Economic Survey | ‘High out-of-pocket expenses for health can lead to poverty’

Survey for rise in public healthcare spend to 3% of GDP

Published - January 29, 2021 11:26 pm IST - NEW DELHI

Hyderabad, 22/01/2021: Pregnant women sitting in the line at Government Hospital of Amberpet in Hyderabad on Friday, January 22, 2021.
Photo: RAMAKRISHNA G / The Hindu

Hyderabad, 22/01/2021: Pregnant women sitting in the line at Government Hospital of Amberpet in Hyderabad on Friday, January 22, 2021.
Photo: RAMAKRISHNA G / The Hindu

India has one-of-the highest level of Out-Of-Pocket Expenditures (OOPE) contributing directly to the high incidence of catastrophic expenditures and poverty, notes the Economic Survey.

It suggested an increase in public spending from 1% to 2.5-3% of GDP — as envisaged in the National Health Policy 2017 — can decrease the OOPE from 65% to 30% of overall healthcare spend.

The Survey states about 65% of deaths in India are now caused by non-communicable diseases (NCDs) with ischemic heart diseases, chronic obstructive pulmonary disease (COPD) and stroke being the leading causes.

The Survey observes that the health of a nation depends critically on its citizens having access to an equitable, affordable and accountable healthcare system. The OOPE, as a share of total health expenditure, drops precipitously when public health expenditure increases.

The Survey also underlines that OOPE for health increases the risk of vulnerable groups slipping into poverty because of catastrophic health expenditures. The life expectancy in a country correlates positively with per capita public health expenditure, it notes.

Private healthcare

The Economic Survey observed that bulk of the healthcare in India is provided by the private sector. “Private hospitals charge much higher than government hospitals for treatment of same ailment and higher charges do not assure better quality,,’’ it said.

The Survey added that for enabling India to respond to pandemics, the health infrastructure must incorporate flexibility as events requiring healthcare attention may not repeat in identical fashion in future.

The survey further highlights that typically, consumers tend to demand primary care less than the economically optimal levels as the price elasticity for this product/service is very high. For instance, among TB patients in Delhi who initially visited a qualified practitioner in 2012, the average length of time from when TB symptoms first appeared to when they reached a DOTS facility was over five months. Similarly, India has very low rate of screening for cancers among women in the age bracket of 15-49 years at 22 per cent for cervical cancer, 10 per cent for breast cancer and 12 per cent for oral cancer when compared to 62 per cent, 59 per cent and 16 per cent respectively in OECD Countries.

``In fact, the privately optimal preference for primary care may be so low that individuals may have to even be paid to use adequate primary care. Individuals also under-estimate health risks and may, therefore, not purchase adequate health insurance,’’ it said.

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