[It just doesn't address the most major component of private medical
expenditure.

Nor does it do anything to extend the infrastructure for providing
healthcare services.

What good is an insurance scheme if even the basic healthcare services are
sparsely available!

The following article focusses on the former aspect only.

《If cumulatively 30% of the total health expenditure is incurred by the
public sector, the rest of the health expenditure, i.e. approximately 70%
is borne by consumers. Household health expenditures include out of pocket
expenditures (95%) and insurance (5%). Out of pocket expenditure dominate
and these are the payments made directly by individuals at the point of
services which are not covered under any financial protection scheme. The
highest percentage of out of pocket health expenditure (52%) is made
towards medicines (see Figure 3).》]

https://scroll.in/pulse/875017/indias-health-protection-scheme-does-little-to-address-biggest-cost-to-patients-buying-medicines

India’s health protection scheme does little to address biggest cost to
patients – buying medicines
The National Health Protection Scheme provides insurance cover for
hospitalisation at the secondary and tertiary health care levels.
India’s health protection scheme does little to address biggest cost to
patients – buying medicines

People crowd outside a chemist store in New Delhi. | Saumya
Khandelwal/Reuters

Yesterday · 02:30 pm

Nivedita Rao

The Union Cabinet recently approved the launch of the National Health
Protection Mission which was announced during Budget 2018-19. The Mission
aims to provide a cover of five lakh rupees per family per year to about
10.7 crore families belonging to poor and vulnerable population. The
insurance coverage is targeted for hospitalisation at the secondary and
tertiary health care levels. This post explains the healthcare financing
scenario in India, which is distributed across the centre, states, and
individuals.

How much does India spend on health care financing vis-à-vis other
countries?

The public health expenditure in India (total of centre and state
governments) has remained constant at approximately 1.3% of the GDP between
2008 and 2015, and increased marginally to 1.4% in 2016-’17. This is less
than the world average of 6%. Note that the National Health Policy, 2017
proposes to increase this to 2.5% of GDP by 2025.

Including the private sector, the total health expenditure as a percentage
of GDP is estimated at 3.9%. Out of the total expenditure, effectively
about one-third (30%) is contributed by the public sector. This
contribution is low as compared to other developing and developed
countries. Examples include Brazil (46%), China (56%), Indonesia (39%), USA
(48%), and UK (83%) (see Figure 1).


Who pays for healthcare in India?
Given the public-private split of health care expenditure, it is quite
clear that it is the private expenditure which dominates i.e. the
individual consumer who bears the cost of her own healthcare. Let’s look at
a further disaggregation of public spending and private spending to
understand this.

In 2018-19, the Ministry of Health and Family Welfare received an
allocation of Rs 54,600 crore (an increase of 2% over 2017-’18). The
National Health Mission or NHM received the highest allocation at Rs 30,130
crore and constitutes 55% of the total Ministry allocation (see Table 1).
Despite a higher allocation, NHM has seen a decline in the allocation
vis-à-vis 2017-’18.

Interestingly, in 2017-’18, expenditure on NHM is expected to be Rs 4,000
crore more than what had been estimated earlier. This may indicate a
greater capacity to spend than what was earlier allocated. A similar trend
is exhibited at the overall Ministry level where the utilisation of the
allocated funds has been over 100% in the last three years.


State level spending
A NITI Aayog report (2017) noted that low income states with low revenue
capacity spend significant lower on social services like health. Further,
differences in the cost of delivering health services have contributed to
health disparities among and within states.

Following the 14th Finance Commission recommendations, there has been an
increase in the states’ share in central pool of taxes and they were given
greater autonomy and flexibility to spend according to their priorities.
Despite the enhanced share of states in central taxes, the increase in
health budgets by some states has been marginal (see Figure 2).


Consumer level spending
If cumulatively 30% of the total health expenditure is incurred by the
public sector, the rest of the health expenditure, i.e. approximately 70%
is borne by consumers. Household health expenditures include out of pocket
expenditures (95%) and insurance (5%). Out of pocket expenditure dominate
and these are the payments made directly by individuals at the point of
services which are not covered under any financial protection scheme. The
highest percentage of out of pocket health expenditure (52%) is made
towards medicines (see Figure 3).


This is followed by private hospitals (22%), medical and diagnostic labs
(10%), and patient transportation, and emergency rescue (6%). Out of pocket
expenditure is typically financed by household revenues (71%) (see Figure
4).


Note that 86% of rural population and 82% of urban population are not
covered under any scheme of health expenditure support. Due to high out of
pocket healthcare expenditure, about 7% population is pushed below the
poverty threshold every year.

Out of the total number of persons covered under health insurance in India,
three-fourths are covered under government sponsored health schemes and the
balance one-fourth are covered by private insurers. With respect to the
government sponsored health insurance, more claims have been made in
comparison to the premiums collected, i.e., the returns to the government
have been negative.

It is in this context that the newly proposed National Health Protection
Mission will be implemented. First, the scheme seeks to provide coverage
for hospitalisation at the secondary and tertiary levels of healthcare. The
High Level Expert Group set up by the Planning Commission (2011)
recommended that the focus of healthcare provision in the country should be
towards providing primary health care. It observed that focus on prevention
and early management of health problems can reduce the need for complicated
specialist care provided at the tertiary level. Note that depending on the
level of care required, health institutions in India are broadly classified
into three types : primary care (provided at primary health centres),
secondary care (provided at district hospitals), and tertiary care
institutions (provided at specialised hospitals like AIIMS).

Second, the focus of the Mission seems to be on hospitalisation (including
pre and post hospitalisation charges). However, most of the out of the
pocket expenditure made by consumers is actually on buying medicines (52%)
as seen in Figure 3. Further, these purchases are mostly made for patients
who do not need hospitalisation.


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