The National Health Policy 2017: Through the Accountability Lens (Part 4)

IV. Health Finance

In the absence of a real resource commitment to implement the policy, any strategy is a statement of dreams.  Asking pointed and relevant questions on the resource envelope and how the proposed activities are going to be financed can help discerning the real intent of the policy.

The NHP 2017 sets three targets for health finance: (a) increase health expenditure by Government as a percentage of GDP from the existing 1.15% to 2.5 % by 2025, (b) increase State sector health spending to > 8% of their budget by 2020 and (c) decrease in proportion of households facing catastrophic health expenditure from the current levels by 25%, by 2025.

Our budget allocations go through an elaborate process of vetting and approvals by the Niti Aaayog and the Ministry of Finance. The complexity of this resource allocation is well known. Health is a state subject and gradual phasing of centrally sponsored programmes, the success of any strategy hinges on the contributions made by states to the overall resource envelope. Given the fiscal position of several states, there would be a huge challenge for the states to prioritize the health, even though they now receive higher untied allocations from the centre. NHP 2017 is silent of this dynamics.

It may be noted that the policies and government pronouncements in the past had strongly advocated for an increase in public expenditure on health. The important question in NHP 2017 context is what is the government plan to make this happen and whether there would be a way to institute accountability on states to draw the resource envelope in a desired manner. The NHP is not explicit on this and the promises made in the past.

The policy advocates allocating major proportion of the resource envelope (up to two-thirds or more) of resources to primary care. The existing budgets are too committed to grant any scope and flexibility for the reallocation of resources. So this would be possible only if new additional untied resources are generated, and, therefore contingent upon the resource generation strategy about which the policy takes a perfunctory view without defining appropriate responsibilities.

With the baggage of huge neglect of primary care and too much dependence on hospitals, the health system has gradually drifted towards emphasizing expensive, overspecialized care making resource envelope too rigid. The lack of investments in primary care and also on public health precludes a referral system and addressing health risks at an early stage. The coordination between primary care and government health insurance schemes focusing on only hospitalization remains weak as the institutions and administrations in government handling the GHIS and primary health remain administratively separated. Further, the lack of coordination between and within programmes compounds the issues. The policy has not immersed deep to take an integrated view on this and how the system needs to be set right.

It is well established that the application of Cost-Effectiveness Analysis (CEA) methodology provides justification for making appropriate choices for the health sector. At present its use is limited in the health decision making. In fact we have compromised on the introduction of new and expensive technologies as many medical interventions have been introduced over the years without doing appropriate and contextual CEA. As a result, we have adopted practices responsible for passing on an increasing proportion of costs to patients leading to the high OOP expenditures on health. 
The recent example of cardiovascular stents is an example.

The NHP 2017 takes a clear view on inclusion and prioritization on the basis of cost-benefit and cost-effectiveness analysis in programme design and evaluation. This would contribute significantly to increasing efficiency of public and private expenditure. 

However, we will need adequate resources and attention for putting the appropriate institutional structure, capacities and processes in place. The focused efforts among other things should also address issues of standardization of methods, addressing various biases that may creep in such analysis and keeping the reviews objective and free from different vested interests. Along with the capacity building, the strategy would also need developing collaborative linkages across various institutions and making the participation of health economists and other disciplines possible, away from medico-centric approach, in such initiatives. Engagement with stakeholders such as IRDA and insurers who have a vital interest in this area must contribute to this effort and institute framing guidelines for making the CEA of interventions a mandatory requirement for all health interventions.

The policy proposes that a robust National Health Accounts System would be operationalized to improve public sector efficiency in resource allocation/payments. The state-level health accounts methodology and studies based on this have served the purpose of informing the policy makers about the seriousness of OOP expenditures on health. Improving efficiency of the public sector is much more complex and multi-dimensional and needs strategies beyond health accounts methodology.

The NHP 2017 has outlined reforms in financing for public facilities. The proposal is to bifurcate the costs in two buckets - operational costs and establishment costs. The later will continue to flow as it is, but the former will be now on reimbursement based. In the absence of budgetary control system and performance based evaluation, it is not clear how this system of bifurcation will work in real practice. The health establishments across the board will remain contended to receive fixed component (such as salary) and not raise any concerns for not receiving resources for operations. What will be the game changer here? The system does not ensure that the existing inefficiencies embedded in the system today will not be carried forward. In the absence of autonomy and appropriate performance accountability system linked to illness burden and public health responsibilities, the mere tinkering of costs have little reform potential. A comprehensive view of public facility autonomy and accountability of which cost classification could have been an integral part of the scheme of things to implement.

Overall, the health care financing approaches in India have remained lopsided focusing on demand side interventions and high dependence on the private sector for both inpatient and outpatient illnesses. The key policy dilemmas are: (a) how healthcare financing mechanisms can address the issue of supply side, (b) what institutional and administrative mechanisms should be instituted to strengthen the private sector engagement and (c) what should be the healthcare financing mechanisms to address primary care challenge.

These policy dilemmas need to be addressed as our national health policy evolves.