Reduce out-of-pocket expenditure to revitalise healthcare

Subir Roy

Senior economic analyst

A recent editorial in The Lancet, a leading medical journal, has stated that healthcare has fared poorly under the Narendra Modi government. “Government spending on health has fallen and now hovers around an abysmal 1.2 per cent of the gross domestic product, out-of-pocket expenditure on healthcare remains extremely high, and flagship initiatives on primary healthcare and universal health coverage have so far failed to deliver services to people most in need,” the editorial says. It adds that ‘persistent inequity’ in both access to and quality of healthcare is well recognised, but a major obstacle that India faces relates to health data and a lack of data transparency.

According to internationally available data, the Indian government spends much more per capita than Bangladesh and Nepal on healthcare, as do Indians out of pocket. But Indians live shorter lives. Something is not right somewhere, and it has to be corrected.

India’s spending on healthcare is the lowest among the G20 countries; unsurprisingly, it has the lowest per capita income in the group, according to a Lancet study. India’s effort to use its G20 presidency to become a pole for the Global South can hardly happen if it remains handicapped by a poorly delivering healthcare sector, whose corollary is a population in indifferent health.

It is not as if the government has not been trying. Over half a decade ago, it launched the Ayushman Bharat health insurance scheme. Under it, a family classified as ‘deprived’ is entitled to Rs 5 lakh per annum for secondary or tertiary care hospitalisation.

It promises to reduce out-of-pocket expenditure by the poor, provides critical medical treatment and emergency care which was earlier unaffordable (many poor families were rendered destitute after paying from their pocket), and its impact is most pronounced among marginal communities like Scheduled Tribes.

Though healthcare is a state subject, the Centre has become associated with the delivery of free healthcare irrespective of which party is in power in which state. Particularly, states in the south, mostly ruled by Opposition parties, which already had their own healthcare schemes and relatively better healthcare infrastructure, have made the most of the Ayushman scheme. In states like Bihar, Jharkhand, Madhya Pradesh, Uttar Pradesh and even Maharashtra, which had low health insurance coverage before the Ayushman scheme, renamed Pradhan Mantri Jan Arogya Yojana (PMJAY), came along, the scheme has provided benefits to significant portions of their population.

Out-of-pocket healthcare expenditure, which was running at 62.6 per cent in 2014-15 of the total household heath expenditure, dropped to 47 per cent by 2019-20. This has happened in part through the increase in social expenditure on health enabled by government allocation for PMJAY. Social security expenditure on health rose from 5.7 per cent in 2014-15 to 9.3 per cent in 2019-20. Average medical expenditure per person ranged between Rs 11,315 and Rs 21,778, depending on whether a person is from SC, ST or OBC communities and resides in rural or urban areas. The sum of Rs 5 lakh available per family per year has gone a long way in mitigating this and keeping destitution at bay for the poor.

While the above data speaks well of the government, there are questions regarding its reliability, as pointed out in The Lancet editorial. The 2021 Census is yet to take place. This leaves several other surveys in limbo: if you don’t know how many Indians are there, how would you work out per capita data for matters like out-of-pocket expenditure and morbidity. The data officially made available need not be rejected, but it has to be kept in mind that such data is somewhat dated.

It is axiomatic that a high middle-income or high-income country needs to have citizens who live long and healthy lives. People also must follow a nutritional diet and remain physically active.

To be a healthier nation, India needs to devise special programmes or take forward existing ones focused on maternal health, medically assisted pregnancies and deliveries and nutrition. Children also must not be as stunted and underweight as they are. The government has in place programmes that have deployed ASHA (Accredited Social Health Activist) and Anganwadi workers who visit homes to render maternity advice and administer vaccines. The pay for these has also been recently raised. These worthwhile programmes need to be taken forward.

The government and the public also need to focus on the state of private healthcare. The ills afflicting this sector are many. Many doctors and consultants attached to private hospitals promptly prescribe a whole set of diagnostic tests, from whose expenses they get a cut.

Private hospitals routinely overcharge and a patient who has been officially discharged is often unable to go home as the agent of his health insurance company and the hospital cannot agree on the admissibility of all the charges levied. Eventually, the patient’s family has to pay out of pocket quite a bit simply to take the patient home. Private hospitals which are empanelled for cashless treatment often turn patients away as they claim that a lot of their bills remain unreimbursed.

While the government has to do its bit, including changing the attitude of officials who have to clear reimbursement bills, civil society has a lot to do. There need to be periodic surveys that give us a non-official sense of the healthcare reality on the ground. Some socially minded doctors are running their own hospitals, some of them in non-urban areas, where they are charging moderately and affordably and are still able to break even.

Indian healthcare is ailing, and various stakeholders have to help set it right. Promises like making India a developed country (Viksit Bharat) by 2047 can fetch votes, but actually getting there involves undertaking a long and arduous journey in several sectors, including healthcare. Otherwise, India will remain a low middle-income country with entrenched poverty. 

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