Healthy reduction of Out of Pocket expenditure
- 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.
- 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.
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