Survey calls for increase in public health spending from 1% to 2.5-3% of GDP

05 Feb 2021


Economic Survey 2020-21 has strongly recommended an increase in public spending on healthcare services from 1 per cent to 2.5-3 per cent of GDP, as envisaged in the National Health Policy 2017. This, according to the Survey, can significantly reduce the out-of-pocket expenditure (OOPE) from 65 per cent to 35 per cent of the overall healthcare spend. 

The Survey observes that the health of a nation depends critically on its citizens having access to an equitable, affordable and accountable healthcare system. The OOPE as a share of total health expenditure drops precipitously when public health expenditure increases. The Survey also underlines that OOPE for health increases the risk of vulnerable groups slipping into poverty because of catastrophic health expenditures. 
The life expectancy in a country correlates positively with per-capita public health expenditure, it notes. Significantly, it also observes that from a financial perspective, India has one of the highest levels of OOPE in the world, contributing directly to the high incidence of catastrophic expenditures and poverty. 
In addition, the Survey also applauds that Pradhan Mantri Jan Arogya Yojana (PMJAY) has been a marquee evolution in the direction of providing financial affordability to a large percentage of the Indian population.
The Survey points out that the recent Covid-19 pandemic has brought to the fore the importance of healthcare sector and its inter-linkages with other key sectors of the economy. A key learning emerging from the ongoing pandemic is that it has showcased how a healthcare crisis can be transformed into an economic and social crisis. 
In addition, it also cautions that healthcare policy must not become beholden to “saliency bias”, where policy over-weights a recent phenomenon. To enable India to respond to pandemics, the health infrastructure must be agile, it has strongly advised. Also, India’s healthcare policy must continue focusing on its long-term healthcare priorities.
Importantly, the Survey observes that countries with more fragmented health systems tend to have lower performance as reflected in higher costs, lower efficiency, and poor quality. Therefore, in addition to providing healthcare services and financing healthcare, a key role for the government is to actively shape the structure of the healthcare market.
Observing that the National Health Mission (NHM) has played a critical role in mitigating inequity as the access of the poorest to pre-natal and post-natal care as well as institutional deliveries has increased significantly, the Survey has recommended that the NHM should be continued in conjunction to with Ayushman Bharat Yojana.
The Economic Survey has deeply examined the issue of information asymmetry in the healthcare sector. It notes that as bulk of the healthcare in India is provided by the private sector, it is critical for policymakers to design policies that mitigate information asymmetry in healthcare, which creates market failures and thereby renders unregulated private healthcare sub-optimal. Therefore, information utilities that help mitigate the information asymmetry can be very useful in enhancing overall welfare, it surmises. 
A key finding is that the mitigation of information asymmetry would also help lower insurance premiums, enable the offering of better products and help increase the insurance penetration in the country. Information utilities that help mitigate the information asymmetry in healthcare sector can be very useful in enhancing overall welfare. Noting that WHO has highlighted the growing importance of the same, the Economic Survey has recommended a sectoral regulator in the healthcare landscape to regulate and supervise the healthcare sector given the market failures stemming from information asymmetry. 
Best practices from several countries such as Australia, England, Finland, Germany, The Netherlands and USA have been shared.
Drawing from the lessons learned during the ongoing global pandemic of Covid-19, the Economic Survey makes a strong case for complete adoption of telemedicine for meeting the last-mile challenges of healthcare delivery in the country. 
Noting that the ongoing COVID-19 pandemic has helped showcase the role of technology-enabled platforms (such as eSanjeevani) as an alternate distribution channel for remote delivery of healthcare services, the Survey has recommended utilisation of the full potential of technology-enabled platforms coupled with digitisation and artificial intelligence at-scale. 
As telemedicine depends crucially on internet connectivity, and health infrastructure and number of telemedicine consultations correlate strongly with the internet penetration in a region, both the central and state governments have been advised to invest in telemedicine on a mission mode to complement the government’s Digital Health Mission and thereby enable greater access to the masses.

Business History Videos

History of Hovercraft Part 1...

If you’ve been a James Bond movie fan, you may recall seein...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Trams in India | ...

The video I am presenting to you is based on a script writt...

By Aniket Gupta | Presenter: Sheetal Gaikwad

Vijay Mallya’s Kingfisher Ai...

It is about Kingfisher Airlines, a company that once soared...

By Aniket Gupta | Presenter: Sheetal Gaekwad

The story of Cadbury | Compa...

Today’s video is about the history of a brand we are all fa...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

view more