OUT OF POCKET EXPENDITURE - POLITY
News: Rate
of out-of-pocket expenditure in total health costs declines, says Health
Ministry study
What's in the news?
● The
Health Ministry released the National Health Accounts Estimates for India
(2019-20) and noted that the share of out-of-pocket expenditure (OOPE) in total
health expenditure has declined from 62.6% in 2014-15 to 47.1% in 2019-20, while government health expenditure’s share in
the country’s total GDP increased from 1.13% (2014-15) to 1.35% (2019-20).
Key takeaways:
● Share
of government health expenditure in
total health expenditure increased from 29% (2014-15) to 41.4% (2019-20) and per
capita government spending on healthcare doubled.
● The
share of private health insurance is
also going up. This shows a sign of maturity for a country in terms of the
insurance arena as those who can afford [health insurance] will afford it from
private players too.
Out of pocket expenditure:
● Out-of-pocket
expenditure is the money paid directly
by households, at the point of receiving health care.
● This
occurs when services are neither provided free of cost through a government
health facility nor is the individual covered under any public or private
insurance or social protection scheme.
Government Health Expenditure:
● Central
and State governments budgeted expenditure on the health sector has reached
2.1% of GDP in the budget estimates for 2022-23 and 2.2% in the revised estimates for 2021-22, an increase from 1.6% in
2020-21.
Government Initiatives to reduce the out of pocket
healthcare expenditure:
1. PM Jan Arogya Yojana:
● Ayushman
Bharat Pradhan Mantri Jan Arogya Yojana is a national public health insurance
scheme of the Government of India that aims to provide free access to health insurance coverage for low income earners
in the country.
● Roughly,
the bottom 50% of the country qualifies for this scheme.
● It
has two interrelated components - Health
and Wellness Centres (HWCs) and Pradhan Mantri Jan Arogya Yojana (PM-JAY).
○ PMJAY
provides coverage of ₹5 lakh health insurance per family, which can be availed
for secondary and tertiary care hospitalization across empaneled hospitals in
the country.
2. Jan Aushadhi:
● Pradhan
Mantri Bhartiya Jan Aushadhi Pariyojana Kendra has been set up to provide generic drugs, which are
available at lesser prices but are equivalent in quality and efficacy as
expensive branded drugs. This will help to reduce out of pocket expenditure.
3. National Health Mission:
● National
Health Mission (NHM) encompasses its two sub-missions, the National Rural Health Mission (NRHM) and National Urban Health Mission
(NUHM).
● The
main programmatic components include - Health System Strengthening in rural and
urban areas, Reproductive-Maternal
Neonatal-Child and Adolescent Health (RMNCH+A) and Communicable and
Non-Communicable diseases.
4. Pradhan Mantri-Ayushman Bharat Health
Infrastructure Mission (PM-ABHIM):
● It
aims to strengthen India’s health infrastructure and improve the country’s
primary, secondary and tertiary care services.
5. Ayushman Bharat Digital Mission:
● It
aims to connect the digital health solutions of hospitals across the country.
Under this, every citizen will now get a digital
health ID and their health record will be digitally protected.
6. Pradhan Mantri Swasthya Suraksha Yojana (PMSSY):
● It
aims to correct regional imbalances
in the availability of affordable/reliable tertiary healthcare services and
also to augment facilities for quality medical education in the country.
WAY FORWARD:
1. Increase Health-care Spending:
● The
government should take steps to achieve the aim of raising health expenditure
to 2.5% of GDP by 2025, and the
Central government has stayed on this path despite fiscal constraints.
2. Digital Adoption:
● Technology
will be a great tool to enable access to healthcare services in remote areas
and minimize the pressure on the healthcare system.
● Further,
it can also be leveraged to bring down the cost of service.
● Government
should encourage the HealthTech industry
and innovation in related areas.
3. Medical Insurance:
● The
capping limit of said deductions can be enhanced to encourage health insurance
coverage along with preventive healthcare.
● Further,
co-pay-based insurance can be
promoted for middle-income groups to ease OOPE which may generally not get covered
in the subsidised health services supported by the government.
4. Tax Provisions for healthcare services:
● Tax
paid on inward supply is not available as input tax credit and the same is
forming part of the cost of healthcare services which is ultimately borne by
the patients.
● Government
should consider moving healthcare services to zero-rating.
● It
will ensure eligibility of input tax credit which may help to reduce the cost
of said services and a refund of unutilized input tax credit should also be
allowed to provide additional working capital to the industry players.
● This
measure will ultimately benefit the end consumers to access quality healthcare
facilities at affordable prices.
5. Promote investment to reduce the gaps:
● The
government may consider innovative public-private
partnership models, beneficial tax rates and weighted-tax deductions on capital
expenditure.
● Income tax holidays
for investments in rural areas and viability gap funding for hospitals in
smaller cities would increase Ayushman Bharat provider base and encourage
investments across India.