Minimizing out-of-pocket health expenditure for India's poor

By Sachi Satapathy 26 February 2016

A health worker screens a patient for diabetes in India. The South Asian country only allocates 0.1 percent of GDP on publicly funded drugs and medicines. Photo by: Trinity Care Foundation / CC BY-NC-ND

The recent adoption of Sustainable Development Goals by the United Nations endorsed an earlier agreement on a resolution passed on Dec. 12, 2012, which emphasizes all member states ensure access to health care facilities for all citizens.

This resolution assumes significance for two main reasons: First, there are close to 150 million people globally who face financial hardship every year because of medical expenses. Secondly, about a quarter of these families in low- and middle-income nations have to borrow money or sell property to support their health care requirements.

These reasons warrant serious attention from global health leaders to come up with a viable option to develop mechanisms that will exempt the poor from payments and provide them both health and financial protection.

While advocating for universal health coverage, the World Health Organization suggests that low- and middle-income countries need to allocate more funds to their health programs as a priority. One pointer to examine and link out-of-pocket expenditure and poverty in middle income and developing country contexts is to ascertain to what extent it has pushed the vast majority of the population in India into serious poverty.

Pushed into the poverty trap

Diabetes — a serious threat to ending TB

Incidence of tuberculosis — a disease that affects 9 million people and claims 1.5 million lives each year — will likely flare up in rapidly developing countries because of diabetes, three TB experts from India write in this exclusive commentary.

The link between out-of-pocket expenditure and poverty is validated in India’s draft National Health Policy 2015, which claims that “55 million Indians fell into [a] serious poverty-trap because of their health care spending during [the] 2011-12 period” and that the country’s out-of-pocket expenditure for health is one of the highest in the world, at 60 percent.*

At the same time, India accounts for 20 percent of the global burden of disease, 21 percent of all child deaths under the age of 5, and 27 percent of all neo-natal deaths. This is compounded by noncommunicable disease burdens, which account for more than 52 million deaths worldwide each year, accounting for more than 60 percent of deaths in the country.*

With close to 1.2 million smoking-related deaths and the 66 million people diagnosed with diabetes each year, it is often the poor and rural populations that suffer most. Since there is a sizable 24 percent of the population not covered under any insurance scheme in India, representing upwards of 300 million people, the high out-of-pocket expenditure becomes a serious burden on this large group.

The bigger picture

If we look at the resources available for health programs, India allocates a mere 0.1 percent of gross domestic product on publicly funded drugs and medicines. This means that people have to incur two-thirds of the total out-of-pocket expenditure for drugs. This underfunded drug provision has become catastrophic for the vast poor class.

With around 2.2 million tuberculosis cases annually, India’s TB control program faced a serious funding crunch. India’s government allocated close to $243 million in the period 2012-2015, lower than the minimum requirement of $432 million. This means that there was a commitment to $432 million by India and its partners, but the actual allocation was $243 million and the deficit is $91 million.

According to WHO data, India contributes only 37 percent of the total amount required for the TB control program annually, inadequate as compared with other grant receiving countries for this particular intervention.

India's economy grew at an average rate of 7.5 percent in 2015, faster than the 6.9 percent growth in China. So why is India home to the largest proportion of stunted children and anaemic women in the world? Why is India’s per capita expenditure on health so abysmally low in comparison with the other BRIC countries? And why is substantial incongruity between funding and disease burden a trend in the country?

Achieving results in low-income settings

Urgent attention is needed by global health advocates. The following action items or recommendations would go some way towards reversing the current situation:

1. Low- and middle-income countries must work out mechanisms to allocate and increase health expenditures from their current level to at least 3 percent of the GDP, and most importantly, increase public spending on drug procurement.

2.There must be a greater allocation of primary health care, which includes developing a robust system of health information and promotion systems at the local level, and the provision of free curative services at the primary level.

3. There is also a strong need to develop local health system to accommodate a maximum number of people in the screening of the general population, with a focus on a preventive-promotive approach, the provision of free essential drugs, diagnostics and strengthening the tertiary tier.

4. The plan to use the expertise and resources available from the private sector to enhance the capacity of the public sector, ensure a standard pricing system to bring parity on service cost across the country, and invest in technology and research on public health must be prioritized urgently — this will enhance the coverage and provide quality health service to a larger population.

5. Apart from ensuring adherence to quality assurance standards on health care service delivery, there is also a need to provide an adequate number of health care providers and technical rural health workers at different levels, increasing the human resources density to achieve WHO norms of at least 23 health workers (including doctors, nurses and midwives) per 10,000 people.

6. The global health community should aim to accomplish equity in terms of accessing health delivery systems through consistent budget allocation and provide poor populations with health insurance. This will significantly reduce out-of-pocket expenditure among poor populations.

The provision of free health care and medicines for both out- and in-patients can be other options to explore, in order to significantly reduce or reverse high private out-of-pocket spending.

A healthy population can in turn help the economy to grow through increased efficiency and better pay. It is therefore a matter of urgency.

To read additional content on global health, go to Focus On: Global Health in partnership with Johnson & Johnson.

*Correction, February 29, 2016: This story has been updated to clarify that India’s out-of-pocket expenditure for health is one of the highest in the world, and that the noncommunicable disease burdens account for more than 52 million deaths worldwide each year.

About the author

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Sachi Satapathy

Sachi Satapathy is an international development practitioner specialized in program management, policy development, strategic communications and advocacy and worked on large scale projects with bilateral and multilateral agencies. His interests are in public health, poverty alleviation and in public-private partnerships for health and development in lower, middle income and developing countries.


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