A heartening health update
A dip in Out of Pocket spending is welcome but the data says little about adequacy of health care
The latest report of National Health Accounts (NHA) — it has data for 2018-19 — shows that India continues to make progress towards reducing the burden of health spending on household budgets. Out of Pocket (OOP) spending as a share of total health expenditure was almost 70% in 2004-05. This has come down to 48% by 2018-19. In fact, the data also shows that most of this reduction has taken place under the present government. Between 2004-05 and 2014-15, the share of OOP spending came down from 69.4% to 62.6%. NHA data shows that it is increased government spending and not private insurance which has driven these gains. This is a heartening development because the poor are more likely to gain when government spending rather than private health insurance brings about a reduction in OOP spending. It is widely accepted that a health shock can drive families into poverty.
What exactly has led to these gains? As far as the increase in government spending – this is what seems to have led to a drop in OOP spending– is concerned, states deserve as much credit as the Centre. The NHA report clearly shows that states account for 59.2% of the total government health expenditure in 2018-19. To be sure, there are more interesting questions to be asked. Pharmaceuticals have the biggest share in OOP health spending in India. The current government has expanded the network of generic drug stores significantly to provide cheaper medicines to people. Has this played a major role in bringing down OOP? Answering these questions will require a fresh survey. If the answer is yes, then there is merit in pursuing this agenda further. The second and an extremely critical question is the pandemic’s impact on OOP spending. Anecdotally speaking, the possibility of OOP burden rising once again cannot be written off. Because NHA data comes with a significant lag, the answer will have to wait for a few years.
To be sure, the NHA numbers need to be read with the caveat. Because it only captures data on the health spending which was made, and not what ought to have been made, these numbers do not tell us anything about the adequacy (or lack of it) of health care in the country. Most indicators, from doctors to hospital beds per capita, tell us that India’s health sector faces serious supply issues. The government, both at the Centre and the states, should not lose sight of this fact.