Public Financing for Health in India

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Dr. K. N. Rao Memorial Oration
Public Financing for Health in India Challenges
and Opportunities
Dr. G. N. V. Ramana Lead Public Health
Specialist The World Bank
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There are multiple sources of Health Financing
Government Spending
Private Out of Pocket Expenditure
Official Development Assistance
Health Insurance
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How is the Healthcare Financed in India ? Per
Capita Expenditure on Health (2005-06) US 38.3
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India Healthcare Financing Mechanisms
US 30.9
US 7.4
State Gov.
Gov. of India
External Assistance
Household Out of Pocket
Corporate Sector/ Charitable hospitals
Revenue Raising

• State Budgets
• Plan (Development)
• Non Plan (Revenue)

• Centrally Sponsored
• Schemes
• State Budgets
• State/District Societies

• Insurance
• ESI
• CGHS
• State Employees

Fee for Service

• Insurance
• GIC
• Social

Resource Intermediation
Resource Allocation

• Medical
• Consultation
• Hospitalization
• Tests

• Public Health
• Disease Control
• Surveillance

Family Welfare RCH
Consultation
Hospitalization
Tests Drugs

• Public
• Hospitals (Tertiary, Secondary)
• Primary Health care services
• Outreach services

• Private
• Corporate Hospitals
• Smaller hospitals/Nursing Homes
• Solo Practitioners
• Alternate Private Practitioners
• Diagnostic labs

Purchasing
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Who Provides Clinical Health Care in India ?
hospitalized cases using Public facility
non hospitalized cases using Public facility
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Government Spending - The Argument Continues
Enhanced Government Spending will improve
health outcomes
Government Spending and provision have little
impact on health outcomes due to inherent
weakness in service delivery
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• The Challenges for Public Financing
• How to ensure Equity?
• How to provide financial protection when a major
  illness strikes?
• How to enhance the efficiency?

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Why Equitable Health Services ?
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The Best-off gain more from Government Spending
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Coverage of basic Maternal Health Services is
higher among the Best-off
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National Average for the Poorest Quintile
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National Average for the Poorest Quintile
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Why financial protection ?
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Hospitalization Costs are Steeply Increasing over
the years
Public Hospitals
Private Hospitals
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Financial Protection Sources for Financing
Hospitalization (1995-96)
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Hospitalization Impoverishes Percent Of Indians
Falling Into Poverty When Hospitalized (1995-96)
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Why improve Efficiency ?
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Vacancies of Doctors and Nurses at PHCs
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Absenteeism among doctors by state and reasons
for absence
Source Chaudhury, Hammer, Kremer, Muralidharan
and Rogers (2003)
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Can these challenges in Public Financing by
Improving accountability mechanisms
Policy Maker
Indirect Voice
Indirect Compact
Client
Provider
Direct Client Power
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• Improving Equity Efficiency thru strengthening
  Short Route of Accountability
• Strengthening local accountability mechanisms
• Enhancing Client Power

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Strengthening Local Accountability

• Empowering the Users to monitor and discipline
• Flexible funds to Rogi Kalayan Samitis and
  Village Health Sanitation Committees under NRHM
• Citizens Report Cards in Bangalore
• Co-producing health and nutrition services
• Mid Day Meal Program in Tamil Nadu
• User associations hire and pay health staff in
  Mali
• Co-operative Pharmacies in Haiti, Singapore.

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• Enhancing the Client Power
• Demand side financing
• Janani Suraksha Yojana in India
• Educational scholarships for Girls in Bangladesh
• Conditional Cash Transfers in PROGRESSA, Mexico
• Publicizing Performance
• Public disclosure of health service use,
  availability of essential supplies, hospital bed
  occupancy

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• Improving Equity Efficiency thru strengthening
  Long Route of Accountability
• Buying Results Performance Based Contracts
• Enhancing Efficiency of Public Health Services
  Bihar Health Society Tamil Nadu Health Services
  Corporation

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• Buying Results
• The Government as active purchaser of health
  services thru performance based contracts
  directly with health providers or with
  intermediaries

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• Contracting Out Urban Primary Health Services
• in Andhra Pradesh, India
• Under World Bank supported Urban Slums Project,
  Govt. of AP contracted out 192 Urban health
  centers in 74 municipalities
• Clinical Services by private sector/NGO
• Community mobilization is done by self help
  groups
• Govt. provided
• Infrastructure (building, equipment, furniture
  and fixtures)
• Drugs and supplies
• Paid the contractor to cover salaries and
  operational expenses and
• Monitored outputs
• This initiative started in 2000 is still
  continuing even though the Bank supported project
  closed in 2002.

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• The Chiranjeevi Scheme Gujarat 2005
• Effective use of Gynecologists in private sector
  for Public Good
• Each district local government entered in to
  contracts with Qualified and willing private
  providers are to provide a package of services.
• The provider is reimbursed on a capitation basis
  for a package of 100 deliveries of women
  belonging to below poverty line taking the case
  mix of complicated and normal deliveries in to
  consideration to minimize perverse incentives.
• The benefit package also includes free medicines,
  diet and transport reimbursement.
• The poor are to be identified either by Below
  Poverty Line card or a certificate issued by
  designated village leader.
• The roles and responsibilities of different
  officers have clearly been clearly defined and so
  are the oversight mechanisms such as record
  maintenance, weekly reviews and monitoring
  visits.

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• The Chiranjeevi Scheme .
• A recent evaluation undertaken by the Indian
  Institute of Management, Ahmadabad in one
  district showed that the scheme was able to cover
  nearly 81 of the total deliveries among eligible
  poor women.
• On an average, a cheranjeevi client is estimated
  to save around Rs. 3273 (about USD 86) per
  delivery.
• However, despite medicines being covered under
  the scheme these clients incurred an average
  expenditure of Rs. 654 (USD 17) for the purchase
  of medicines for the mother as well as for the
  child.
• The Scheme has now been extended state-wide

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• Improving Efficiency of Public Sector
• The Bihar Health Society
• Strategic focus on making block PHCs functional
• Outsourcing other services including laboratory,
  call centre for reporting service statistics
• Essential Drug list and commitment to supply them
  
• Transparent bidding to ensure supply of limited
  number of pharmaceuticals
• Professional managers for bigger hospitals
• Daily monitoring of Block PHC use by the call
  centre suggest steep increase in use.

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• Improving Efficiency of Public Sector
• The Tamil Nadu Medical Services Corp.
• 90 of pharmaceutical procurement in the state
• Centralized Procurement Better Price Quality
• Flexibility to draw supplies to end users Pass
  Books
• Transparent Bidding as per the TN transparency
  act. Winning bidder disclosed on the day of bid
  opening
• Networked logistic distribution system with
  warehouses in each district.
• Significant impact on price as well as quality

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• Conclusions
• Bulk of Health spending and provision in India is
  private like many other developing countries
• Public financing should therefore focus on
  Financial Protection especially during
  hospitalization either through Risk Pooling or
  Health Insurance for the poor
• Public financing should also focus more on areas
  where there are private market failures
• Core Public Health Functions Vector control
  sanitation health education surveillance
  monitoring and evaluation of program
  effectiveness.
• Conditions that have externalities Infectious
  Disease Control

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The important thing for government is not to do
things which individuals are doing already, and
to do them a little better or a little worse but
to do those things which at present are not done
at all - J.M.Keynes 1926