The age-wise population projections for 2015 of the US Census Bureau (Table 7.1) have been utilised as the population to be covered for health care.

7.2 Coverage of Services

The coverage of health care services is assumed as follows:

Expanded programme on immunisation for population in the 0-4 years age group.

School health programme for population in the 5-14 years age group.

Other public health programmes (including family planning, health and nutrition information) for population above 10 years.

Tobacco and alcohol control programme for population above 10 years.

AIDS prevention programme for the entire population.

Short course chemotherapy for tuberculosis for the entire population.

Management of the sick child for population in the 0-9 years age group.

Pre-natal and delivery care for the female population in the 15-44 years age group.

Family planning for population in the 20-44 years age group.

Treatment of STDs for the entire population.

Limited care for the entire population.

Discretionary clinical services for the entire population.

7.3 Recurring Expenditure

Public sector

The estimated annual per capita costs of selected public health and clinical services have been taken from data given by World Development Report 1993 - Investing in Health, published by the World Bank. The data pertains to low- and middle-income countries for the year 1990 and is given in US dollars.

To arrive at the relevant figures for 2000, the US dollar figures were converted into Indian rupees using the exchange rate prevailing in 1990 (Rs. 17.95 to one US dollar). The rupee figures were then inflated to arrive at the 2000 figures by using the annual average inflation (WPI) rate.

The recurring public expenditure arrived at is presented in Table 7.2.

Private sector

Information on consumer expenditure in cash on medical goods and services per person for a period of 30 days (July 1993 - June 1994) in Sarvekshana (published by the National Sample Service Organisation - Government of India) NSS 50th Round was obtained. The expenditure figures were inflated to arrive at the 2000 figures by using the annual average inflation (WPI) rate.

There is empirical evidence to show that, in Asia, private expenditure on health increases by 1.33 percent for every one percent rise in GNP. Using the most likely GNP growth of 8 percent per annum and the elasticity factor of 1.33, the forecast of consumer expenditure on medical goods and services by the Business Intelligence Unit, Chennai was used. The final figure on private recurrent expenditure has been apportioned under the various heads.

The recurring capital expenditure is presented in Table 7.3.

The total recurring expenditure, public and private, for the year 2015 works out to Rs 120,490 crores, with the public sector accounting for Rs 88,969 crores and private sector Rs 31,521 crores. (Table 7.4).

7.4 Capital Expenditure

New Units

Facilities have been classified as under:

Rural facilities

Rural Health Sub-Centres (RHSC)

Public Health Centres (PHC)

Community Health Centres (CHC)

Rural Hospitals (RH)

Dispensaries

Urban facilities

Urban Health and Family Welfare Posts (UHFWP)

Urban Health and Family Welfare Centres (UHFWC)

Urban Hospitals (UH)

Dispensaries

It has been assumed that dispensaries in both rural and urban areas, RHSCs and UHFWPs will have only outpatient facilities. Norms for the number of incremental units required to meet the demographic and economic situation in 2015 have been taken from the Planning Commission. According to these estimates, there would be one RHSC for every 4,000 population, one PHC for 25,000 population and one CHC for every 100,000 population. In urban areas, there would be one UHFWP for every 12,000 population and one UHFWC for every 100,000 population. An assumption of one hospital for every 10 RHSCs and 10 UNFWPs has been made for rural and urban areas respectively.

In the case of inpatient facilities, the current Chinese level of 2.4 beds for every 1000 population has been used as a benchmark. Based on this norm, the estimated number of beds in each unit to serve the population figure in 2015 has been worked out.

Based on the above, the incremental number of units and incremental average number of beds in each of the units (inpatient facilities only) has been worked out. In the case of units with only outpatient facilities, the cost per unit as worked out by the Business Intelligence Unit, Chennai has been used. In the case of units with inpatient facilities, the cost per unit has been worked on the basis of the number of beds in each unit. To estimate the cost per bed, the figures for a leading corporate hospital in the country has been used as the upper limit benchmark. Using appropriate deflation, the cost per bed in each of the facilities has been estimated. The cost per bed per unit multiplied by the number of units gives the total capital expenditure for a particular category of unit.

The estimated capital expenditure for new units works out to Rs 4,337 crores per year, of which Rs 2,777 crores is in the public sector and Rs 1,559 crores is in the private sector. (Table 7.5).

Existing Units

7.11 Options in Financing and Management

Even though India spends more than other emerging economies on healthcare, India performs poorly on most health indicators. The public expenditure on health is only 1.2% of GDP while private expenditure is 4.4%.

The burden on the Government in terms of health care expenditure will increase dramatically even without any deliberate measures. There are a number of reasons why it could be more than this expected growth. A principal factor is the availability of health care. Supply tends to drive its use. For example, in the rapidly growing application of diagnostic technology (such as ultrasound, CT scan, and MRI), the mere availability of the technology leads to its use, in some instances for reasons of dubious medical utility.

But other factors will with certainty increase overall healthcare expenditure in India. These are:

The existence of genuine, unmet need for healthcare.

Growing expectations, initially in the middle and upper groups, but gradually throughout society, about the entitlement to healthcare of an acceptable quality.

Promotion of healthcare by providers, manufacturers and suppliers.

The major problem of India’s healthcare system at present is twofold:

Poorer groups are not getting their fair share of Government spending on health; and

Expenditure throughout the sector is neither clearly focussed on maximising health gain, nor on the efficient and effective provision of healthcare.

The increase in quantum of public health expenditure can be done in several ways. Government can reallocate to public spending on health from other publicly funded activities such as defence and inefficient public sector enterprises. Government can increase revenues and spend more on health. Government can also supplement public funds for health with private funds. In addition, there are methods of increasing the taxation on activities that will increase health care costs, such as use of tobacco and liquor.

In addition, there must be a shift in government funding from the current emphasis on curative, advanced and urban services to increase funding for basic health services in rural areas. Health insurance schemes for the poor with in built cross subsidy would have to be institutionalised. Selective user charges in public funded services for higher level services and to prevent misuse would be required. Encouraging the private sector to build new health units through build-own-operate mechanisms needs to be resorted to. Corporatisation of public hospitals for better efficiency in public expenditure is necessary.

The most important aspect of introducing new financing mechanisms is the effect they would have on freeing up Government expenditure on health and applying them to the groups for which it is intended. There are studies by NCAER to show that the top quintile gets about 35 percent, and the lowest about 7 percent of subsidies related to inpatient care, in a regime with no private insurance. Any decline in the use of public health care by the top quintile, if accompanied by an increase in inpatient day use by the poorest quintile by the full amount of this change, will only modestly increase the share of the poorest. On the other hand, if the top expenditure quintile were excluded altogether from using public facilities, there would be a huge benefit to the bottom three quintiles.

In short, introducing user charges for the better off and preventing misuse of subsidies by those who can afford will have a very significant benefit for the poor in terms of availability and affordability of healthcare.

 

 

Table 7. 1

INDIA’S POPULATION PROFILE

Source: US Census Bureau

Table 7.2

Table 7.4

Fig in Rs crore