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Susmita Pratihast & Sumita Kale: Healthcare expenditure

Susmita Pratihast & Sumita Kale  |  New Delhi 

Public expenditure on health by central and state governments rose from 1-1.2 per cent of GDP in the 1990s to stagnate at around 1.25 per cent since 2000, receiving a small boost to 1.39 per cent in 2006-07. Low public spending over the years has led to a network of ill-equipped government health services. As a result the share of private health care has increased significantly in India; expenditure on private sources amounts to 77 per cent of the total health expenditure.
While health costs have been rising substantially, the NSSO 60th round survey reports that rural households spend 13 per cent of their total consumption expenditure on health compared to 10 per cent in urban areas. This could have many reasons "" marginal standard of living, absence of health insurance, inaccessible public health facilities and exposure to sub-standard costly private health care. 78 per cent of non-hospitalised treatments in rural areas is attended to by private sources, which are not subject to any quality checks or regulation.
It is important that professional bodies like the Indian Medical Association take up the task of regulating and monitoring the private health sector to prevent exploitation by unqualified practitioners, unnecessary tests/medicines/IV saline, sale of spurious drugs and so on.
Across economic groups, it is the poorest who bear the highest burden of health costs "" in rural areas, there is only a marginal difference in the proportion of health expenditure to total health expenditure among the richest and poorest economic groups. However, this difference is substantially large when similar groups are observed across urban areas.
28 per cent of untreated ailments in rural areas are due to lack of financial resources. While 59 per cent of hospitalisation costs in rural areas are borne through borrowings and sale of assets, for the poorest this share of financing rises to 67 per cent.
Specific policy interventions targeting the poorest sections are, therefore, needed. Risk pooling, using the network of various micro-credit organisations and self-help groups is one method to reach out to the poor. Community health insurance schemes run by hospital trusts and NGOs have been successful at providing cover for group members.
As the National Commission on Macroeconomics and Health (2005) points out, insurance alone will not mean much unless facilities of adequate standard are easily available for the patients, which will limit indirect costs on transport, loss of wages and so on.
Indians face considerable income loss, primarily due to inaccessibility to good quality and subsidised healthcare""wage losses from AIDS and tuberculosis cases alone are estimated at Rs 15,000 crore. With 220 lakh cases of hospitalisation projected by 2015, the provision of healthcare by public and private sources as well as financing should form crucial elements of India's health policy.
The authors work with Indicus Analytics and can be contacted at and

First Published: Wed, July 11 2007. 00:00 IST