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Budget 2013: Just money won't help public health, we need state incentives

In his budget speech, Chidambaram did mention that health for all remained one of his government’s priorities, but did he match his words with his deeds?

He has increased the allocation of health by nearly a fourth to Rs. 37, 330 crore, which looks good given that the government’s plan during the next five years is to double the expenditure (as share of GDP) on health.

The 12th plan proposes to raise the government expenditure on health from the present 1.2 per cent of the GDP to Rs. 2.5 per cent by 2017. A simple, back of the envelope calculation shows that the raise is reasonably consistent with its plan. Of course, there are variables such as healthcare cost inflation as well as possible changes in growth and GDP estimates.

Bulk of the health-outlay (Rs. 21,239 crore) will go to the National Health Mission (NHM), the new version of the National Rural Health Mission (NRHM), which was implemented in 18 states since 2005. If the NRHM focussed on the rural poor, the NHM will include the urban poor as well.

 Budget 2013: Just money wont help public health, we need state incentives

Just money won't fix public health. AFP

Of the rest of the money, about Rs. 4727 will be spent on medical education, Rs. 150 crore on geriatric care in 150 districts of 21 states, and about Rs.1000 crore plus on Indian system of medicine.

If anybody thought that Centre’s extra allocation will make a major difference, here is the reality - the real impetus for universal healthcare should actually come from the states which account for 85% of the country’s government-spend. As against the centre’s 1.3 per cent share of the GDP, the states spend 5.5 per cent.

Evidently, the Centre, despite its passionate claims, is only a minor player.

Therefore it would have helped the states, more precisely the better governed ones, if most of the money is given to them as conditional matching grants than through vertical programmes such as the NHM, which are not free from spillage, corruption (e.g. UP), wastage, inefficiency as well as poor synergy. The Soviet style vertical programmes are in fact an anomaly because India is diverse and federal.

Perhaps in states which are still in the dark ages regarding government healthcare, such programmes are of some use, despite the spillages. The increased allocation must be good news for them. But, the states which have done well in health have done it mostly with their own money, and will have more to offer to the Centre in terms of progressive policies and ideas for innovation.

What is also missing is a lack of guarantee of health security against impoverishment, particularly in view of the prospect of poor economic growth and possible external shocks. The High Level Expert Group of the Planning Commission on health had noted the need for health security and safeguards against healthcare cost inflation.

Even if the present outlay and the allocations in the subsequent budgets keep pace with it own targets for the next five years, the government will still not be able to reduce the financial burden of healthcare on people much. If all goes well, the per capita personal expense (out-of-pocket) for healthcare will only decline from the present Rs. 1825 to Rs. 1750 after five years.

And how much will the government have to raise its expenditure?

From Rs 650 to Rs 1975.

Instead of the vertical “national missions” which are essentially one-size-fits-all models, the centre should start using its health budget to incentivise better performances by the states. In an era of decentralised governance, wherein one should look for effective local service delivery, national programmes are an anomaly if it really tries to implement than provide technical advise and provide money.

However, schemes such as the one for the elderly announced by the finance minister are ideas that can be piloted by the Centre for the states to replicate. Perhaps the Centre should spend more on new ideas, innovation and policy.

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Updated Date: Feb 28, 2013 17:16:38 IST