It is time for government to double health budget: former health secretary Sujatha Rao

Former Health Secretary Ms. Sujatha Rao discusses the challenges and solutions for improving public health spending in India.

A goal post that consistently shifts is the one related to increasing public health spending to the magical figure of 2.5% of GDP. Current total health spending is about 3.5%. Of this public health spending is about 1.35%. Low public spending implies high out of pocket expenditures by households.

Demonetization, GST and the COVID pandemic in quick succession have adversely impacted millions of households living at the margin with stagnant wages, high prices of food and borrowings, making ‘affordability’ of health care critical. While 13.4% of households in rural areas and 8.5% in urban areas have borrowed money to pay their medical bills, the rest have either sought access to free public care, denied themselves health care or availed substandard care that is within their budget. An estimated 60-80 million households are reported to have fallen below the poverty line for availing medical care. What is certainly a paradox of Indian politics is that despite all this, health is a non issue for electing governments.

India’s health system is at a crossroads as it needs to, without any further procrastination, build the capacity in all States, particularly the northern States, to cope with the dual burden of disease. Communicable and infectious diseases are easier to handle in terms of the episodic nature of the disease, though, if neglected, the consequences can be devastating and brutal. Non-communicable diseases on the other hand have to be managed over a lifetime necessitating a steady, routinised, system of care. Tackling both requires a health system that is swift and nimble but also steady and solid. Getting the right balance is the key: the right mix of skills and competencies, technology, infrastructure and supervisory systems. All this needs money.

While most countries have brought in reforms and revamped their delivery systems to make them fit for purpose, India has wasted much time, in constantly hemming its budgets at the edges and resorting to knee-jerk responses to every health crisis, such as increasing the sum assured – ₹5 lakh to ₹10 lakh to ₹15 lakh and so on – under subsidised social health insurance. The increases in sums assured are just meaningless and most lazy of all ways of setting right a deeply flawed system of care.

With the budget time around the corner, there are huge expectations, despite the past being so uninspiring. Since 2010, India’s public spending, in proportion to the GDP, has hovered around 1.12% to 1.35%. In gross terms, though central budget allocations have certainly improved – up from ₹25,133 crore in 2012-13 to ₹86,175 crore in 23-24, the proportion to GDP of the central health budget has been around 0.27%. With States averaging a 5% spending of their revenue budgets against the targeted 8%, overall public health spending is not just low but disproportionately low in the poorer States like Bihar.

While overall allocations have been disappointing, a real positive is the loan of $65 million from the World Bank and $175 million from the ADB that has recently been negotiated. Under this the focus is, and rightly, on strengthening the district-level disease surveillance laboratory infrastructure, establishing ICUs in large districts, strengthening primary health care facilities and so on. While these loans will fill the glaring gaps in our health system as thrown up during the COVID pandemic, India, however, cannot stop and needs to invest hugely and quickly in building the basic health infrastructure in the country, particularly in the States of Bihar, U.P., MP, Orissa, Rajasthan, Chattisgarh, Jharkhand and Assam where shortfall of both facilities as well as human resources is far above the national average of 30%. This disparity needs to be bridged with a dramatically differential package of funding from the Central Government. Till the supply position improves, demand-side interventions like Ayushman Bharat (PMJAY) are of marginal value, more so, with out-patient care not being insured. Systems in these States must be developed and the Finance Ministry must make a beginning with not only substantially increasing health budgets, particularly for NHM, but in addition, allocate all the money collected under the 4% health cess to the health budget. Of the total of ₹69,063 crore collected so far, only 25% of it has been transferred to the Health Ministry.

In addition to strengthening the public health systems, there is a need to rationalise the GST levies on health products, such as 18% GST on health insurance premiums or 5% GST on insulin and hepatitis diagnostics when the number of diabetics and those prone to hepatitis are increasing. Disincentives also need to be considered for those private entities that are increasing the cost of care despite full GST exemptions and a huge number of other sops being extended from time to time.