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Insights into Editorial: Moving away from 1%

Insights into Editorial: Moving away from 1%



India’s health achievements are very modest even in comparison to large and populous countries such as China, Indonesia or Brazil.

India’s neighbours, in the past two decades, have made great strides on the development front.

Sri Lanka, Bangladesh and Bhutan now have better health indicators than India.

How could these countries make the great escape from the diseases of poverty earlier than their much bigger neighbour?


Historically, Low spending and interventions on Health from Centre and States:


India has not invested in health sufficiently, though its fiscal capacity to raise general revenues increased substantially from 5% of GDP in 1950-51 to 17% in 2016-17.

India’s public spending on health continues to hover around 1% of GDP for many decades, accounting for less than 30% of total health expenditure.

Besides low public spending, neither the Central nor the State governments have undertaken any significant policy intervention, except the National Health Mission, to redress the issue of widening socioeconomic inequalities in health.

But the National Health Mission, with a budget of less than 0.2% of GDP, is far too less to make a major impact. And worryingly, the budgetary provision for the NHM has decreased by 2% in 2018-19 from the previous year.


National Health Policy 2017 envisaged raising public spending on health to 2.5% of GDP by 2025:

  • The Policy seeks to reach everyone in a comprehensive integrated way to move towards wellness. It aims at achieving universal health coverage and delivering quality health care services to all at affordable cost.


  • It seeks to promote quality of care, focus is on emerging diseases and investment in promotive and preventive healthcare.


  • The policy is patient centric and quality driven. It addresses health security and make in India for drugs and devices.
  • In order to provide access and financial protection at secondary and tertiary care levels, the policy proposes free drugs, free diagnostics and free emergency care services in all public hospitals.


Clear trends that India needs to adopt:

It is imperative to understand why India is not doing as well as these countries on the health front.

Two important trends can be discerned:

  • As countries become richer, they tend to invest more on health, and
  • The share of health spending that is paid out of the pocket declines.

Economists have sought to explain this phenomenon as “health financing transition”, akin to demographic and epidemiologic transitions.

Economic, political and technological factors move countries through this health financing transition.

Of these, social solidarity for redistribution of resources to the less advantaged is the key element in pushing for public policies that expand pooled funding to provide health care.

Out-of-pocket payments push millions of people into poverty and deter the poor from using health services.

Hence, most countries, which includes the developing ones, have adopted either of the above two financing arrangements or a hybrid model to achieve Universal Health Care (UHC) for their respective populations.

  • For example, according to the World Health Organisation’s recent estimates, out-of-pocket expenditure contributed only 20% to total health expenditure in Bhutan in 2015 whereas general government expenditure on health accounted for 72%, which is about 6% of its GDP.


  • Similarly, public expenditure represents 2%-4% of GDP among the developing countries with significant UHC coverage, examples being Ghana, Thailand, Sri Lanka, China and South Africa.


Measures that need immediate Implementation are:

  • District hospitals are to be strengthened, to provide several elements of tertiary care alongside secondary care. Sub-district hospitals too would be upgraded.


  • A National Healthcare Standards Organisation is proposed to be established to develop evidence-based standard management guidelines.


  • A National Health Information Network also would be established by 2025.
  • A National Digital Health Authority would be set up to develop, deploy and regulate digital health across the continuum of care.



Therefore, there is a need for a substantial increase in the allocation for health in the forthcoming Union Budget.

However, the rise in government health spending also depends on health spending by States as they account for more than two-thirds of total spending.

Pre-paid financing mechanisms, such as general tax revenue or social health insurance (not for profit), collect taxes or premium contributions from people based on their income, but allow them to use health care based on their need and not on the basis of how much they would be expected to pay in to the pooled fund.

Hence, both the Centre and States must increase their health spending efforts, which would reduce the burden of out of pocket expenditure and improve the health status of the population.

Else, the 2019 Budget would also see public health spending sticking at 1% of GDP. This would mean India, would, without doubt, miss the 2025 target, and thereby fail to achieve UHC in a foreseeable future.


Way Forward:

However, the real challenges lie in how quickly the government can strengthen the public sector, how well it can regulate the partnering private sector, how effectively it can ramp up the health workforce to reach all sections of the population and how efficiently the Central and State governments can team up.

UHC has ensured social equity by functioning as a mechanism for redistribution of incomes.

Strategic shifts in the level of control that the government exerts on both the financing and provision of health are urgently required.

India can build on learning from core design principles from global experiences, including prioritising resources for health within government budgets, pooling existing resources, and greater government control over the health sector. It can also allow for a customised approach based on its context.