Making health allocations work

Budgets are less than adequate. Greater efficiencies in spending will help in delivering more

With its limited resources, India’s health sector has made significant strides in population coverage, quality of services, and improvement in health indicators. An important area, however, in which it lags considerably behind its peer-nations, with a significant impact on outcomes, is the manner in which it finances healthcare. Public underfunding of health in India has been long acknowledged as an important issue. Even though in aggregate terms, at 4.5 per cent of the GDP India does not do too poorly, at a consolidated level of state and Union governments, India currently spends approximately 1.3 per cent of the GDP from public funds against the 2.5 per cent target set by the National Policy on Health. This is considerably less than the levels for other developing countries such as Thailand (close to 3 per cent), Turkey (3.2 per cent), China (above 3 per cent), and South Africa (4.5 per cent). This challenge of limited public allocation of funds for health is a well-understood one, both at the level of the Centre and states and needs continued attention.

However, equally importantly, and perhaps even before more money comes, the issue of how well the current allocations are being spent requires urgent attention, but has been much less explored. The issue of quality of spending is key both to maximise the impact from currently limited allocations as well as to build a sound case with policymakers for the increased allocation of scarce public resources for health. There are four broad areas of relevance in this context.

One, public-health as the first priority for existing public resources. Despite multiple achievements in the last several decades, including the elimination of polio and guinea worm disease and a reduction in maternal and child mortality, public-health needs in the country remain large. The latest data from the National Family Health Survey 2019-20 has highlighted the unfinished tasks on nutrition, infectious diseases such as tuberculosis, and immunisation. COVID-19 has once again brought to fore the need for much greater focus on disease-surveillance, diagnostics, community awareness, and behaviour change, a strong public health cadre, and the oft-neglected areas of research — clinical and non-clinical, including in epidemiology, pharmaceuticals, vaccines, diagnostics, and health economics. Fully addressing these gaps needs to be an urgent priority because otherwise, the Indian health system will not have a strong foundation on which to build its super-structures. Doing this will require high-capacity, well-funded organisations and robust institutions. For this purpose, strengthening existing ones and creating new ones, where necessary, will require a substantial investment of public funds because these are not tasks that markets are well suited to take on. The current envelope of public funds is more than adequate for this, but it needs to be carefully protected against the constant demand for increasing the provision of curative care.

Two, much more careful targeting for the use of public resources for curative health. India has a great deal of variation in the availability and accessibility of care from region to region, and, within regions, across population groups. There are, for example, districts in Bihar which have total C-Section rates that barely cross 3 per cent thus endangering the lives of mothers and children, while there are others in Telangana and elsewhere where the rates are well above 50 per cent, including within public-sector hospitals. Public-funds need to be used in a carefully targeted way which is not competitive and substitutive, particularly when funds are limited, but complementary in their approach so that the availability of essential services such as C-Sections and emergency care can be guaranteed even in the remotest parts of the country and to the very poorest of households. While more aggregate public funding will certainly help with this, a reallocation of existing funds away from high-availability areas to those with poor access could have a very large immediate impact. In this context, another burning issue is that of proper support, training, career pathways, and most importantly adequate compensation for the existing very large 2 million strong field-force of community health workers, specifically ASHAs and Anganwadi Workers. This field-force is an essential part of the public health system providing a very wide range of services but the contractual and piece-rate approaches that are currently being applied to pay them, undercuts their effectiveness.

Three, greater efficiencies in spending will deliver more out of current resources. With limited funds, the need for increasing returns on investment points to effective programme design aimed at minimal duplication, optimal utilisation of resources, and better regulation. Replacing the multiple current vertical systems in public delivery with horizontal ones (supply, digital, and other systems) could reduce duplication and increase returns from a fiscal as well as programmatic perspective.

Four, better designed in-state financing and centre-state transfer arrangements can improve budget utilisation and leverage it for enhanced outcomes. Large underspends result in significant floats in the system, which could be well utilised for addressing service gaps. Investments in a stronger public finance management system and strategic purchasing with explicit links to outcomes could address some of the constraints to budget execution.

Many of these directions, some underway already, would need stronger institutions. Investing in the creation of well capacitated domestic institutions that can take these agendas forward would be a key priority for public resources. The pandemic has underlined, more strongly than ever before, that health impacts, not merely human development outcomes, but economic and social outcomes, at an individual as well as country level. There is no better time than now to give health the attention it needs.

Venkateswaran is a Fellow and Mor is a Commissioner associated with The Lancet Commission on Reimagining Healthcare India. Views are personal

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