Financing the Health Care Sector in India

India is the second most populous country in the world. It is a socialistic state where the government is committed to provide for the health care of its people.

HEALTH CARE INFRASTRUCTURE IN INDIA

Indian Health Infrastructure is divided into a three-tier structure of primary, secondary and tertiary levels. Currently, the government has 117 tertiary medical colleges and hospitals,1200 ESI and PSU hospitals,4400 district hospitals, 2400 community health centers at secondary level, 23,000 primary health centers 1,37,000 sub centers and 1500 urban posts at primary level.

Health Care spending pattern

This massive infrastructure seems more than sufficient to meet the needs of the Indian population. The ground reality, however, is very different. According to the Economic Survey 2005, it is seen that India’s overall health spending is 5.6% of the GDP. However, health care spending is only 1.2% of the GDP against WHO norms of 5%.

Fund availability for health care

Thus, although the overall health sector spending is adequate, the spending on health care, which provides treatment and care for the sick, is insufficient. As per the Annual Report of the Ministry of Health of 2004, hospitalized Indians spend 58% of their total annual expenditure on health care and 40% of hospitalized Indians borrow to cover for these expenses. 25% of hospitalized individuals fall below poverty line due to hospitalization expenses.

Resource distribution

According to National Commission for Applied Economic Research (NCAER) reports, 80 % of the resources are cornered by the affluent (which form only 30% of the population) and only 20% is available to the poorest (which form 70% of the population). In addition, individuals do more than 75% spending on health care from their personal resources. Only 45% of the indoor patients actually utilize the government infrastructure and the rest go to expensive private hospitals. Health care expenses are thus a major cause of impoverishment in Indian society.

CHALLENGES IN HEALTH CARE SECTOR

An analysis of the above data clearly reveals that the health infrastructure is beset with problems. The main problem areas are:


1. Inadequacy of funds
2. Available funds not reaching targeted population
3. Insufficient treatment facilities
4. Non-availability of requisite manpower to man the facilities.
5. Absence of resource co-ordination between the private and government sector.

The annual per capita income of India is a minimal $ 380 (according to 2005 IMF figures). This is barely sufficient to meet daily needs and grossly inadequate to fund the cost of hospitalization. This also negates the idea of fund generation through levy of user charges.

MECHANISMS TO MEET THESE CHALLENGES

This essay will attempt to suggest mechanisms whereby adequate funds can be generated to run the health care sector and there is equitable distribution between the affluent and the deprived strata of the society.

1. Community based Health Insurance

The concept of a community-based health insurance is a viable solution. Various studies have estimated the average annual expenditure per family at $25-30. A CBHI scheme at $2 per month per family administered through a third party administrator can be launched for a target population of 100,000 per hospital. The government can fund specialized treatments to support the scheme.

2. Generating resources through cess

By levying a cess on health degrading products like Tobacco, Cigarettes, Pan Masala, Alcoholic beverages etc funds can be generated. This cess could be extended to pollution causing or hazardous industries. These funds can be kept in a separate pool and disbursed for the treatment of specific diseases like Tuberculosis, Cancer, AIDS, Leprosy, Renal failure which require prolonged and expensive treatment.

3. Health Tourism

India has several excellent hospitals, with state-of-the-art equipment and diagnostic facilities. These hospitals also boast of the internationally acclaimed doctors. This combined with spiraling costs of treatment and long waiting periods abroad could woo foreign patients for treatment in India. This could well be combined with a holiday or a tourism package. The resources generated by these hospitals can fund the Hospital-rural neighborhood health cluster discussed in next paragraph.

4. Hospital-rural neighborhood cluster concept

Most rural areas lack proper medical care centers. Also as rural areas do not provide good quality of life, medical professionals do not want to settle there. The minimal health infrastructure, which exists, is thus not manned by trained personal. This vicious cycle results in non-availability of treatment facilities. Studies have established that 95% patients require prescription treatment and only 5% require hospitalization. Small rural dispensaries manned by staff of urban hospitals in the morning, can do this job. Ambulances could shift patients requiring specialized treatment to urban hospitals. This concept would provide good treatment facilities and medical manpower to patients in remote areas.

5. Public-private sector resource sharing

Private enterprise in health sector, private nursing homes and corporate hospitals should be encouraged. The government should tie up with the private sector for low cost insurance based treatment wherever adequate infrastructure exists in the private sector. This can be partly funded by the government. The government can then focus on hitherto neglected areas of health care where the private sector is not investing. Thus duplication of resources will be avoided and better facilities would be available for remote areas.

6. Telemedicine

India’s strength in the Information technology can be used for the improvement of health infrastructure. Telemedicine can provide advanced diagnostic facilities to the people in the remote areas. Through satellite links the state or district level hospitals can be linked to the peripheral hospitals. Mobile telemedicine vans can also be utilized for the same. The patients in the interior areas can be examined and diagnosis and treatment advised by consultants sitting in the urban institutes. Thus, only patients requiring special care would be moved to the nearest urban hospital.

CONCLUSION

India’s health sector has some inherent strengths which need to be enhanced. Innovative strategies and ‘out-of-box’ thinking are needed to devise and implement a result-oriented action plan. These are some ideas to finance and prop up the health care delivery system. These would ensure adequate funds, efficient deployment and equitable distribution of the resources.

Contributed by: Dr Harmeet Singh MBA(Birmingham)