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Higher government spending on healthcare lowered per capita out-of-pocket expenses

The share of government expenditure on healthcare climbed to 1.35% of GDP in 2017-18, from 1.20% in the preceding fiscal year, marking an acceleration in spending when compared to the period between 2013-14 and 2016-17.

November 29, 2021 / 06:28 PM IST
Representative image (Source: Reuters/Francis Mascarenhas)

Representative image (Source: Reuters/Francis Mascarenhas)

There’s some happy news on government spending on healthcare. The share of government expenditure on healthcare climbed to 1.35% of GDP in 2017-18, from 1.20% in the preceding fiscal year, marking an acceleration in spending when compared to the period between 2013-14 and 2016-17. Yet, the rise in government spending on healthcare continues to be slow. It might struggle to rise to the target of 2.5% of GDP envisaged in the National Health Policy of 2017, even though public spending had risen during the pandemic.

The rise in government spending on healthcare led to an increase in the share of government expenditure in the total health expenditure to 40.8% and a decline in out-of-pocket expenditure to 48.8%, according to the National Health Accounts report for 2017-18 released on Monday. The report was not in the public domain at the time of filing.

The rise in the share of government spending in the total health expenditure and the decline in the share of out-of-pocket expenditure had quickened during 2017-18. The former climbed about 8 percentage points while the latter fell about 10 percentage points from 2016-17. Their shares in the total health expenditure have changed dramatically since 2013-14 when the share of government in the total health expenditure was 28.6% and the share of out-of-pocket at 64.2%.

A press statement issued by the ministry of health and family welfare noted that the share of social security expenditure on health, which includes the social health insurance programme, government-financed health insurance schemes, and medical reimbursements made to government employees increased during the same period. Its share in total health expenditure climbed to 9% in 2017-18 from 7.3% in 2016-17 and 6% in 2013-14. The share of foreign aid for health declined to 0.5% from 0.6% the previous year, which the government attributes to India’s economic self-reliance.

Equally significant are the changes to the per capita expenditure on health. The per capita out-of-pocket expenditure has declined to Rs 2,097 in 2017-18 to fall below the levels of 2013-14 when it was Rs 2,336. The decline was sharper in the year under review, it fell 18.4% from Rs 2,570 per capita in 2016-17.

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In contrast, the per capita government expenditure on health rose to Rs 1,753 in 2017-18, up 23.6% from Rs 1,418 in 2016-17 and 68% from Rs 1,042 in 2013-14. However, the sum of per capita government expenditure and out-of-pocket expenditure at Rs 3,850 in 2017-18 was lower than the combined spending of Rs 3,988 in the previous year.

The press release attributes the fall in out-of-pocket expenditure to the increased utilisation of government health facilities and reduction in the cost of services at these facilities. “If we compare National Health Accounts 2014-15 and 2017-18 there has been a decline in OOPE for government hospitals to the tune of 50%,” the statement said.

The government healthcare facilities provided by state governments such as the Mohalla Clinics in Delhi would also have contributed to the decline in the per capita out-of-pocket expenditure and a rise in the per capita government health expenditure.

Government expenditure on health refers to spending by the Union and state governments. State governments bear a larger burden of healthcare expenditure in the public sector. It constitutes spending under all schemes funded and managed by the Union, state, and local governments including quasi-governmental organisations and donors where funds are channelled through government organisations.

An official release said that the government expenditure as a share of total government expenditure stood at 5.12% in 2017-18, rising from 4.4% in the preceding year and 3.78% in 2013-14. The rising spending on healthcare indicates the government’s priority for the healthcare sector, the release added.

The share of primary healthcare in the current government expenditure had increased to 54.7% in 2017-18 from 51.1% in 2013.14, according to the report. The primary and secondary care together accounted for 86% of the current government health expenditure, up from 75% in the previous year. In contrast, the share of primary and secondary care in the private sector had declined from 84% to 74%, while that of tertiary care increased.
Tina Edwin is a senior financial journalist based in New Delhi.
first published: Nov 29, 2021 06:28 pm
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