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Modi Govt Doubled Health Insurance Spending, Lags on Health Infrastructure

Modi Govt Doubles Health Insurance Spend, Skimps on Health Infrastructure | While out-of-pocket expenditure on healthcare fell in the Modi government’s first term, studies suggest this is from under-utilisation of healthcare rather than greater protection

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Modi Govt Doubled Health Insurance Spending, Lags on Health Infrastructure | Representative image | Photo courtesy: Priya Darshan, iStockphoto.com

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Modi Govt Doubles Health Insurance Spend, Skimps on Health Infrastructure

Aditya Shinde (name changed) spent upwards of Rs 7 lakh on the health expenses of his grandmother, who was diagnosed with renal failure in late 2019 and died in April 2021.

“The medical costs have definitely gone up,” Shinde, who lost his father in 2013 to the same condition, says. “The cost of a haemoglobin injection (which is required for every dialysis session) was Rs 450 in 2013 and even at a discounted cost, I got it for Rs 850 [for my grandmother]. Even consultations had become expensive: For my father's consultation, I paid Rs 1,000 while for my grandmother, I paid Rs 1,500 for online consultation during Covid-19 and Rs 3,500 for in-person visits.”

Out-of-pocket health expenditure as a percentage of total health spending fell from 64.2% in 2013-14 to 48.2% in 2018-19, and health expenditure rose to 2.1% of the gross domestic product (GDP) in 2022-23, government data released in the Economic Survey 2022-23 show.

However, this increase is uneven, data show. For one, allocations for Ayushman Bharat, the government’s flagship health insurance scheme, more than doubled from Rs 3,200 crore (revised estimates) in 2018-19 to Rs 7,200 crore in 2023-24. On the other hand, funding to the National Health Mission, for strengthening public health infrastructure and building human resources, rose 17% during the same period, from Rs 30,683 crore to Rs 35,947 crore. This is, in fact, a decline in real terms.

Experts say this marks a shift in India's health policy from one based on universal healthcare focusing on strengthening the public health sector to providing health insurance and shifting healthcare to the private sector. As India goes to polls later this week, we look at how the health sector has changed in the Modi years.

Decline in Out-of-pocket Expenses

India’s out-of-pocket health expenditure, as percentage of its total health spending, has--as we said--declined since 2014, when the Bharatiya Janata Party-led National Democratic Alliance government under Narendra Modi first came into power.

However, that number is still higher than its BRICS partners and other large economies, a comparison of World Health Organization data for 2021 shows. Among its neighbours, India performed better than Pakistan, Bangladesh and Nepal. Overall, India ranks 161 among 188 countries in terms of out-of-pocket expenditure.

A key factor for access to healthcare is the rate of hospitalisation. In 2014, India had 31.5 hospitalisations for every 1,000 people, National Sample Survey data for the 71st round show. By 2017-18, in the 75th round of the Survey, this number fell to 28 hospitalisations per 1,000 people. This is the first time in four decades that hospitalisation rate has declined, Indranil, professor at the Jindal School of Public Policy, noted in the State of Finances in India report 2022-23 by the Centre for Financial Accountability (CFA). “The decline in OOP is essentially due to decline in utilisation of care rather than greater financial protection,” he wrote.

“Infrastructure and healthcare access have been significant issues, particularly evident in rural health statistics,” explains Sayamsiddha, policy analyst at Centre for Budget Governance and Account

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