Given India’s poor public spending on healthcare—1.4% of GDP versus China’s 3.1% and 6% for the world—it is natural to be sceptical of the government’s claim that, under the new National Health Policy, this will go up to 2.5%; given the health minister has ruled out a cess to fund this, it is not clear how long it will take to reach the 2.5% target. What is important to keep in mind, though, is that poor public spending on health is probably the single-largest contributor to poverty—families above the poverty line slip below it in a flash when confronted with any medical emergency, even if not severe. The draft policy, in 2015, has cited NSS data to say more than 6.3 crore persons fell into poverty every year due to health care costs alone, and the share of out-of-pocket expenditure on healthcare in total household monthly per capita expenditure was as high as 6.9% in rural areas in 2011-12 and 5.5% in urban areas. Indeed, as a result of poor publicly-funded free/low-cost alternatives—according to the NSSO’s Health-in-India survey of 2014—the share of the rural population opting for private institutes increased from 56% in 1995-96 to 58% in 2014, and from 57% to 68% in urban areas.
While funding the ramp up in public expenditure in health will, no doubt, be a challenge, what is more important is the ability to spend it well. Government doctors and nurses, for instance, get paid a lot more than those in the private sector—so viability-gap-funding-based PPP models may be a good option to try with strict control on deliverables. It is important to leverage advances in tele-medicine and some states are also looking at mobile-clinics that move from one village to another with certain basic medical infrastructure/doctors; equally important, given prevention is better than cure, focusing on rolling out primary health centres is critical. There are also several private-sector run hospital models that have significantly lowered costs and these need to be studied/replicated.
Equally important, since poor water/sanitation facilities are at the root of most disease, no ramp-up of health expenditure makes sense unless tightly woven with improvements of the type the Swachh Bharat campaign plans. A report by Lixil, Water Aid and Oxford Economics has found that India suffered the most on this account, with $107 billion wiped off GDP in 2015 due to poor sanitation facilities—that’s over 5% of GDP. Fortunately, with the government already focused on this, chances of a more integrated approach are higher.