India’s health push during Covid helped bring down share of out-of-pocket spending: Study

Share of out of pocket spending declines

India’s push to build health infrastructure during the Covid-19 period helped push the share of government health spending higher than people’s out-of-pocket expenditure for the first time, according to a study by the Observer Research Foundation.

While out-of-pocket spending declined from 64.2 percent in FY14 to 47.1 percent in FY20, it dipped another seven percentage points to 39.4 percent in FY22.

In contrast, government spending on health rose from a meagre 28.6 percent in FY14 to 48 percent in FY22.

“While the increased health spending was necessitated by the pandemic, it is clear from historical data that this has been an ongoing trend throughout the decade,” said the study.

The per capita out-of-pocket expenditure has remained constant for urban areas, around Rs 1,650 over the last three years, while the government’s spend has gone up 40 percent to Rs 2,018 per capita.

However, the study noted that the country still has a long way to go before it reached the 2.5 percent of GDP health spending target set in 2017.

Despite the increases, overall health spending remained at 1.82 percent of GDP compared with 1.14 percent a decade ago.

“With the ambitious expansion of AB-PMJAY to include all 70+ citizens and the possibilities that the scheme offers for the government hospitals to plough back money into the public system, the capacity to absorb funds in the public sector is bound to improve,” it said.

India celebrated six years of Ayushman Bharat scheme earlier this month, which has helped contain spending and transformed healthcare infrastructure.

According to government data, the number of Ayushman Bharat cards issued by the government reached 354.9 million on September 23, a 42 percent jump over the previous year. The scheme provides an insurance cover of Rs 5 lakh for the family of each cardholder.