Increasing health spend to 3% of GDP can halve out-of-pocket expenditure

Health care is finally taking centre stage owing to the Covid-19 pandemic, the Economic Survey said, while calling for increased spending to prepare for the next health crisis, which could be drastically different from Covid-19. It also batted for setting up a sectoral regulator.

The survey estimated that an increase in health spend from 1 per cent to 2.5-3 per cent of gross domestic product (GDP) can decrease the out-of-pocket expenditure from 65 per cent to 30 per cent of the overall health care spend.

“From a financial perspective, India has one of the highest levels of out-of-pocket expenditures in the world, contributing directly to the high incidence of catastrophic expenditures and poverty.”

Stressing that India must take steps to improve health care accessibility and affordability, it said, “Covid-19 has showcased how a health care crisis can get transformed into an economic and social crisis.”

The survey said the focus must be on building the health care system generally rather than a specific focus on communicable diseases.

“Health care policy must not become beholden to ‘saliency bias’, where policy overweights a recent phenomenon that may represent a six-sigma event,” the survey mentioned.

India ranks 179th among 189 countries in prioritisation accorded to health in its government Budgets, similar to donor-dependent countries such as Haiti and Sudan.

While 66 per cent of the spending on health care is done by the states, according to National Health Accounts 2017, the survey says the state expenditure on the sector is highly variable across states.

To make India pandemic-ready, the health care infrastructure has to be agile.

The survey suggests, for instance, that every hospital could be equipped in a way that at least one ward could be quickly modified to respond to a health emergency.

It also drew attention to the low human resources in health and a far from adequate skill mix — doctors-nurses-midwives ratio.

Stressing that since 74 per cent of outpatient care and 65 per cent of hospitalisation care is provided through the private sector in urban India, it said: “It is critical for policymakers to design policies that mitigate information asymmetry in health care.”

It suggested drawing from platforms such as the Quality and Outcomes Framework introduced in the United Kingdom in 2004 as well as other quality assessment practices in creating information utilities.

The data from the National Digital Health Mission could also be utilised, with the help of artificial intelligence and machine learning algorithms to mitigate information asymmetry with respect to patients, the survey said.

“This would also help lower insurance premiums, enable the offering of better products and help increase the insurance penetration.”

It stressed on strengthening the telemedicine network, given its potential to provide health care access in remote areas through investment in internet connectivity.