How govt could cut your expense on healthcare

Indians bear one of the highest healthcare costs as a percentage of their income compared to citizens of other countries. The Economic Survey 2021 has highlighted the fact that as against the global average of 3% of the population which spends more than 25% of their income on healthcare 4% of India’s population has to bear such a high level of expenditure.

While this could have been the situation for a small section (4%) of the population dealing with serious or multiple health issues, the scenario is not very encouraging even when we look at a wider section of population – i.e. 17%, that has healthcare expenses above 10% of their income. This is high when compared to the global average of 13% of population which spends more than 10% of its income on healthcare.

Given the very low level of health insurance penetration in India it is mostly an out of pocket expense for the majority of the population. Any serious illness among family members often drains many years of savings and in the worst cases many people end up accumulating huge debt. It may take many years for families to recover from such unplanned costs, says the survey.

The survey suggests that the government needs to increase its expenses to bring down this burden of higher healthcare cost by a bigger portion of the population. “Increased prioritization of healthcare in the central and state budgets is important as it crucially impacts how much protection citizens get against financial hardships due to out-of-pocket payments made for healthcare” says the Economic Survey 2021.

A bigger spend by the government in the healthcare sector can not only improve the overall health infrastructure but ensure timely and good quality healthcare access to a larger segment of the population.

As health is a state subject in India, spending on healthcare by states matters the most when examining government healthcare spending. According to National Health Accounts, 2017, 66 per cent of spending on healthcare is done by the states. India ranks 179th out of 189 countries in prioritization accorded to health in its government budgets (consolidated union & state government). This prioritisation of health in India is similar to donor dependent countries such as Haiti and Sudan, and well short of its peers in development.

The survey has suggested a threshold expense for the country which can significantly help in reducing this cost. “An increase in public health expenditure from the current levels in India to 3 per cent of GDP can reduce the OOP expenditure from 60 per cent currently to about 30 per cent” estimates the Economic Survey 2021.

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