Health care expenses are skyrocketing. The average expenditure per hospitalization case in private hospitals was registered at Rs. 31,845 in 2017-18, an increase of 24% from 2014-15, though expenses in public/government hospitals remained largely constant at Rs. 4500 per hospitalization case. With expenditure in private hospitals almost 7 times higher than that in public hospitals, and the growing hospitalization cases in private hospitals, there is a clear evidence of cost escalation in health sector. A study conducted in five north Indian states reported that half the hospitalized, spent more than 23% of their annual income for health care.
The latest NSSO survey on social consumption suggests that ~80% of the rural hospital expenses are met by household income/savings. The corresponding figure for urban is 84%. Health care costs are more impoverishing than ever before and almost all hospitalizations, even in public hospitals leads to Catastrophic Health Expenditure and over 63 million people are facing poverty every year due to health care costs alone.
Despite the rising burden of health care on household expenses, coverage under any form of health insurance continues to be very low. In 2017-18, merely 13% of the hospital expenses were covered under government insurance schemes and in urban areas, even lower at 9%. What is even more worrying is the lower insurance coverage amongst the poor. In the fig below, it is evident that only 9-10% households in the lowest income bracket have some form of health expenditure coverage while almost 30% of urban households and ~22% of rural households in the highest income bracket are covered under some form of insurance. Further, it is worth noting that the urban poor is even more deprived than that of the rural poor.
Government of India have time and again introduced several measures to bring the poor under some form of health insurance coverage. Several Publicly Financed Health Insurance (PFHI) schemes were introduced either by the state or the central government. One of the biggest initiatives, so far has been the PMJAY -Ayushman Bharat scheme, launched in 2018, which aims to provide health care facilities to over 10 crore families covering urban and rural poor. The scheme offers an insurance cover of Rs. 5 lakh which will cover almost 50 crore citizens. However, despite the mega scheme launched in 2018, government expenditure on health continue to be meagre at 0.29% of GDP which is about 2% of the total expenditure. Global evidence on health spending shows that unless a country spends at least 5–6% of its GDP on health and the major part of it is from government expenditure, basic health care needs are seldom met. In India government spending on health falls way below the global benchmark.
In most developed economies, in times of slow down, the welfare programs of the government act as an automatic stabilizer to revive demand. In India, the welfare programs are essential not just for revival but also for survival. In a situation of an economic crises, where the household incomes have slumped, it is essential that government scale up its support on health care which is an essential expense for any ailing individual. Does the solution lie in increasing health insurance coverage or can there be a more innovative solution to making health care needs more affordable for all?
