read: West Bengal bolsters health sector, but gaps remain

The Federation of Indian Chambers of Commerce & Industry (FICCI) has said in its pre-budget recommendations this year that while the government has already envisaged increasing public spend on healthcare to 2.5 per cent of GDP, “We urge the government to start spending an extra 0.5 per cent of GDP every year on health for the next five years.”

The percentage of public health spend on GDP has not moved much despite increasing overall allocation for the ministry of health and family welfare (MoHFW) in the last many years. In the budget for 2021-22, the MoHFW was allocated ₹ 73,932 crore (of which just 4 per cent was earmarked for the Department of Health Research at ₹2,663 crore), a decrease from the previous year, when ₹82,928 crore was earmarked as per revised estimates (RE).

The FY21 allocation had included ₹14,217 crore for COVID-19 emergency response and health system preparedness package, and COVID-19 vaccination for healthcare and frontline workers. In fact, since 2014-15, when the Modi government first came to power, the total budget allocation for MoHFW at RE stage has increased nearly two-and-a-half times. But has the expanding health budget been as per plan and has it helped in meeting key targets set earlier?

There is a fairly long list of industry demands pertaining to the Union Budget for 2022-23. Charu Sehgal, Partner, Life Sciences & Health Care Leader of Deloitte says one of the healthcare industry’s demands is to reintroduce tax holidays for rural hospitals, with flexibility to select beneficial years and viability gap funding by the government for setting up hospitals in Tier 1 and Tier 2 cities.

These measures would make specific areas attractive for investment and ultimately strengthen the healthcare infrastructure.

In addition, a weighted deduction of expenses incurred on skill development would help the government in reaching the WHO-recommended doctor:patient ratio of 1:1000 by 2024. At present, India has just over 13 lakh registered allopathic doctors. The MoS Health, Bharati Pravin Pawar, had said in RS in November that the doctor-population ratio was 1:834, but this calculation assumed 80 per cent availability of registered allopathic doctors and also the availability of 5.65 lakh AYUSH doctors.

Also read: Graphic: Capturing India’s one year of COVID vaccination drive

Also, there is a demand for more life-saving drugs to be brought at the lowest rate of GST.

And besides seeking larger healthcare spend in the budget, FICCI has also suggested ramping up the vaccination programme as well as improving the scale of genome sequencing for COVID-19. To strengthen health infrastructure in the private sector, it has asked the government to consider offering weighted deduction to healthcare providers for capex incurred for fighting the COVID-19 pandemic and for expenses incurred on skills development.

Another key demand of the chamber is a Health Infrastructure Fund and a Medical Innovation Fund to facilitate greater access to capital for industry.

According to the PRS Legislative analysis of some of the big health schemes from last year’s budget documents, many of the key targets which had been set under the National Health Mission framework and had to be achieved by 2020, have missed their deadline. We have still not reached the goals on infant mortality rate, malnutrition or mortality from tuberculosis.

As per the National Family Health Survey 5, which was conducted between 2019-21, more young children and women are now anaemic than in 2018-19. At an all-India level, more than two in three children below five years were anaemic versus 58.6 per cent in 2015-16.

Nearly six in 10 women aged 15-19 years were found to be anaemic, up from 54.1 per cent earlier, whereas at least every second pregnant woman was anaemic (52.2 per cent now versus 50.2 per cent in 2015-16). Anaemia refers to deficiency of haemoglobin, resulting in fatigue and pallor.

As the COVID-19 pandemic shows no signs of abating, economic output is again impacted by a fresh wave of the pandemic the world over and as India struggles with localised restrictions amid rising infections, increasing expenditure on healthcare may be the only way out.