This policy paper attempts to present resource allocation, utilization, and absorption across four Indian states. It highlights key issues and provides recommendations to improve the health financing process that facilitates greater flexibility and efficiency in financing the programs. The experiences of policymakers who have successfully handled systemic issues developed best practices, and ensured results for the state have been included as a part of the learnings. Further, in terms of continued center-state engagement in implementing health schemes, the current financial transfers for Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB PM-JAY) have been included as a case example.
Adequate public financing is key to achieving universal health coverage (UHC) in India and across states. Despite sustained economic growth, India’s public spending stands at 1.20% of GDP, and out-of-pocket expenditure (OOPE) is quite high at 58.7% of total current health expenditure (“National Health Accounts Estimates for India” 2019). Further evidence suggests millions of people are pushed into poverty due to high OOPE on health (“The Impoverishing Effect of Healthcare Payments in India: New Methodology and Findings: | Economic and Political Weekly” n.d.). The National Health Policy 2017 recommended increasing public health expenditure to 2.5% of GDP by 2025(Ministry of Health and Family Welfare n.d.). The states spending on health should be increased to at least 8% of their respective budgets by 2020. Currently, all states are spending less than 8% except for Meghalaya (9%). The average spend across states is 5.18% (4.1%- 9%). The per capita health expenditure across all states is Rs. 1218 (Rs. 616-Rs. 6937) with a wide inter-state variation (Ministry of Finance, n.d.). Given the low public spending on health and the diverse needs of the health sector due to changing population health and disease dynamics, timely allocation, utilization, and resource absorption are critical.
As per the UN Sustainable Development Goal 3, which focuses on “Ensuring healthy lives and promoting well-being for all at all ages”, a robust and timely program administration is one of the most integral parts of achieving equitable and greater access to health services. Thus, to facilitate effective administration, it is crucial to have an organized and timely flow of funds for undertaking diverse activities for the health sector. A recent study conducted by the Indian Institute of Public Health Bhubaneshwar (IIPH-B) that looked into resource allocation, fund transfer process, utilization, and pattern of spending on different programs brought out the complexity of the fund transfers and under-utilization due to low absorption capacity in the districts. The analysis published on National Health Mission financing of states by the National Institute of Public Financing and Policy (NIPPF) (Choudhury and Kumar Mohanty n.d.) has brought out key issues of how delays in financing affect both the utilization of funds and performance of states which are critically linked.
Given this, the present policy brief makes a modest attempt to understand resource allocation, utilization, and absorption across four Indian states. This policy brief highlights key issues and provides recommendations to improve the health financing process that facilitates greater flexibility and efficiency in financing of the programs under their ambit to policymakers especially for the Department of Health and Family Welfare, Government of Odisha.
