Financing for Healthcare in India: Current situation & recommendations
Current Situation (in context of India):
Good news is that financing for healthcare is a well-recognized function of health systems, that deals with arranging or raising funds, allocation of those resources to the best use so that universal health coverage could be achieved.
This is also clearly a known factor which has direct proportionate impact on access to healthcare by society at large. In absence of this, millions of patients either do not have access to healthcare or are forced to choose substandard/ poor quality care. Following are some key highlights:
a. Macro spending
- Major challenge - lack of financial protection for individuals seeking healthcare services (combination of public and out of pocket expenditures).
- Out of pocket expenses accounts for nearly 60% of healthcare expenditure – leading to significant financial burden on families and individuals
b. Impetus of Change by Government
- Despite all efforts (increase of 12.6% in 2023-24 union budget as compared to 2022-23), Public health expenditure (2.1% of GDP in FY 23) remains low compared to other economies of the world (e.g. 9% for UK, 10% for Germany) – refer cover figure
- Favorable change in outlook towards health and wellness, enabling policies (including R&D), promoting good healthy lifestyle practices is helping positioning health at the center of our lives.
- WHO India Country Cooperation Strategy - Strategic roadmap for WHO to work with the Government of India (GoI) towards achieving its health sector goals.
c. Universal Coverage – Ayushman Bharat
- Biggest healthcare schemes in the world, Ayushman Bharat Yojana over 500 million beneficiaries to get health cover 6100 USD (which is ~2.5X of GDP per capita).
- Increased outlay in Budget 2024 (+10% vs 2023) to US$ 900Mn.
d. Digitalization / other external factors
- ABDM (Ayushman Bharat Digital Mission) a big push to digitally bridge the gap between stakeholders operating in healthcare domain.
- Integrated digital infrastructure including unified health interface, HCP registry, Health facility registry, ABHA mobile APP will drive paradigm shift in healthcare in India.
e. Operations
- Inefficient payment and contractual arrangement.
Long cycle time for reimbursements – leading to inadequate staffing and medicines/ therapies availability.
Some recommendations:
Being tech savvy, focusing on prevention, partnership, learning from existing best practices and innovation in financing can be of great help if we really intend to maximize output from this very important function of health system. Some key levers that can help:
a. Leverage Digitech – current & emerging technologies
- Maximize usage of digital and technology to bring productivity in health care, improve last mile delivery.
- Bridge the gap in healthcare access, particularly in rural and remote areas.
- Introduction of new platform therapies enabling reduction of disease burden.
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b. Adopt Global best practices!
- Public private social insurance system of Germany (86% of population is enrolled).
- Public insurance system in Japan (100% population is covered)6.
- Single payer system in Canada.
c. Focus on preventive care
- Financing products and services that can prevent burden of diseases/ disorders or at least arrest the progression of disease.
d. Be Innovative in way we are financing
- Social health insurance should be promoted where individuals and organizations can pool resources together to provide universal coverage.
- Microfinancing and EMI options can be leveraged further (as it is happening in other products and services space).
e. Partnership
- Partnership and co-financing to promote R&D in innovative therapies, medicines for long term benefits.
- Promoting public private partnerships for maximizing benefits via economy of scale in the overall care delivery process.Credit to Sources, references used:
4.??? ABDM-Insights
Special thanks to Gaurang for support and input here