Decreasing Out-of-Pocket Expenditure (OOPE) and Upcoming Challenges in India's Health Financing Reforms

India's health funding system has undergone significant reform over the past ten years, with a particular emphasis on lowering out-of-pocket expenses (OOPE), which disproportionately affect a huge portion of the population. Studies indicate that OOPE in health, particularly in rural and poorer areas, pushes 3–7% of Indian households below the poverty line each year. As seen by the most recent release of the National Health Account (NHA) estimates for 2020–21 and 2021–22 by the Government of India on September 25, 2024, addressing this issue has grown to be a top policy priority.

The nation has come a long way, but obstacles still need to be overcome if it is to reach the National Health Policy (NHP) 2017 target of 2.5% of GDP for government health spending by 2025.

Notable Drop in Outside-of-Pocket Expenditure (OOPE):

The most recent NHA estimations show that OOPE has drastically decreased during the previous ten years. OOPE made up 64.2% of all health spending in 2013–14, but by 2021–22, it had dropped to 39.4%. This decrease, which is the result of higher government spending on health care and the implementation of numerous health initiatives, marks a significant shift in the financial burden from individuals to the government. It is anticipated that this tendency will continue, even if 39.4% is still a significant percentage that necessitates ongoing government action.

From 64.2% in 2013–14 to 39.4% in 2021–22, OOPE decreased.

The COVID-19 pandemic's increased health spending has contributed to a decade-long trend of declining health care costs.

Growth in Public Health Expenditures (GHE):

A primary cause of the decline in OOPE is the notable increase in Government Health Expenditure (GHE). GHE increased from 28.6% to 48.0% of overall health expenditures between 2013–14 and 2021–2022. In India's health policy, this is a historic milestone as public spending now exceeds OOPE for the first time.

Spending on health by the government increased from 28.6% in 2013–14 to 48.0% in 2021–2022.

The pandemic-induced jump in health allocations contributed significantly to this rise, though the upward trend had began before the outbreak.

Although there is still a significant difference between India's present GHE and the NHP 2017 goal of reaching 2.5% of GDP by 2025, this shift does indicate a more equal health financing system. The difficulty lies in continuing the upward trend of health spending until the pandemic's acute effects fade.

The government's initiatives and total health expenditure (THE):

Over the past ten years, there has been a fall in Total Health Expenditure (THE) as a percentage of GDP, despite an increase in public health spending. The increased percentage of government health spending, which has reduced family financial strain, is the cause of this contradictory development.

Even with these improvements, 39.4% of all health expenses are still attributed to OOPE, indicating a recurring problem. India still has difficulties bringing this number down even lower, particularly if it hopes to meet its goal by 2025.

Government Initiatives Helping to Reduce OOPE:

1. Pradhan Ayushman Bharat Mantri The AB-PMJAY Jan Arogya Yojana: Since its launch in 2018, AB-PMJAY, which provides free secondary and tertiary care to underprivileged populations, has grown to become a pillar of India's healthcare system. It had made 69 million hospital admissions possible nationwide by 2024.
2. Centers for Ayushman Bharat Health and Wellness (AAMs): These facilities concentrate on providing grassroots, comprehensive primary healthcare, particularly in rural areas. By 2024, there were more than 1.75 lakh operational AAMs offering palliative care, maternity and child healthcare, and management of non-communicable diseases.
3. The PMNDP, or Pradhan Mantri National Dialysis Programme, This program has made dialysis services more accessible to 2.5 million underprivileged patients since its inception in 2016, saving disadvantaged populations a substantial amount of money.
4. Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP): An initiative to provide the people with access to reasonably priced generic medications. This programme had grown considerably by 2024, saving thousands of crores of rupees for households.

Obstacles in Health Insurance:

Even if the landscape of health financing in India has changed significantly, there are still a number of obstacles to overcome. Among them are:

1. Sustaining Public Health Expenditure: It is imperative for state and union governments to guarantee the perpetuation of the health spending trend. Health is essentially a state responsibility, and although economic devolution has given state governments more money, this money hasn't necessarily resulted in increased spending on healthcare. The 13th Finance Commission's 32% fiscal devolution and the 14th Finance Commission's 42% fiscal devolution, for instance, did not result in commensurate increases in state health spending.
2. Unspent Allocations: A sizeable amount of union government allocations are still unutilized despite the pandemic-induced spike in health budgets. This draws attention to problems with the use of funds and makes the case for better administrative capabilities to efficiently receive and allocate monies.
3. Quality of Care and Continuum of Services: Since counterfeit medications continue to find their way into public supply chains, ensuring the quality of pharmaceuticals is still a difficult task. In order to establish a continuum of care, it is also essential that primary care supplied by AAMs be integrated with secondary and tertiary care delivered through AB-PMJAY. In the absence of this integration, a lot of people still have trouble navigating the healthcare system.
4. Uncommon Illnesses and Needs Specific to a Population: There are still no policies that specifically address uncommon diseases and other underrepresented health needs, even while AB-PMJAY and AAMs handle a wide spectrum of health conditions. These gaps need to be filled to ensure equitable healthcare access for all segments of the population.

The Direction to Go:

Over the past ten years, India's health system has made significant advancements, especially in the areas of OOPE reduction and public health care expansion. Still, the nation has a long way to go. India must continue to invest in health in order to fulfill the NHP 2017 objective of 2.5% of GDP for public health spending by 2025. Other requirements include improved fund usage and integration of healthcare services.

Going forward, it is imperative that the federal government and state governments concentrate on:

• keeping and growing health spending plans.
• strengthening administrative capabilities to optimize the use of monies allotted.
• combining basic, secondary, and tertiary services to ensure a continuum of treatment.
• addressing the needs for population-specific health and quality control gaps.

India have the capacity to emerge as a worldwide prototype for efficacious health financing changes. Nonetheless, this will necessitate persistent effort, political will, and funding for the health system. The COVID-19 pandemic has highlighted the importance of health security as a fundamental component of national security. For the future of the nation, investing in health is not just socially and economically necessary, but also crucial.