By Nupur Pavan Bang
The Indian Health care industry is growing at a rapid pace (CAGR of 17 per cent) and is expected to become a US $280 billion industry by 2020. Even so, nearly one million Indians die every year due to inadequate healthcare facilities and close to 700 million people have no access to specialist care.
There are wide gaps between the rural and urban population in its health care system. A staggering 70 per cent of the population still lives in rural areas and has no or limited access to hospitals and clinics. Around 80 per cent of specialists live in urban areas.
Improvement in health care infrastructure and facilities and ease of access to them is the only way India can fight against diseases. For that to happen, government spending on healthcare must go up. However, the state of affairs, as they are now, is not very encouraging.
The average growth in expenditure on total healthcare is not only lower than the average GDP growth rate, the expenditure is still lower (as a % of GDP) than the expenditure of even low-income countries, as classified by the World Bank (See Graph).
India is a low-middle income country as per the World Bank classification. In fact, the growth in expenditure on total healthcare in India has been decreased from what it was a decade ago (from 4.3 per cent to 4.05 per cent).
In a talk at Harvard School of Public Health (HSPH) in 2012, it was noted that India spent about $40 per person annually on health care where as the United States spent $8,500. The entire GDP of India was $1.6 trillion then while the US health care spending alone was $2.6 trillion.
Sujatha Rao, a former secretary of health and human welfare in India (2009-2010) and director-general of the National AIDS Control Organization (2006-2009) iterated, “What is very interesting is that India spends so little, but there are hospitals there that are comparable in terms of outcomes”.
The problem essentially lies with government hospitals and their infrastructure. While there are many universal health care schemes being run by the Central and the State Governments in India and the government hospitals offer treatment and essential drugs free of charge, the fact that the government sector is understaffed, underfinanced and that these hospitals maintain very poor standards of hygiene forces many people to visit private medical practitioners and hospitals.
Besides the lack of overall healthcare infrastructure, the second most important influence on India’s healthcare industry is its lack of a medically insured population and high out-of-pocket expenditure.
According to Annual Report to the people on health by the Ministry of Health and Family Welfare, Government of India (December 2011), about 71 per cent of the total health care expenditure in the country was borne by households out of their pockets. Out of pocket expenditure is any direct outlay by households, including gratuities and in-kind payment, to health practitioners and suppliers of pharmaceuticals, therapeutic appliances and other goods and services whose primary intent is to contribute to the restoration or enhancements of the health status of individuals or population groups, as per the definition given by the World Bank. Out of Pocket expenses figures by World Bank for India stand much higher at 86 per cent for the year 2012.
The NDA Government did plan to bring about a 'complete transformation' of the health sector and even worked on the blueprint of the world's largest universal health insurance programme, partially inspired by US President Barack Obama's grand insurance-for-all project which is popularly known as ‘Obamacare’.
The Government now needs to act on its plans. The Union Budget 2016 must allocate more money to the healthcare sector. The sector is in dire need of funds to improve their infrastructure and skill sets and to increase capacity. There are leakages of allocated funds at all levels. It is important to link initiatives like Digital India to bring in more transparency in the allocation of funds and its expenditure by Government Hospitals and Medical Officers.
It is said, Health is Wealth. Mr. Jaitley, while steps to improve the economy are much appreciated, a healthy India will hasten the progress towards a wealthy India!
(The author is Associate Director at the Thomas Schmidheiny Centre for Family Enterprise, Indian School of Business. Views are personal)
Updated Date: Feb 26, 2016 13:32 PM