Economic Survey 2021| India’s healthcare policy: Beyond pandemics

Updated: January 30, 2021 8:24 AM

Economic Survey of India 2021: Accessibility, affordability and accountability of the healthcare system of India are essential for better health and wellbeing of its people.

Economic Survey of India 2021, Budget Economic Survey 2020-21The Covid-19 pandemic is yet another reminder of havoc that communicable diseases can create, but the risk posed by non-communicable diseases (NCDs) cannot be undermined either.

By Abinash Dash, 

Economic Survey 2021 India: Accessibility, affordability and accountability of the healthcare system of India are essential for better health and wellbeing of its people. Health directly affects domestic economic growth by improving labour productivity and reducing economic burden of illnesses. Barro (1996) found that increasing life expectancy from 50 to 70 years (a 40% increase) could raise the economic growth rate by 1.4 percentage points per year.

India’s healthcare system, though has shown some improvement, is marred with poor health outcomes; low access and utilization; high out-of-pocket health expenditure; inequity in availability of healthcare; lower budget allocation for healthcare; low human resource for health; unregulated private enterprise in an industry marked by high level of market failure; and poor quality of health care (Ch. 5, Economic Survey, 2020-21). Both the supply and demand side factors of healthcare needs urgent attention.

The supply side of the health sector in terms of physical infrastructure and human resource needs to be scaled up significantly. The National Health mission (NHM) has played a critical role in mitigating inequity in healthcare access, therefore, its budget needs to be increased substantially. NHM coupled with Health and Wellness Centre (HWC) under the Ayushman Bharat can bridge the gap of unequal healthcare access. Cross-country data from global health expenditure shows that at low levels of public health expenditure; an increase in public health expenditure sharply reduces the Out-Of-Pocket (OOP) expenditure as a share of total health expenditure. It is estimated that an increase in public health expenditure from the current levels in India to 3% of GDP can reduce the OOP expenditure from above 60% currently to about 30%.

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Majority of healthcare in India is provided by the private sector, as such, it is critical for policymakers to mitigate information asymmetry in healthcare. Asymmetric information creates market failures leaving the unregulated private healthcare sector at sub-optimal level.

Therefore, information utilities that help mitigate the information asymmetry can be very useful in enhancing overall welfare. Addressing this information asymmetry can help lower premiums, enable the offering of better products and help increase the insurance penetration in the country.

The impressive growth of telemedicine in India during the pandemic is evident as the eSanjeevaniOPD (a patient-to-doctor tele-consultation system) has recorded almost a million consultations since its launch in April 2020. As telemedicine consultations correlates strongly with the internet penetration in a state, more internet access will increase usage of telemedicine and reduce geographic disparities in healthcare utilisation.

The Covid-19 pandemic is yet another reminder of havoc that communicable diseases can create, but the risk posed by non-communicable diseases (NCDs) cannot be undermined either.

The NCDs constitute 71% of global deaths and about 65% of deaths in India are caused by non-communicable diseases (NCDs). NCDs, though partially, is related to lifestyle choices that can be controlled by encouraging people to adopt health lifestyle through behavioural nudges.

The future of healthcare lies in our ability to provide access to quality healthcare to all. India’s healthcare policy must continue to focus on long-term healthcare priorities despite the setback from the pandemic. Both demand and supply side constraints in the healthcare sector need to be addressed.

Firstly, effective handling of communicable disease by building adequately trained health emergency response teams and setting up dedicated control rooms at district level. Secondly, controlling rising NCD prevalence in India, partially through awareness campaigns on healthy lifestyle. Thirdly, strengthening the primary healthcare facilities with adequate human resource and equipment. Fourthly, providing universal health coverage and extensive promotion and utilisation of Ayushman Bharat’s PMJAY and health and wellness centres. Sixthly, a standardised system for quality reporting on healthcare for hospitals, physicians and insurance companies is a must to benchmark such services. Last but not the least, to root out ‘quacks’ from the system and tackle information asymmetry in the healthcare sector, regulation and supervision of the healthcare sector need to brought in with more vigour, such as an independent sectoral regulator (Ch. 5, Economic Survey, 2020-21).

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