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Doing less with more: India's health care system

Much of the health care spending in India, and in the rest of the world, is on expensive and ineffective forms of treatment

Shanu Athiparambath  |  New Delhi 

The Union Budget has allocated larger funds for the health sector for FY14, at Rs 37,330 crore from the revised estimates of Rs 24,894 crore for FY13. The Budget allocation for 2013-14 is 0.32 per cent of India's estimated gross domestic product (GDP), which is higher than the 0.25 per cent of GDP in the current financial year’s revised estimates. The previous year’s Budget estimate was Rs 30,477 crore.

The increase in health expenditure in the 2013-14 Union Budget is 49 per cent over the revised estimates for the financial year 2012-13 and 32 per cent over the Budget estimates for FY13. But, many think that given the health requirements of the country, this is only a marginal rise in the health expenditure. In the United States, for instance, the total health expenditure was as high as 17.9 per cent of its GDP in 2010, according to the (WHO).

If both the Centre and state allocation for the health sector is taken together, the 12th five-year Plan intends to raise the expenditure from 1.04 per cent of GDP in the financial year 2011-12 to 1.87 per cent of the GDP by 2016-17 to reduce the out-of-pocket expenditure of the poor households.

But, many health policy experts think that this is a wrong way to look at the issue. The whole notion of initially deciding the percentage of the GDP that should be spent on is highly flawed, says Laveesh Bhandari, director, Indicus Analytics, a research firm.

“The government first has to see the most efficient way of achieving a particular outcome, and based on it, it has to decide the amount of money to be spent. This is an agenda driven by the World Bank, and sadly it was accepted by the Indian intelligentsia,” says Bhandari.

Much of the spending in India, and in the rest of the world, is on expensive and ineffective forms of treatment. One third of the household expenditure in India is on medicines. Most poor Indians spend more on minor ailments than on diseases of a serious nature. “Hospitals are an extremely expensive way of spending money on health care,” says Bhandari.

As a better environment, water and sanitation conditions affect one’s health more than medicines some health experts even think that spending more on health care at their expense would result in ballooning health expenditure which accomplishes little.

According to a 2008 World Bank paper, over-medication is rampant in India. Though many think that poor Indians in rural areas often do not have access to a health care facility, according to this study, most Indians have access to some health care facility when they need to. Even people in Rural Rajasthan visit doctors 6 times a year on average when the corresponding figure in the US is only 3.15 times. Even extremely poor rural households in India spend around five per cent of its monthly budget on heath expenses. The level of medication is likely to be higher than this data indicates because over-the-counter selling of medicines is far more common in India.

But, according to the United Nations Children’s Fund (Unicef), nearly 66 per cent of the Indian children suffering from diarrhoea are not given oral rehydration solution (ORS) which costs virtually nothing. A 2004 Health Nutrition and Population (HNP) discussion paper of the World Bank estimates that chlorinated water can eliminate 95 per cent of the diarrhoea cases. Millions die every year world-wide from diseases that can be prevented by vaccines.

Kerala and Sri Lanka are cited examples of places where greater social spending have led to better health indicators. “It is not a matter of money. It is a matter of accountability and incentive, and it will work well only if you structure it well. In Sri Lanka they have a system with government and they have very good indicators when compared to other south Asian countries,” says Shekhar Shah, the Director-General of NCAER.

In Kerala, the state which has the highest development indicators in India, the amount allocated for health care in the 2012-13 budget is only 0.99 per cent of the Gross State Domestic Product (GSDP). But, the private expenditure on health care is almost nine times as high and nearly two thirds of the poor shun public health care facilities. In Sri Lanka, the public spending on health care in 2010 was only 1.32 per cent of the GDP. “The average patient knows much less about his own health and his own conditions than the doctor. But, it is possible to look into health outcomes by tracking patients and looking at health conditions with or without health clinics.” Shekhar Shah says.

But, economist Bibek Debroy thinks that measuring health outcomes are much harder. “In schooling, we can look at the gross enrolment ratio, and how students perform in standardised tests. In health, it is really difficult to measure the outcomes.

Unlike in the controlled experiments in the US, we do not have reliable data.” he said.

Debroy, however, thinks that health is a neglected sector in India. “If you look at the 12th Plan document, the attention health received is far less than that received by education. The health care needs of the country are heterogeneous. Someone who is in Delhi at the Ministry of Health and Family Welfare cannot decide that. States like say, Kerala and Bihar might require different approaches,” Debroy says.

Many like economists and (India's Tryst With Destiny) think that the planning commission’s aim of achieving universal health coverage by 2022 is unlikely to come to fruition.

First Published: Sat, March 30 2013. 21:31 IST