In Pre-Covid India, Healthcare Spending Fell As Percentage Of GDP: 10 Points

In pre-Covid India, the Out-Of-Pocket spending on health as percentage of GDP fell

The government highlighted “an encouraging trend” in health expenditure indicators in the recent National Health Accounts estimates for 2018-19. Still, the total healthcare spending as a percentage of Gross Domestic Product fell by one percentage point.

  1. The total expenditure on health as a percentage of Gross Domestic Product (GDP) declined from 4.2 per cent to 3.2 per cent between 2004-05 and 2018-19. However, the per capita Total Health Expenditure — the health expenditure per person in the country at current prices — increased from Rs 3,638 in 2013-14 to Rs 4,470 in 2018-19. 

  2. Government Health Expenditure as a percentage of the GDP too fell from 1.35 per cent in 2017-18 to 1.28 per cent in 2018-19. However, compared to 2013-14, it rose 0.13 percentage points from 1.15 per cent. Government Health Expenditure, including capital expenditure, was Rs 2,42,219 crores in 2018-19, up 5 per cent from Rs 2,31,104 crores in the previous financial year.

  3. The government’s share in Total Health Expenditure increased from 28.6 per cent (2013-14) to 40.6 per cent (2018-19) — a 12 percentage point rise. The Total Health Expenditure rose from Rs 5,66,644 crores in 2017-18 to Rs 5,96,440 crores in 2018-19 – a 5 per cent rise. The Total Health Expenditure constitutes current and capital expenditures incurred by the government and private sector, including external funds.

  4. The Centre’s share in the Government Health Expenditure fell to 34.3 per cent in 2018-19, from 40.8 per cent in the previous year. On the other hand, the states’ share during the same period rose from 59.2 per cent to 65.7 per cent. 

  5. The per capita government spending on healthcare increased by 74 per cent from 2013-14, from Rs 1,042 in 2013-14 to Rs 1,815 in 2018-19.

  6. The per capita Out-of-Pocket Expenditure (OOPE) as a percentage of Total Health Expenditure declined by 16 percentage points – from 64.2 per cent in 2013-14 to 48.2 per cent in 2018-19. OOPE refers to payments made by an individual to receive medical services, which are often not covered by medical insurance. India’s OOPE is considered very high compared to economically-advanced countries with a robust social welfare system. 

  7. While releasing the report, Niti Aayog’s Dr VK Paul noted that the guiding principle of government has been to reduce out-of-pocket expenditure (OOPE) on health expenses, which pushes individuals and families into poverty.

  8. The social security expenditure on health, which includes the social health insurance program, government-financed health insurance schemes, and medical reimbursements made to government employees, increased from 6 per cent in 2013-14 to 9.6 per cent in 2018-19. Moreover, government-financed health insurance expenditure increased by 167 per cent between 2013-14 and 2018-19, rising from Rs 4,757 crores to Rs 12,680.

  9. The report suggested that government spending on primary healthcare rose from 51.1 per cent in 2013-14 to 55.2 per cent in 2018-19. In India, primary healthcare is the first level of healthcare infrastructure, which includes sub-centres and Primary Health centres. The rise in spending, Union Health Secretary Rajesh Bhushan said, reinforced the Centre’s decision to prioritise primary healthcare in the country.  

  10. However, while showing significant improvement in certain indicators, the report reflected the health expenditure of 2018-19, two years before the Covid-19 pandemic. The pandemic-induced focus on public health is expected to catalyse government spending. “The ongoing pandemic has showcased how a healthcare crisis can get transformed into an economic and social crisis,” the 2021-22 economic survey noted. It added that health expenditure rose from Rs 2.73 lakh crore in 2019-20 (pre-Covid-19) to Rs 4.72 lakh crore in 2021-22 (Budget Estimate), a 73 per cent rise. 

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