What is the status of ‘Government’ & ‘Private’ expenditure on Healthcare in the states?
Sai Krishna Muthyanolla
May 29, 2021
In the previous story, we looked at government & out-of-pocket (private) expenditure on health in India and compared it with few other nations across the world. What is the status of Indian states as far as health expenditure is concerned?
India’s second wave of COVID-19 infection has put an unprecedented strain on the country’s healthcare system. Since early March 2021, official cases and deaths have skyrocketed, recently breaking world records on an almost daily basis. Many experts suspect that with poor record-keeping for the cause of death – and crematoriums overwhelmed in many places – the real numbers of deaths due to COVID-19 could be significantly higher in the country than what is being officially reported. News reports have indicated that the second wave has caused health infrastructure to collapse in several cities, with the most acute shortages being oxygen and hospital beds. In the middle of an ongoing and exponential rise in cases, state governments are scrambling to build up new infrastructure.
In continuation to our recent stories on the extent of government and private spending on healthcare in the country, we look at health financing indicators across major Indian states in this story.  To understand this, we employ the National Health Accounts (NHA) estimates. These estimates are derived within the framework of National Health Accounts Guidelines for India, 2016 and adhere to System of Health Accounts 2011, a global standard framework for producing health accounts. The NHA round 2016-17 provides the most recent data (for the year 2016-17) on commonly used health financing indicators for comparison of health expenditure such as total health expenditure (THE), government health expenditure (GHE), and out-of-pocket expenditure (OOPE). OOPE refers to private expenditure by people either directly to healthcare institutions or indirectly in the form of health insurance premiums.
Share of Total Health Expenditure in GSDP highest for Bihar, UP; lowest for Gujarat, Haryana
The Total Health Expenditure (THE) comprises capital and current health expenditure in both public and private sectors providing healthcare in India. THE constitutes current and capital expenditures incurred by Government and Private Sources including External/Donor funds. For the year 2016-17, Total Health Expenditure (THE) for India is estimated at Rs. 5.81 lakh crores (3.8% of GDP and Rs. 4381 per capita).
Total Health Expenditure (THE) as a percentage of Gross State Domestic Product (GDSP) indicates overall health (government and private) spending relative to economic development. The NHA 2016-17 estimates indicate that:
Share of Government Health Expenditure in GDSP consistently low among major states
GHE constitutes spending under all schemes funded and managed by Union, State and Local Governments including quasi-governmental organizations and donors in case funds are channeled through Government organizations. GHE has an important bearing on the health system as low Government health expenditures may mean high dependence on household out-of-pocket expenditures, leading to indebtedness in many poor & vulnerable households. For the year 2016-17, Government Health Expenditure (GHE) for India has estimated Rs. 1.88 lakh crores (32% of THE, 1.2% GDP and Rs. 1418 per capita).
Government Health Expenditure (GHE) as a percentage of Gross State Domestic Product (GDSP) indicates the government health spending relative to economic development. The NHA 2016-17 estimates indicate that:
Share of Government Health Expenditure in Total Health Expenditure low in major states
While the total health expenditure comprises capital and current health expenditure in both public and private sectors providing healthcare, GHE constitutes spending under all schemes funded and managed by the government. GHE has an important bearing on the health system as low government health expenditures may mean high dependence on household out-of-pocket expenditures.
The following graph indicates the share of government health expenditure in total health expenditure across major states:
Evidently, a high number of major states have an estimated low share (<30%) of Government Health Expenditure in Total Health Expenditure. This would, in turn, have negative implications for out-of-pocket expenditure in these states, since health expenditure constitutes a major part of household expenditure in poor & vulnerable households.
Out-of-Pocket Expenditure on healthcare significantly higher than Government Expenditure in all major states
Out-of-Pocket Expenditures are expenditures directly made by households at the point of receiving health care. This indicates the extent of household spending towards healthcare payments. For the year 2016-17, the Household Out of Pocket Expenditure on health (OOPE) for India is estimated at Rs. 3.4 lakh crores (58.7% of THE, 2.2% of GDP, Rs. 2570 per capita).
Comparing health expenditures and out-of-pocket expenditure from NHA 2016-17 estimates indicates that:
Featured Image: Government & Private Expenditure on Healthcare