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Data: Share of Government Health Expenditure now more than Out of Pocket Expenditure

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Recently, the Union Ministry of Health and Family Welfare released the National Health Account (NHA) estimates for the fiscal years 2020-21 and 2021-22.  The NHA report is a comprehensive assessment of a country’s health expenditure. Data indicates that the share of Government Health Expenditure out of the Total Health Expenditure has now reached 48% in 2021-22, more than the 39.4% share of Out-of-Pocket Expenditure.

Recently, the Union Ministry of Health and Family Welfare released the National Health Account (NHA) estimates for the fiscal years 2020-21 and 2021-22. These reports are the eighth and ninth editions of the annual NHA series which started in 2013-14. The NHA report is a comprehensive assessment of a country’s health expenditure. It tracks the flow of funds in the healthcare system, including public and private spending. It also provides details about various funding sources, expenditure patterns, methods of healthcare delivery, and the types of healthcare services utilized. Moreover, the estimates are based on the globally accepted framework of ‘A System of Health Accounts (SHA), 2011’ which facilitates inter-country comparisons.

As per the report, India’s total health expenditure (THE) has doubled from Rs. 4.5 lakh crores in 2013-14 to Rs. 9 lakh crores in 2021-22. This includes both current and capital expenditures incurred by government and private sources, including external funds. Normalising with population, the total health expenditure per capita or the health expenditure per person in India increased from Rs. 3,638 in 2013-14 to Rs. 6,602 in 2021-22. Meanwhile, the THE as a per cent of GDP has been between 3-4% during this period.

Government’s health expenditure has increased from 28.6% to 48%

Of the THE, the share of Government Health Expenditure (GHE) has increased from 28.6% in 2014-15 to 48% in 2021-22 while the GHE per capita has tripled. The share of Central government in GHE has increased from 34% to 41.8% during the same period and that of states has reduced.

Out-of-pocket expenditure (OOPE) is expenditure directly made by households at the point of receiving health care. This metric reflects how much financial burden households face when accessing healthcare. OOPE serves as an indicator of how well the healthcare system protects them from high medical costs. A high OOPE means the financial protection is limited and can cause a financial strain on the household when accessing healthcare.

Share of Out-of-Pocket Expenditure has come down to 39.4% in 2021-22

The OOPE as a per cent of THE gives the proportion of total healthcare spending directly by households rather than through public healthcare facilities or private insurance coverage. On a positive note, the share has dropped from 64.2% in 2013-14 to 39.4% in 2021-22. However, the total OOPE has increased by 22% in the same period while the per capita OOPE has increased from Rs. 2,336 to Rs. 2,600 following a notable decline in 2016-17 and a subsequent upward trend.

In short, India’s expenditure on health has gone up over the years and there is a shift toward public funding, while the financial burden on households has reduced. A closer look reveals that the THE increased by nearly 13% in 2020-21 and by more than 22% in 2021-22, outpacing the growth in other years. The same is the case with the GHE which increased by more than 16% in 2020-21 and 37% in 2021-22. This increase in spending could attributed to the COVID-19 pandemic’s impact and the increased spending by governments on ramping up health facilities.

GHE as percentage of GDP was only 1.84% in 2021-22, far from 2025 target of 2.5%

If the GHE as a Percentage of GDP is considered (at the national level), it has increased continuously from 1.13% in 2014-15 to 1.84% in 2021-22. As per the Economic survey, this share is estimated to be about 1.9% in 2022-23 and 2023-24, yet substantially lower than the target of 2.5% of GDP by 2025, as per the National Health Policy, 2017.

Among states, the GHE as a percentage of GSDP or the share of public health investment has improved across all the 21 states for which data is presented in the report. In the states of Bihar, Jharkhand, and Jammu and Kashmir, the share was 2.5% or more, while it is above 2% in Assam, Chhattisgarh, Himachal Pradesh, and Odisha, as of 2021-22.

Per capita GHE across states shows huge variations

The per capita GHE in states ranges from Rs. 1,497 in Uttar Pradesh to Rs. 4,438 in Kerala and Rs. 5,581 in Himachal Pradesh. Just like the increase in each state’s total GHE over the years, the per capita GHE has also increased. Following a sharp increase in 2015-16 over 2014-15, in 2021-22, 19 out of 21 states registered an increase in per capita GHE by more than 30%. The per capita GHE in Jharkhand had almost doubled in 2021-22 while Madhya Pradesh, Bihar, Odisha, Uttarakhand and West Bengal registered an increase of more than 50%.

A similar trend is evident in the case of THE across states. In almost all the states, the GHE influenced the trend in THE in the pandemic years. The share of GHE of THE was more than 50% in 9 states, as of 2021-22. In Uttarakhand, Assam, and Himachal Pradesh, the share has been above 50% for the last 4-5 years.

In most states, the per capita THE dropped in 2017-18, before increasing in the coming years. The per capita THE has more than doubled in these eight years in the states of Assam, Himachal Pradesh, and Jharkhand.

Per capita OOPE ranged from Rs. 984 in Bihar to Rs. 7,889 in Kerala

A huge variation is evident in the per capita OOPE across states. The per capita OOPE in 2021-22 in Bihar was Rs. 984 as compared to Rs. 7,889 in Kerala. The per capita OOPE was the second highest in West Bengal with Rs. 4,010 followed by Himachal Pradesh with Rs. 3,844. Kerala’s per capita OOPE was more than Rs. 5,000 exceeded Rs. 5,000 as early as in 2014-15, a figure that no other state has matched even by 2021-22. This is despite Kerala having the second-highest per capita GHE.

The state-wise OOPE as a per cent of THE was more than 50% in Andhra Pradesh, Kerala, Uttar Pradesh, and West Bengal in 2021-22. The share has dropped by more than 40 percentage points in Bihar, and by more than 30 percentage points in five states. The share of OOPE in THE was 73.6% in Odisha in 2014-15 while that of Kerala was 73.9% in the same year. However, in 2021-22, the share in Odisha dropped to 37.1% while OOPE continues to contribute to 59.1% of THE in Kerala.

Of the 21 states, the per capita OOPE is more than the per capita GHE in Andhra Pradesh, Kerala, Maharashtra, Uttar Pradesh, Punjab, and West Bengal.

Even though the national trend reveals a shift towards public funding, there are disparities resulting in increased financial burden on households at the state level. Some states bear a heavier financial burden for healthcare compared to what is provided through public funding. The reasons could range from population behaviour to economic factors, healthcare infrastructure, and policy differences which have not been explored in this story.

India aims to achieve Universal Health Coverage by 2030

Universal health coverage (UHC) and global health security are essential for achieving the Sustainable Development Goals (SDGs), particularly SDG 3, which aims for universal access to quality healthcare without financial hardship. India’s efforts to achieve this UHC is outlined in the National Health Policy 2017 which emphasizes equitable healthcare access. Initiatives like the National Health Mission and Ayushman Bharat have been implemented to achieve these goals. The Government of India is also providing significant health insurance coverage through the Pradhan Mantri Jan Arogya Yojana. However, as is evident from the trends, it is necessary to address the regional disparities for India to achieve its goals better health outcomes for all citizens.

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A bachelor’s degree in mathematics and master’s in social science, she is driven by ardent desire to work with this unique combination to create her own path instead of following the herd. Having served a stint as the college union chairperson, she is a strategist who is also passionate about nature conservation, art and loves solving Sudoku.

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