Mumbai: Aditya Shinde (name changed) spent upwards of Rs 7 lakh on the health expenses of his grandmother, who was diagnosed with renal failure in late 2019 and died in April 2021.
“The medical costs have definitely gone up,” Shinde, who lost his father in 2013 to the same condition, says. “The cost of a haemoglobin injection (which is required for every dialysis session) was Rs 450 in 2013 and even at a discounted cost, I got it for Rs 850 [for my grandmother]. Even consultations had become expensive: For my father’s consultation, I paid Rs 1,000 while for my grandmother, I paid Rs 1,500 for online consultation during Covid-19 and Rs 3,500 for in-person visits.”
Out-of-pocket health expenditure as a percentage of total health spending fell from 64.2% in 2013-14 to 48.2% in 2018-19, and health expenditure rose to 2.1% of the gross domestic product (GDP) in 2022-23, government data released in the Economic Survey 2022-23 show.
However, this increase is uneven, data show. For one, allocations for Ayushman Bharat, the government’s flagship health insurance scheme, more than doubled from Rs 3,200 crore (revised estimates) in 2018-19 to Rs 7,200 crore in 2023-24. On the other hand, funding to the National Health Mission, for strengthening public health infrastructure and building human resources, rose 17% during the same period, from Rs 30,683 crore to Rs 35,947 crore. This is, in fact, a decline in real terms.
Experts say this marks a shift in India’s health policy from one based on universal healthcare focusing on strengthening the public health sector to providing insurance and shifting healthcare to the private sector. As India goes to polls later this week, we look at how the health sector has changed in the Modi years.
Decline in out-of-pocket expenses
India’s out-of-pocket health expenditure, as percentage of its total health spending, has – as we said – declined since 2014, when the Bharatiya Janata Party-led National Democratic Alliance government under Narendra Modi first came into power.
However, that number is still higher than its BRICS partners and other large economies, a comparison of World Health Organization data for 2021 shows. Among its neighbours, India performed better than Pakistan, Bangladesh and Nepal. Overall, India ranks 161 among 188 countries in terms of out-of-pocket expenditure.
A key factor for access to healthcare is the rate of hospitalisation. In 2014, India had 31.5 hospitalisations for every 1,000 people, National Sample Survey data for the 71st round show. By 2017-18, in the 75th round of the Survey, this number fell to 28 hospitalisations per 1,000 people. This is the first time in four decades that hospitalisation rate has declined, Indranil, professor at the Jindal School of Public Policy, noted in the State of Finances in India report 2022-23 by the Centre for Financial Accountability (CFA). “The decline in OOP is essentially due to decline in utilization of care rather than greater financial protection,” he wrote.
“Infrastructure and healthcare access have been significant issues, particularly evident in rural health statistics,” explains Sayamsiddha, policy analyst at Centre for Budget Governance and Accountability. “The disparity between the required infrastructure to address population health issues and the existing infrastructure is evident. Bridging this gap in the public healthcare system is essential to prevent people from resorting to private healthcare for services such as diagnosis.”
As of March 31, 2022, there were 161,829 sub-centres, 31,053 primary health centres (PHCs), and 6,064 community health centres (CHCs) across India, as per the Rural Health Statistics, 2021-22. While the population covered by the sub-centres has improved, it worsened in the case of PHCs and CHCs, an analysis of government data by PRS Legislative Research shows. Even as the number of centres increased, it has not kept pace with projected population growth.
Further, there is a 66% shortfall of male health workers in sub-centres. In rural areas, there was a shortfall of 3.1% of allopathic doctors in PHCs, and a shortage of 79.5% specialists at the CHCs in 2022, according to government data.
Of the large states, Madhya Pradesh (95%), Kerala (94.3%) and Haryana (93.6%) had the highest shortfall of specialists, while Telangana (12.5%) had the least shortfall. As a percentage of sanctioned posts, Madhya Pradesh (94.5%), Goa (91%) and Chhattisgarh (89.3%) had the highest vacancies, while Lakshadweep, Meghalaya and Kerala had the least.
Rise in health expenditure as percentage of GDP
Health expenditure as a percentage of GDP rose from 1.3% in 2013 to 2.1% in 2022-23, as per the Economic Survey 2022-23.
“The WHO recommends allocating 5% of GDP to healthcare,” says Amulya Nidhi, national convener of Jan Swasthya Abhiyan. “However, our current policy, established in 2017, suggests a lower allocation.”
The National Health Policy, 2002, had set a target of 2% of GDP by 2010; the United Progressive Alliance government, in 2004, had set a goal to increase public-health spending to 2-3% of GDP over a five-year period; and the Centre’s 12th five-year plan set the target at 1.87% of GDP by March 2017, as IndiaSpend reported in July 2018. None of these goals were met, we had reported. The National Health Policy of 2017 increased this target to 2.5% by 2025.
The figure of 2.1%, for 2022-23, includes spending in water, sanitation and hygiene (WASH) and disaster management, Nidhi says. “Notably, recent budget analyses indicate that only about 1.2% of GDP is allocated to healthcare, reflecting the actual spending by health ministries and emphasising the need for a more robust healthcare funding strategy.”
As a percentage of government expenditure, India’s health spending–including local, Union and state governments–is 5.02%, as per the National Health Accounts, 2019-20. Countries such as Malaysia (8.5%), Russia (10.2%), Brazil (10.5%) and South Africa (15.3%) spend a higher proportion, as per the World Health Statistics 2022.
“The overall trend reveals that, according to the National Health Policy, health spending should reach 2.5% of GDP by 2025. However, the current spending falls significantly short of this target. Over the years, there has been little to no increase in overall spending, with figures remaining stagnant or even declining,” says Sayamsiddha.
The National Health Policy 2017 called on states to increase health spending to a minimum of 8% of their total spend by 2022. In 2023-24, of 28 states, only three spend higher than this target: Delhi (12.4%), Puducherry (9%) and Meghalaya (8.3%). Punjab spends the lowest at 2.9% followed by Maharashtra at 4.9% and Telangana at 4.2%, according to the Reserve Bank of India’s State Finances Report 2023. IndiaSpend reached out to Milind Mhaiskar, chief secretary of public health department in Maharashtra and Ajoy Sharma, principal secretary in Punjab for comment on the spending. We will update this story when we receive a response.
In 2023-24, the Union and state governments together allocated Rs 3.68 lakh crore towards health, constituting 1.24% of the GDP, as per a CBGA analysis of the budget. Until 2021-22, state health budgets had been steadily increasing as a percentage of GDP, likely due to the additional expenditure incurred during Covid-19. However, in 2023-24, both the share of state health budgets in total state budgets and as a percentage of GDP dropped compared to previous budget estimates, the analysis found, which shows that along with the Union Government, states have also lagged in prioritising the health sector
More importantly, the increase in health sector spending has moved from NHM to Ayushman Bharat indicating a shift from the universal healthcare approach (followed in Sri Lanka) to insurance-based healthcare (followed in Canada, where they have public health insurance).
“There’s a deliberate effort under way to reshape the healthcare sector in favour of large corporations,” says Nidhi. “It’s undergoing privatisation, corporatisation, and commercialisation. Over the past decade, this administration has fundamentally altered the essence of healthcare. What was once focused on providing services has now transitioned into an industry. When the very definition changes, it impacts all policies, programmes, and frameworks. Numerous documents, including those from NITI Aayog, reveal a clear inclination towards promoting a market-oriented healthcare system and industry, intertwining health with tourism and market interests.”
Decline in allocations to National Health Mission
The National Health Mission is among India’s major schemes that addresses health infrastructure needs with a focus on providing primary healthcare. The NHM comprises two sub-missions–rural or NRHM and urban or NUHM–providing funding for targeted public health initiatives aiming at reducing maternal and infant mortality, out-of-pocket healthcare expenses, and disease prevalence.
The health ministry told the parliamentary standing committee on health, as noted in a March 2022 report, that as against the projected requirement of Rs 32,309.19 crore for NHM in 2022-23, Rs 28,859.73 crore has been provided–an underallocation of 10%.
The ministry further said that there has been a decline of 7.2% in allocations from Rs 31,100 crore in 2021-22 to Rs 28,859.73 crore in 2022-23. The Committee expressed “serious concern” over this reduction, adding that “the set of diverse activities/initiatives and healthcare facilities provided under the Scheme need a substantial push from the Government in form of increased budgetary allocations”.
Government data show that the allocations to NHM have increased every year since 2017-18, and utilisation touched 100% since 2018-19. But the allocations have declined in real terms since 2018-19, the CFA report cited above found, impacting essential services such as safe deliveries and vaccination. It also affected remunerations for frontline health workers like ASHAs, who played a crucial role during the pandemic, the report said, highlighting the need for increased Union allocation to support the NHM agenda, particularly as it shifts towards addressing non-communicable diseases.
In the 2023-24 budget, there was a 13% increase from the previous year’s revised estimates for the Ministry of Health and Family Welfare with Rs 89,155 crore being allocated. NHM got Rs 35,947 crore–excluding the National Ayush Mission and Senior Citizen Health Insurance Scheme–8% more than the previous year’s revised estimates, but 3% lower than previous year’s budget, according to an analysis of the 2023-24 budget by Accountability Initiative.
Furthermore, in terms of infrastructure development, the allocation for Pradhan Mantri Swasthya Suraksha Yojana, which envisages creation of tertiary healthcare capacity, and for Pradhan Mantri Ayushman Bharat Health Infrastructure Mission, which focuses on developing primary, secondary and tertiary health infrastructure, was reduced from the previous budget estimates by 29% and 7%, respectively as per an analysis by CBGA.
This trend needs to be seen with the challenging condition of health facilities in both rural and urban areas, the analysis said. Keeping the Indian Public Health Standards (IPHS) as reference, Rural Health Statistics 2021-22 reported that the extent of shortfall of sub-centres is to the tune of 25%, shortfalls of PHCs are 31%, and shortfall in CHCs are 36%. Similarly, in the case of urban areas, the shortfall of PHCs was reported to be 39.7%.
Ayushman Bharat showing the way out?
Pradhan Mantri Jan Arogya Yojana is a health insurance scheme aiming to reduce out-of-pocket expenditure, offering coverage of up to Rs 5 lakh to 130 million eligible families (650 million individuals) based on Socio-Economic Caste Census (SECC) 2011 criteria such as occupation and shelter. Eligible families receive Ayushman cards for accessing services in empanelled hospitals. In 2023-24, the Government has allocated Rs 7,200 crore to Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), a 12% increase over the previous year’s revised estimates, which stood at Rs 6,412 crore.
As of November 2022, the National Health Agency registered 78.7 million beneficiary households, covering 73% of the targeted 107.4 million households, with 20.8 million households identified from the SECC 2011 database, the Comptroller and Auditor General (CAG) found in a 2023 audit. In January 2022, the Union government expanded coverage to 120 million families based on NFSA data, yet it faced issues in confirming eligibility through documents, leading to errors in beneficiary databases and multiple registrations, particularly in Tamil Nadu.
In various States and Union Territories, expenditures ranging from Rs 12,000 in Chandigarh to Rs 22.44 crore in Tamil Nadu were made on ineligible beneficiaries, the CAG found.
“They have set a target of 12 crore [120 million] households, equivalent to roughly 55 crore [550 million] people, since the scheme’s launch in 2017-18. Currently, we’ve reached 34 crore, leaving a shortfall of 20 crore [200 million] from the target. Additionally, considering the government’s provision of free rations to approximately 80 crore [800 million] people, it highlights the substantial need for healthcare support among the marginalised and impoverished segments of our population, suggesting that the target of 55 crores may need to be revised upwards eventually,” says Manmohan Singh of Microsave Consulting.
The responsibility for hospital empanelment lies with the State Health Agency (SHA), with all CHCs and public hospitals automatically designated as Empanelled Health Care Providers (EHCPs). Private hospitals are required to meet specific criteria for empanelment.
As of January 27, 2023, there were a total of 28,586 EHCPs in India, with 13,085 of them being private EHCPs, accounting for 46% of the total, consistent with the percentage observed as of November 25, 2019, as per an analysis by Accountability Initiative.
However, there were variations among states regarding the proportion of private EHCPs. For instance, in Tamil Nadu and Chhattisgarh, the percentage of private EHCPs increased during the above period, reaching 69% and 49%, respectively. Conversely, some states experienced a decrease in the number of private EHCPs, such as Rajasthan and Himachal Pradesh, where the count dropped by 86% and 68%, respectively, indicating a dis-empanelment of private hospitals in those regions.
“Payments are crucial. For instance, as a private hospital or health service provider, if there are delays, it’s demotivating. I might wait the first time, but if it happens again, I might stop providing services. I’m offering services, but not receiving timely payments,” Singh adds.
“Initially, approximately 30,000 hospitals were empanelled in PM-JAY, but recent figures indicate only around 17,115 remain active, highlighting a gap in service provisioning. Improved access to empanelled hospitals is essential for the effective rollout of the scheme, especially considering that a majority of the 34 crore beneficiaries are from rural areas,” Singh said.
The scheme has been fraught with issues such as empanelled hospitals not being up to the mark, the CAG found. For instance, in 12 states, essential medical equipment was found to be non-functional and there was a lack of basic infrastructure, exacerbating healthcare delivery challenges.
Experts point out that the scheme has not yet been able to cut down all out-of-pocket expenses.
“Private hospitals are typically concentrated in major urban centres like Agra, Bareilly, and Lucknow in Uttar Pradesh, rather than being evenly distributed across districts, contributing to increased out-of-pocket healthcare expenses. A study by SACHIS in Uttar Pradesh highlighted various categories of out-of-pocket expenditures, including pre-hospitalisation costs. Patients often bear expenses for initial consultations and diagnostic tests at nearby private clinics, which may not be covered by insurance packages or if the nearest hospital is not empanelled. Subsequent hospitalisation incurs additional costs for transportation, accommodation, meals, medications, and consumables, potentially exacerbating financial burdens,” Singh explains.
The scheme has brought down costs for those who have been able to utilise it. However, even then, those costs remain high. A 2021 study conducted by Institute of Rural Management shows that in Uttar Pradesh, of 1,925 episodes studied, 1,159 hospitalisations were under the scheme. While the average total expenses for all 1,925 patients are Rs 16,157, it is about half (Rs 8,828) for those who availed the scheme benefits. “However, Rs 8,828 can be considered a significant expenditure given the socioeconomic background of the scheme beneficiaries,” the study said.
The study also pointed out that a majority of the expenditure was reported on medicines and consumables (45%), followed by diagnostic tests (21%), and consultation (12%). Thus, 78% of the expenditure is on direct health services. Another 10% expenditure is on transport and 12% is on food and accommodation, and informal payments.
IndiaSpend reached out to Apurva Chandra, secretary, Ministry of Health and Family Welfare, and the office of the health minister for comment. We will update this story when we receive a response.
Prachi Salve has two masters degrees: in economics from Mumbai University and in development studies from the University of Sussex, UK. She holds a bachelor’s degree in economics from St. Xaviers College, Mumbai. She has been a research assistant at the Institute of Development Studies (UK) and the Young Foundation (UK). She has also worked for Greenpeace India in the fundraising division.
This report first appeared on IndiaSpend and has been republished with permission. Read the original here.
