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Health Financing in India
Agenda
What is a health system?What does health financing provide ?What are the functions of health financing
mechanisms?What are the sources of health financing in
India?Comparison of health financing of India
with other countriesHealth Investments in India
What is a health system?
A health system is the sum total of all the organizations, institutions and resources whose primary purpose is to improve health.
Source: http://www.who.int/topics/health_systems/qa/en/index.html
A health system needs staff, funds, information, supplies, transport, communication and overall guidance and direction. A health system needs to provide services that are responsive and financially fair, while treating people decently.
What are the functions of health financing mechanisms?
Source: Schieber G, Baeza C et al, Financing Health Systems in the 21st century, Chapter 12, Disease Control Priorities in Developing Countries, OUP & World Bank, 2006
Meaning of terms
Revenue Collection is the way health systems raise money from households (e.g. taxes, user fees, private health insurance), business (e.g. taxes, private health insurance, social health insurance), external aid (e.g. grants, loans)
Pooling deals with collection and management of revenues so that members of the pool share collective health risks
Purchasing refers to the mechanisms used to purchase services from public and private providers
Health Financing Mechanisms
Taxes
Providers
Employers & Consumers
Tax Collector Social Insurance Revenue Collector
Risk Pooling Entity
General Taxation
Social Health Insurance
Private Health Insurance
Out-of-pocket expenses
Adapted from: Mossailos E; Dixon A: Funding healthcare in Europe: weighing the options, European Union: 272-300:2000
What are the sources of health financing in India?
Source: Kataria,M., Finances of Health Care Services (BOP-WHO Workshop-1995)
Sources of Financing Healthcare in IndiaSource of Funds % Distribution
(a) Public Funds
Central Government 6.4
State Government 12.6
Urban Local Bodies and PRIs 1.3
Total (a) 20.3
(b) Private Funds
Households 72.0
Firms 5.3
NGOs 0.1
Total (b) 77.4
(c) External Support
Grants to Central Government 1.5
Material Aid to Central Government
o.1
Grants to State Government 0.2
To NGOs o.5
Total (c) 2.3
Total funds 100.0
Statement of funds for health care in India
Source: National Health Accounts, 2005
Estimated health expenditure in India =Rs 108,732 crore or 4.8% of GDP at current market
price
Health Expenditure as compared to other countriesIndicator India Chin
aUSA Sri
LankaThailand
Health Expenditure as % of GDP
4.8 5.8 14.6 3.7 4.4
IMR/1000 live-births 68 <30 2 8 15
Under-5 mortality/1000 live-births
87 37 8 15 26
Higher health expenditures does not necessarily result in better health outcomes
Public Expenditure on Health as % of GDP (2004 data)
Source: UNDP, Human Development Report 2008
Government Health Expenditure (as % of GDP)
Source: RBI Bulletin, Expenditure Budget, Govt of India
Contribution to Health Expenditure by Central and State Government (as % of GDP)
Source: RBI Bulletin, Expenditure Budget, Govt of India
Impact on state spending on health due to FRBM Act
Total Revenue Expenditure by All States as % of GDP
Source: Revenue Accounts, Various states
Extent of under-utilization of Health Budget (%)
-: Overspent, +: Underspent
Source: RBI Bulletin
Trends in Public Health Expenditure
Public Expenditure on health is less than 1.2 percent of GDP (WHO recommendation- 5% GDP)
In Maharashtra less than 2% of total state expenditure is on health (Standing Committee recommends around 5% of total state expenditure should be on health). In the year 2001-02 around 2.47% of total state expenditure was on health, which had decreased to 1.87% in the year 2004-05.
Only 17% of BMC’s budget for health (about Rs 9.75 billion in 2006) (Mandated is 1/3rd of budget)
86% of BMC’s public health budget is endowned on four major hospitals (KEM, Nair, Sion, Nair Dental)
Structure of Health Sector Spending
Budget Heads % AllocatedSalaries and Wages 70
Drugs, medicines, supply, 12
Purchase of equipment and machinery
8
Maintenance of equipment, buildings, electricity, rent, taxes etc
5
Other routine expenditures 5
TOTAL 100%
Hospitalization Treatment-All India
Source: NSSO 60th round
Non-Hospitalized treatment-All India
Source: NSSO 60th round
Trends in health services utilization
Percentage distribution of cases of hospitalized treatment in urban areas by type of hospital during 42nd, 52nd and 60th NSSO rounds
0
10
20
30
40
50
60
70
42nd 52nd 60th
NSSO rounds
Perc
en
tag
e
GovernmentNon-Government
Type of Hospital NSSO 60th round NSSO 52nd round
Government Hospitals 3877 2195
Private Hospitals 11533 5344
Any hospital 8851 3921
The NSSO 60th round mentions an increase in both utilization of private sector utilization and hospitalization expenses in urban areas as compared to NSSO 52nd round
Health Insurance Landscape in India
Total Population 1.2 bn (Oct 04)
Private sector enterprise 55,000,000
Community Health Insurance 07,000,000♦
CGHS 40,000,000
ESIS 38,000,000
Private Health Insurance (Mediclaim) 17,000,000
Indian Railways 07,000,000
Uninsured 943 million
Source: Industry data 2004, ♦ ILO Estimates
Limitations of Existing Insurance and Social Security Mechanisms10% of population are covered through any
form of health security0.4% of informal sector population have any
sort of social security (NCEUS, 2007)ESIS, CGHS and ECHS- social security
mechanisms are only for formal sectorGovernment social security mechanisms are
BPL-targeted (estimates are that only 70% of population have ration cards and many of populations are not actually poor)
Most newer government financing schemes are insurance-based e.g. RSBY
Contd...
Only about 6-7% of population has some sort of coverage
Health insurance penetration is low- only 3% of population covered
Of which 50% of them are under social insurance, 23% under private health insurance and rest 17% under community health insurance
Impact on households due to lack of health security and low public health spending6 - 8% of patients who fell ill did not seek care
because of financial reasons1
Among those who sought careAbout 25% of hospitalised patients are
impoverished2
Every year, an additional 3.7% of the population is impoverished because of medical causes3
Medical care is one of the 3 main causes of impoverishment in the country4
Medical inflation stands at 13% CAGR (Compared to 7% CPI and 7.3% urban income growth and 1.9 % rural income growth)1- NSSO 60th round
2- World Bank, 20023- van Doorslaer,E; O'Donnell O; Rannan-Eliya RP; et al. Effect of payments for health care on poverty estimates in 11 countries in Asia: an analysis of household survey data. Lancet 2006 4- World Development Report 2004
Way Forward ???
High income
Middle income
Low income
Poor Very poor
Formal sector
SHI + PHI SHI + PHI SHI NA NA
Self employed
PHI PHI CHI CHI NA
Informal sector
PHI PHI CHI Social assistance
Unemployed NA NA CHI Social assistance
Acknowledgements: Dr N Devadasan
THANK YOU