NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, February 24, 2015

Changing disease patterns, low public spend on healthcare, and high out of pocket expenses have been the primary concerns leading to the formulation of the government’s new health policy. Economic advancement in India over the last two decades has enabled the government to take the cue and clearly articulate its intent to increase the public financing of health to 2.5 per cent of GDP in the Twelfth Five-Year Plan to move toward affordable, accessible and quality healthcare for all.

However, the share of government funding in total healthcare spend remains at approximately 1 per cent of GDP (less than 30 per cent of the total spend) which ranks India 171 out of 175 countries in the world on these parameters.

In spite of the best commitments by successive governments and Plan documents, healthcare spend has not kept pace with the GDP growth rate due to a variety of reasons, including high fiscal deficit.

Between paper and reality

A welfare state like India needs immediate addressal of this situation; Budget 2015 presents an excellent opportunity. It should lay out a roadmap for increased funding for healthcare and a definitive approach to take India to universal healthcare coverage, a matter that has been debated in policy circles since 2010. On paper, a comprehensive package is available to the entire population through the public delivery system, but in reality the government is far from delivering on this promise, especially for the poor.

While the network of Primary Health Centres (PHCs) and Community Health Centres (CHCs) has grown over the years, the public healthcare infrastructure remains woefully inadequate both in terms of accessibility and quality.

There have been two meaningful interventions in the interim towards the quest for universal healthcare — the National Rural Health Mission (NRHM) and the Government Sponsored Health Insurance Schemes (GSHIS).