Context: 

• One of the relatively healthy developments in Indian healthcare in recent years has been the steady fall in the average out-of-pocket expenditure (OOPE). However, Government’s Health expenditure has to be increased to further reduce Out Of Pocket Expenditure (OOPE).

What is Out Of Pocket Expenditure (OOPE)?

• Out-of-pocket expenditure is the money paid directly by households, at the point of receiving health care as a percentage of total healthcare expenditure. 
• 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.

Findings of National Health Accounts 2019-20

• India has continued to reduce OOPE from a high of 62.6 percent in 2014-15 to 47 per cent in 2019-20. 
• In the same period, government health expenditure rose from 29 to 41 per cent of total healthcare expenditure. 
• Private health insurance also appears to have grown in this period, from 3.7 to 7 per cent. 

Significant input from the finding

• Long-term trends since 2013-14 suggest a strong correlation between rising government health expenditure and falling OOPE. 
• For instance, 8 percent rise in government expenditure in the years between 2016-17 and 2017-18 resulted in almost 10 percentage point drop in OOPE.

Concerns associated with the findings

• These figures pertain to the year before the outbreak of the Covid-19 pandemic. 
• Although OOPE has steadily declined over the last 5 years, the fact is that Indians still spend far too much from their own pockets to defray health expenses. 
  • For instance, OOPEs as a percentage of total healthcare expenditure for countries such as Indonesia,Malaysia and China hover in the mid-30s. (47 percent in India)
• Both the Central and state governments still underspend on healthcare. 
  • Government health expenditure as a percentage of gross domestic product (GDP) between 2014-15 and 2019-20 rose only marginally, from 1.13 per cent to 1.35 per cent, though the per capita spend nearly doubled. 
  • State’s health spending is just 4-5 per cent of their total budget.

Way forward

• The aim to raise health expenditure to 2.5 per cent of GDP by 2025 would make an appreciable difference to OOPE, provided the states also increase their health allocation.

https://www.business-standard.com/opinion/editorial/healthy-reduction-123042601306_1.html