Bring down Out of pocket expenditure: Economic Survey

Aimed at bringing down the out of pocket expenditure, the economic Survey of India recommended an increase in public spending on healthcare services from one percent to 2.5-3 percent of GDP.

This would bring down the Out of Pocket Expenditure from 65 per cent to 35 per cent of the overall healthcare spending, said the economic survey presented in parliament by Finance Minister Nirmala Sitharaman on January 29.

Noting that health of a nation depended critically on its citizens having access to an equitable, affordable and accountable healthcare system, the Survey said that the Out of Pocket expenses drops precipitously when public health expenditure increases. The Survey points out that vulnerable groups slip into poverty because of the out of Pocket expenses for health services.

Increased healthcare spending can reduce out-of-pocket expenses from 65 per cent to 35 per cent of overall healthcare spending

It also pointed out that India has one of the highest levels of Out of Pocket expenses, contributing directly to the high incidence of catastrophic expenditures and poverty. The survey also appreciated the Pradhan Mantri Jan Arogya Yojana (PMJAY), which has delivered financial affordability to a large section of the population.

The Survey emphasises that the COVID-19 pandemic has shown how important is the healthcare sector and its inter-linkages with other key sectors of the economy. It showed how a healthcare crisis could transform into an economic and social crisis. In addition, it also cautions that healthcare policy must not become beholden to “saliency bias”, where policy over-weights a recent phenomenon. “To enable India to respond to pandemics, the health infrastructure must be agile. India’s healthcare policy must continue focusing on its long-term healthcare priorities,” ,” the survey advised.

Continuation of NHM in Conjunction with Ayushman Bharat Yojana

The Survey also points to the need to focus on healthcare market. It said that the National Health mission played a critical role in mitigating inequity as the access of the poorest to pre-natal and post-natal care as well as institutional deliveries increased significantly. The Mission should be taken forward in conjunction with Ayushman Bharat Yojana.

Technology-Enabled solutions need to be harnessed to the fullest for last mile Healthcare Services Delivery”

With bulk of the healthcare in the country provided by private sector, the survey said that policymakers should design policies that mitigate information asymmetry in healthcare, which creates market failures and thereby renders unregulated private healthcare sub-optimal.  “Mitigation of information asymmetry would help lower insurance premiums, enable the offering of better products and help increase the insurance penetration in the country,” it said. Pointing out that the WHO has highlighted the growing importance of the same, the Survey recommended a “sectoral regulator in the healthcare landscape to regulate and supervise the healthcare sector given the market failures stemming from information asymmetry.”

In the aftermath of the Covid pandemic, the Economic Survey makes a strong case for telemedicine for meeting the challenges of healthcare delivery in the country. The Survey also advised the Central and State governments to invest in telemedicine on a mission mode.


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