In India, the issue of financing healthcare continues to be politically insignificant and publicly invisible. According to recently released National Health Accounts statistics, public health expenditure as a share of GDP increased from 0.96 per cent in 2004-05 to a mere 1.01 per cent in 2008-09.

Health financing in India is done by a number of sources such as the tax-based public sector, the private sector financing health care of their employees and target populations, the households through out-of-pocket expenditures, the social and community based insurance and the external financing. While taxation is considered the most equitable system of financing, OOP expenditure by households is considered the most inequitable.

In India, there is a clear urban-rural, rich-poor divide. Affluent urban populations and those working in the organized sector covered under some form of social security scheme such as ESIS and CGHS, have unlimited access to medical services. The rural population and those working in the unorganized sector have only the tax-based public facilities to depend on for free or subsidized care, and private facilities depending on their ability to pay.

As per World Health Statistics 2009, OOP expenditure as percent of total expenditure on health is very high for India (about 75 percent) as compared to its market peers such as Brazil and China where it is about 30 and 50 percent respectively. According to an estimate, nearly 25 percent of Indian households report spending 5 percent or more of their total annual expenditure on OOP health payments; for 10 percent of households, OOP health payments exceed 10 percent of total expenditure. About 8% of the households are pushed below the poverty line because of health expenses!

An important public policy challenge is to increasingly shift the responsibility of public health funding from the central government to the state governments. In addition, if central health grants to the states are made contingent on improvement in measurable health outcome indicators, there would be a strong incentive for state governments to adjust their health spending so as to bring about rapid improvements in health outcomes.

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Tags: financing health, health insurance, OOP, public health spending

This entry was posted on Tuesday, March 2nd, 2010 at 4:08 pm and is filed under Indian Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.