Healthcare in India
SECTION IV
Financing of Health in India
F
K. SUJATHA RAO
SECRETARY NATIONAL COMMISSION ON MACROECONOMICS AND HEALTH, GOVERNMENT OF INDIA NEW DELHI E-MAIL: ksujatharao@hotmail.com
S. SELVARAJU SOMIL NAGPAL somilnagpal@yahoo.com S. SAKTHIVEL
INSTITUTE OF ECONOMIC GROWTH, UNIVERSITY OF DELHI ENCLAVE, NORTH CAMPUS, DELHI 110007 E-MAIL: sakthivel327@hotmail.com
INANCING IS THE MOST CRITICAL OF ALL DETERMINANTS OF A HEALTH SYSTEM. The nature of financing defines the structure, the behaviour of different stakeholders and quality of outcomes. It is closely and indivisibly linked to the provisioning of services and helps define the outer boundaries of the system’s capability to achieve its stated goals. Health financing is by a number of sources: (i) the tax-based public sector that comprises local, State and Central Governments, in addition to numerous autonomous public sector bodies; (ii) the private sector including the not-for-profit sector, organizing and financing, directly or through insurance, the health care of their employees and target populations; (iii) households through out-of-pocket expenditures, including user fees paid in public facilities; (iv) other insurance-social and community-based; and (v) external financing (through grants and loans). While taxation is considered the most equitable system of financing, as tax is a means of mobilizing resources from the richer sections to finance the health needs of the poor, out-of-pocket expenditures by households is considered the most inequitable. Under a system dominated by out-of-pocket expenditures, the poor, who have the greater probability of falling ill due to poor nutrition, unhealthy living conditions, etc. pay disproportionately more on health than the rich and access to health care is dependent on ability to pay. Assessing how pro-poor a system of financing is again depends on how the different types of financing interact with each other. For example, a country may have a social
Financing of Health in India
F
K. SUJATHA RAO
SECRETARY NATIONAL COMMISSION ON MACROECONOMICS AND HEALTH, GOVERNMENT OF INDIA NEW DELHI E-MAIL: ksujatharao@hotmail.com
S. SELVARAJU SOMIL NAGPAL somilnagpal@yahoo.com S. SAKTHIVEL
INSTITUTE OF ECONOMIC GROWTH, UNIVERSITY OF DELHI ENCLAVE, NORTH CAMPUS, DELHI 110007 E-MAIL: sakthivel327@hotmail.com
INANCING IS THE MOST CRITICAL OF ALL DETERMINANTS OF A HEALTH SYSTEM. The nature of financing defines the structure, the behaviour of different stakeholders and quality of outcomes. It is closely and indivisibly linked to the provisioning of services and helps define the outer boundaries of the system’s capability to achieve its stated goals. Health financing is by a number of sources: (i) the tax-based public sector that comprises local, State and Central Governments, in addition to numerous autonomous public sector bodies; (ii) the private sector including the not-for-profit sector, organizing and financing, directly or through insurance, the health care of their employees and target populations; (iii) households through out-of-pocket expenditures, including user fees paid in public facilities; (iv) other insurance-social and community-based; and (v) external financing (through grants and loans). While taxation is considered the most equitable system of financing, as tax is a means of mobilizing resources from the richer sections to finance the health needs of the poor, out-of-pocket expenditures by households is considered the most inequitable. Under a system dominated by out-of-pocket expenditures, the poor, who have the greater probability of falling ill due to poor nutrition, unhealthy living conditions, etc. pay disproportionately more on health than the rich and access to health care is dependent on ability to pay. Assessing how pro-poor a system of financing is again depends on how the different types of financing interact with each other. For example, a country may have a social
References: Government of India. Statistical abstract of India. Various years. Mahal A, Singh J, Afridi F, Lamba V, Gumber A. Who benefits from public health spending in India. New Delhi: National Council of Applied Economic Research; 2001. National Sample Survey Organisation (NSSO). Morbidity and treatment of ailments. Report No. 441. New Delhi: Department of Statistics, Central Statistics Organisation, Government of India; 1998:A-170. National Sample Survey Organisation (NSSO). Morbidity and utilization of medical services. Report No. 364. New Delhi: Department of Statistics, Central Statistics Organization, Government of India; 1989:A-13. Prabhu KS. Social sector expenditures and human development: A study of Indian states. Bombay: Development Research Group, Reserve Bank of India; 1993. Reserve Bank of India (RBI). Handbook of statistics. Various years. Reserve Bank of India (RBI). Report on currency and finance. Various years. Selvaraju V. Budgetary subsidies to health sector among selected States in India. Journal of Health Management 2001;3. Selvaraju V. Health care expenditure in rural India. Working Paper No. 93. New Delhi: National Council of Applied Economic Research; 2003. Tanzi V, Schuknecht L. Public spending in the 20th century: Global perspective. Cambridge: Cambridge University Press; 2000. World Bank. World Development Report 2004: Making services work for poor people. World Bank; 2003:256-7. Financing and Delivery of Health Care Services in India 255