Health is wealth, treble public spending on it to 2.5-3% of GDP

The Economic Survey 2020-21 has made a strong case for an increase in public spending on healthcare services from 1% to 2.5-3% of GDP, as envisaged in the National Health Policy 2017. This is necessary as it can significantly reduce the Out-of-Pocket-Expenditure (OOPE) from 65% to 35% of the overall healthcare spend.

The Survey observes that the health of a nation depends critically on its citizens having access to an equitable, affordable and accountable healthcare system.

The OOPE as a share of total health expenditure drops precipitously when public health expenditure increases. The Survey also underlines that OOPE for health increases the risk of vulnerable groups slipping into poverty because of catastrophic health expenditures.

"We observe positive correlations between total number of cases and deaths with respect to health expenditure per capita implying better health infrastructure. So, better health infrastructure is no guarantee that a country would be able to deal better with devastating pandemics like COVID-19. As the next health crisis could possibly be drastically different from COIV 19, the focus must be on building the healthcare system generally rather than a specific focus on communicable diseases," said the Survey.

"The recent COVID-19 pandemic has emphasised the importance of the healthcare sector and its interlinkages with other key sectors of the economy. A key learning emerging from the ongoing pandemic is that it has showcased how a healthcare crisis can be transformed into an economic and social crisis," notes the Survey.

In addition, it also cautions that healthcare policy must not become beholden to “saliency bias”, where policy over-weights a recent phenomenon. To enable India to respond to pandemics, the health infrastructure must be agile, it has strongly advised. Also, India’s healthcare policy must continue focusing on its long-term healthcare priorities.

According to the Survey, the life expectancy in a country correlates positively with per-capita public health expenditure.