NATIONAL HEALTH ACCOUNT

1. Context 

2. Key Points

• The government spent 1.35 per cent of the country's Gross Domestic Product (total value of the final goods and services in a year indicative of a country's economy) on healthcare during the year, bouncing back from a slight drop seen in 2018-19 as per the report.
• The health account estimates describe the country's total expenditure on healthcare whether by the government, private sector, NGOs or individuals and the flow of these funds.

3. Findings of the report

3.1. Rise in Government spending on Health care

• Government spending on healthcare has been on the rise. The money spent by the government on healthcare as a percentage of GDP has increased from 1.13 per cent in FY 2015 to 1.35 per cent in FY 2020.
• Even this small percentage increase in the government's health kitty has translated into nearly double the money spent on each person the per capita health spending of the government in this period has increased from Rs 1, 108 to Rs 2, 014.
• Although the number is still far from the target of 2.5 per cent investment in healthcare by 2025, the number is likely to shoot up in next year's report, with the increased government spending during the pandemic getting reflected.
• The government's share in the total money spent on healthcare in the country went up by 12.4 percentage points between FY 2015 and FY 2020, increasing from 29 per cent to 41.4 per cent

3.2. Money spent by people

• Money spent by people from their pocket on health care has been going down.
• The report shows that 47/1 per cent of the total spending on health care in FY2020 came directly out of people's pockets.
• But this is a 15.5 percentage point drop from 62.6 per cent of the spending coming out of pocket in FY 2015. 
• The aim is to bring this down as low as possible by investing in public health and insurance among others so that people do not have to shell out the money when they are sick.

3.3. National Health Policy

• A major chunk of the government's health spend was in the primary sector.
• Out of the total spending by the government on healthcare in FY 2020, 55.9 per cent went to primary care, 29.6 per cent went to secondary care and 6.4 per cent went to tertiary care.
• To compare, the government spent 51.3 per cent on primary care, 21.9 per cent on secondary care and 14 per cent on tertiary care in FY 2015.
• It is heartening to see that there has been a consistent and fast increase in government spending on primary healthcare.
• This is important because it forms the basis for preventive healthcare.
• This has been articulated in the National Health policy that there will always be more spending on primary healthcare which is the backbone.
• Now, there has been the great achievement of 1.5 lakh health and wellness centres across the country that can also screen people for cancers, diabetes and eye disease.

3.4. Social Security expenditure 

4. India stands on Health expenditure

• The marginal increase in government spending while there is a significant drop in out-of-pocket spending bothers.
• The increase in government health expenditure as a percentage of GDP also takes into account capital spending (money spent on developing infrastructure).
• Other countries look at only the current health expenditure, which for India stands at 1.04 per cent calculated based on this report.
• This puts India in 164th place out of 184 countries in terms of government health spending.
• Also, the marginal increase in percentage could be a factor of a shrinking economy GDP growth was slow in FY 2020.
• This percentage is likely to go up further next year because the economy tanked as a result of Covid-19.

5. The reason for steadily dropping out-of-pocket expenditure

• If you look at the total spending on health (which includes health spending by the government, private players and individuals) it has been going down as a proportion of GDP from 3.9 per cent in FY 2015 to 3.3 per cent in FY 2020.
• This means that there is a decline in the consumption of healthcare services. And, our work with NSSO data supports this as we saw a decline in hospitalisations and out-patient services.
• The data might be hiding these facts, but the government's initiatives are on the right track to ensure that people's expenses on health go down.
• Health and Wellness Centres ensuring preventive care and the Ayushman Bharat insurance scheme offering free treatment is the way to go, but the implementation has to be strengthened so the poor people can access care.
• The out-of-pocket expenditure can also be reduced by improvement in the procurement of medicines that make up a significant proportion of health costs and improving services in the public sector hospitals too.

6. An increase in spending on insurance

• Along with an increase in government spending, the report shows that there has been an increase in spending on privately purchased health insurance as well.
• Privately purchased health insurance made up for only 3.9 per cent of the total health expenditure in FY 2015, which increased to 7.72 per cent in FY 2020.
• The government-financed health insurance spending also went up from 3.8 per cent of the total money spent on healthcare in FY 2015 to 6.37 per cent in FY 2020 as per the report.

7. Health spending by states

• The data from the detailed report could be meaningfully used by the states to design their policy and budget.
• There was a need for the states to increase their contribution towards healthcare and achieve the target set by the National Health Policy 2017, which says that 8 per cent of states' budgets should go towards healthcare.
• Only two big states and three of the smaller ones have crossed the 8 per cent target in FY 2020.
• Delhi contributed 18.7 per cent of its total spending on health and Kerala 8 per cent, Puducherry 10.5 per cent, Meghalaya 8.9 per cent and Goa 8.7 per cent.