PolicyHealthcare Financing: Who is paying?Nivedita Rao- April 6, 2018TheUnion Cabinetrecentlyapproved the launch of the National Health Protection Missionwhich was announced during Budget 2018-19.   The Mission aims to provide a cover of five lakh rupees per family per year to about 10.7 crore families belonging to poor and vulnerable population.  The insurance coverage is targeted for hospitalisation at the secondary and tertiary health care levels. This post explains the healthcare financing scenario in India, which is distributed across the centre, states, and individuals.How much does India spend on health care financing vis-à-vis other countries?The public health expenditure in India (total of centre and state governments) has remained constant atapproximately 1.3% of the GDPbetween 2008 and 2015, andincreased marginally to 1.4% in 2016-17.  This is less than the world average of 6%.   Note that theNational Health Policy, 2017proposes to increase this to 2.5% of GDP by 2025.Including the private sector, thetotal health expenditure as a percentage of GDP is estimated at 3.9%.  Out of the total expenditure, effectively about one-third (30%) is contributed by the public sector.  This contribution islow as compared to other developing and developed countries.  Examples include Brazil (46%), China (56%), Indonesia (39%), USA (48%), and UK (83%) (see Figure 1).Who pays for healthcare in India? Mostly, it is the consumer out of his own pocket.Given the public-private split of health care expenditure, it is quite clear that it is the private expenditure which dominates i.e. the individual consumer who bears the cost of her own healthcare.  Let’s look at a further disaggregation of public spending and private spending to understand this.In 2018-19, theMinistry of Health and Family Welfare received an allocation of Rs 54,600 crore(an increase of 2% over 2017-18).  The National Health Mission (NHM) received the highest allocation at Rs 30,130 crore and constitutes 55% of the total Ministry allocation (see Table 1).  Despite a higher allocation, NHM has seen a decline in the allocation vis-à-vis 2017-18.Interestingly, in 2017-18, expenditure on NHM is expected to be Rs 4,000 crore more than what had been estimated earlier.  This may indicate a greater capacity to spend than what was earlier allocated.  A similar trend is exhibited at the overall Ministry level where the utilisation of the allocated funds has been over 100% in the last three years.State level spendingANITI Aayog report (2017) notedthat low income states with low revenue capacity spend significant lower on social services like health.  Further,differences in the cost of delivering health serviceshave contributed to health disparities among and within states.Following the 14thFinance Commission recommendations, there has been an increase in the states’ share in central pool of taxes and they were given greater autonomy and flexibility to spend according to their priorities. Despite the enhanced share of states in central taxes, theincrease in health budgets by some states has been marginal(see Figure 2).Consumer level spendingIf cumulatively 30% of the total health expenditure is incurred by the public sector,the rest of the health expenditure, i.e. approximately 70% is borne by consumers.  Household health expenditures include out of pocket expenditures (95%) and insurance (5%). Out of pocket expenditure dominate and these are the payments made directly by individuals at the point of services which are not covered under any financial protection scheme.  The highest percentage of out of pocket health expenditure (52%) is made towards medicines (see Figure 3).This is followed by private hospitals (22%), medical and diagnostic labs (10%), and patient transportation, and emergency rescue (6%).  Out of pocket expenditure is typically financed by household revenues (71%) (see Figure 4).Note that86% of rural population and 82% of urban populationare not covered under any scheme of health expenditure support.Due to high out of pocket healthcare expenditure, about 7% population is pushed below the poverty threshold every year.Out of the total number of persons covered under health insurance in India,three-fourths are covered under government sponsored health schemes and the balance one-fourth are covered by private insurers.  With respect to the government sponsored health insurance, more claims have been made in comparison to the premiums collected, i.e., the returns to the government have been negative.It is in this context that the newly proposed National Health Protection Mission will be implemented.  First, the scheme seeks to provide coverage for hospitalisation at the secondary and tertiary levels of healthcare.  TheHigh Level Expert Group set up by the Planning Commission (2011)recommended that the focus of healthcare provision in the country should be towards providing primary health care.  It observed that focus on prevention and early management of health problems can reduce the need for complicated specialist care provided at the tertiary level.  Note that depending on the level of care required,health institutions in India are broadly classified into three types: primary care (provided at primary health centres), secondary care (provided at district hospitals), and tertiary care institutions (provided at specialised hospitals like AIIMS).Second, the focus of the Mission seems to be on hospitalisation (including pre and post hospitalisation charges).  However, most of the out of the pocket expenditure made by consumers is actually on buying medicines (52%) as seen in Figure 3.  Further, these purchases are mostly made for patients who do not need hospitalisation.ParliamentFirst no-confidence motion of the 17th Lok Sabha discussed todayNiranjana Menon- August 8, 2023Discussion on the first no-confidence motion of the 17thLok Sabha began today.  No-confidence motions and confidence motions are trust votes, used to test or demonstrate the support of Lok Sabha for the government in power.  Article 75(3) of the Constitution states that the government is collectively responsible to Lok Sabha.  This means that the government must always enjoy the support of a majority of the members of Lok Sabha.  Trust votes are used to examine this support.  The government resigns if a majority of members support a no-confidence motion, or reject a confidence motion.So far, 28 no-confidence motions (including the one being discussed today) and 11 confidence motions have beendiscussed.  Over the years, the number of such motions has reduced.  The mid-1960s and mid-1970s saw more no-confidence motions, whereas the 1990s saw more confidence motions.Figure1: Trust votes in ParliamentNote: *Term shorter than 5 years; **6-year term.Source: Statistical Handbook 2021, Ministry of Parliamentary Affairs; PRS.The no-confidence motion being discussed today wasmovedon July 26, 2023.  A motion of no-confidence is moved with the support of at least 50 members.   The Speaker has the discretion to allot time for discussion of the motion.  TheRules of Procedurestate that the motion must be discussed within 10 days of being introduced.  This year, the no-confidence motion wasdiscussed13 calendar days after introduction.  Since the introduction of the no-confidence motion on July 26, 12 Bills have been introduced and 18 Bills have been passed by Lok Sabha.  In the past, on four occasions, the discussion on no-confidence motions began seven days after their introduction.  On these occasions, Bills and other important issues were debated before the discussion on the no-confidence motion began.Figure2: Members rise in support of the motion of no-confidence in Lok SabhaSource: Sansad TV, Lok Sabha, July 26, 2023; PRS.Figure3: Number of days from introduction to discussion on no-confidence motionsNote: Number of days implies calendar days.Source: Statistical Handbook 2021, Ministry of Parliamentary Affairs; PRS.On average, no-confidence motions (excluding the one being discussed today) have been discussed for 13 hours over three days.  Discussions have lasted longer than 20 hours on four instances, most recently in 2003.  Today’s no-confidence motion was allotted 12 hours discussion time by theBusiness Advisory Committee.Following the discussion, the motion is put to vote.  26 out of 27 no-confidence motions (excluding the one being discussed today) have been voted upon and rejected.  This means that no government has ever had to resign following a vote of no-confidence.   On one occasion, in 1979, the discussion on a no-confidence motion against the Morarji Desai government remained inconclusive.  He resigned before the motion was put to vote.  50% of all no-confidence motions (14 out of 28) were discussed between 1965 and 1975.  Of these, 12 were against governments headed by Indira Gandhi.Figure4: Duration of discussion on no-confidence motionsNote: This graph excludes the no confidence motion moved on July 26, 2023.Source: Statistical Handbook 2021, Ministry of Parliamentary Affairs; PRS.In comparison, confidence motions have a more varied history.  The first motion, brought in 1979 to demonstrate confidence in Charan Singh’s government, was not discussed at all.  The Prime Minister resigned before the discussion could take place.  Since then, 11 confidence motions have been discussed in Lok Sabha, with nine occurring in the 1990s.  During this period, several coalition governments were formed, and Prime Ministers sought to prove their majority throughconfidence motions.   These motions have been discussed, on average, for 12 hours over two days.Figure5: Duration of discussion of confidence motionsSource: Statistical Handbook 2021, Ministry of Parliamentary Affairs; PRS.Of the 11 confidence motions discussed in Lok Sabha, seven were accepted.  On three instances, governments had to resign as they could not prove that they had the support of the majority.  On one instance in 1996, the motion was not put to vote.  Following an eleven-hour discussion on this confidence motion, Prime Minister Atal Bihari Vajpayee announced his intention to resign on the floor of the House.  He resigned 16 days into his term.Vajpayee became Prime Minister again in 1999, and faced another confidence motion.   This time, it was put to vote.   The motion was defeated by a margin of one vote.  This has been the closest result on a trust vote in the history of Lok Sabha.  The next closest result was when a motion of no-confidence against P V Narasimha Rao’s government was defeated by 14 votes in 1993.  In most cases, results have been in favour of the government by a large margin.«12345678910»
PolicyHealthcare Financing: Who is paying?Nivedita Rao- April 6, 2018