Investing in Health: Countries Share Lessons to Improve the Future of Healthcare in India
This blog post was coauthored by Bhavesh Jain.
The Ministry of Health and Family Welfare and the National Institute of Public Finance and Policy recently hosted a policy consultation on health financing in India. We helped organize the workshop, along with the Bill & Melinda Gates Foundation and the World Bank. The conference brought policymakers and academics from India and around the world together under one roof to discuss health financing in the context of health systems challenges and different financing methods currently used within India.
According to the Constitution of India, health is the responsibility of the state. The Fourteenth Finance Commission initiated significant reforms by increasing the share of funds that states receive from the central divisible pool of tax proceeds from thirty two percent to forty two percent. This was the biggest increase in the distribution of the net proceeds of taxes from the center to the states in Indian history. The Finance Commission has recommended that states pay a greater share of the cost of implementing centrally sponsored programs, such as the National Health Mission.
With the devolution of central funding to the states, we need to redefine the architecture of health financing and drive more investments into key pillars of health, such as improved access, affordability, and quality. India has traditionally been a low spender on health. Total health expenditure, both public and private, accounts for about four percent of Gross Domestic Product. Moving forward, we should focus not only on increasing investment in healthcare but also ensuring that health remains a priority for the states. Historically, state investments in health have not been prioritized, relative to other competing interests.
From the Indian perspective, the conference offered a tremendous opportunity to learn from successful models of universal health coverage from Organisation for Economic Co-operation and Development (OECD) countries and others. The conference included presentations from Thailand, Turkey, and the Philippines. International and national experts debated the role of the different central ministries and state government in healthcare financing in the context of fiscal devolution and suggested the way forward for India.
Focusing on primary care, improving the quality of healthcare services, transitioning from incremental budgeting to a more performance oriented and needs based budget allocation, defining the purchasing and providing split, emphasizing evidence based decision making, and the need for strong political will were key recommendations from the workshop. Below, we address each of these recommendations in further detail.
Prioritizing Primary Care
The experts unanimously emphasized the importance of mandatory free preventive and primary care as the backbone of a successful universal health coverage model. Recent experiences in Turkey and lessons from OECD countries show that investing in essential and cost effective interventions, such as preventive and primary care activities, demonstrates value for money of scarce financial and human resources. Thailand has also implemented a compulsory rural health practice. Compulsory rural health was essential to ensuring the availability of primary care services to the masses.
Quality of Healthcare Services
Lessons from the OECD countries suggest that the central and state governments must coordinate their efforts to maintain minimum quality standards for healthcare services. The central government plays a stewardship role in establishing the national information infrastructure necessary to monitor health outcomes. A national level information infrastructure can increase the accountability of the states, which are, in return, responsible for the implementation of programs. The OECD experience indicates that accountability mechanisms for healthcare outcomes matter more than the degree of decentralization or type of provision. For example, even in decentralized nations like Canada and Sweden, a performance measurement framework (Canada) and open comparison system (Sweden) allow easy comparison of quality of care across localities.
Performance Based Budgeting
Experiences from Brazil, Mexico, and several OECD countries demonstrate the efficacy in moving from historical or incremental budgeting that is prepared based on the previous budget to a budget based on performance and actual need. In Mexico, money was allocated based on the number of beneficiaries enrolled in the health insurance program, Seguro Popular. Brazil takes into consideration the socioeconomic characteristics of particular areas when deciding how to allocate funds. Such policies ensure that health remains a priority for states and helps achieve fiscal equalization between richer and poorer states through central transfer arrangements.
Purchaser-Provider Split
The purchaser-provider split is a service delivery model in which third party payers are kept organizationally separate from service providers. This separation is fundamental to the successes in Thailand and Turkey. The National Health Security Office in Thailand and Social Security Institution in Turkey serve as the single healthcare purchasers for their respective countries. These institutions design the benefit package and provider payment methods. The provider payment methods, such as capitation in Thailand and capitation with performance based payments in Turkey, have been crucial in improving efficiency. The close end demand side capitation method of payments that pays providers based on the number of people in their care has been effective in containing costs, improving standards of health facilities, and enhancing access to high quality healthcare. The use of strategic purchasing when the purchaser and provider are separate from each other has been critical in improving efficiency, equity, and accessibility.
Evidence Based Decision Making
In Thailand, there have been concerted efforts to promote evidence based policymaking. Thailand has introduced health technology assessments to demonstrate value for money in health financing. Health technology assessments are used in Thailand to inform coverage decisions under the benefit package. Lessons from Thailand show that the use of scientific evidence in the decision making process has been instrumental in keeping costs low. Strict enforcement of provider payment methods and public private competition have contributed to cost control and maintaining the quality of care.
Political Commitment and Strong Leadership
Thailand offers a case study in how reformists, civil society, and technocrats can be mobilized to achieve near universal coverage in seemingly record time in a middle income country. Universal health coverage was made the political priority in 2001. The role of Dr. Recep Akdag, the former Minister of Health of Turkey, and Dr.Viroj Tangcharoensathien, a senior expert at the Ministry of Public Health in Thailand as the torchbearers in their respective countries highlights the importance of strong leadership to the success of universal health coverage.
Implications for India
Although health is a state subject and the recent reform toward decentralization is a move in the right direction, the states and the central government have a shared interest in the health of the population. The center has equal responsibility and should be equally accountable in ensuring that all citizens receive their minimum benefits. Experts at the conference emphasized tax based funding as a means to pay for healthcare. The potential of other financing sources, such as sin taxes and health bonds, should also be explored. The states and the central government must proactively regulate the private sector and define the structure of provider payments in order to best influence the private sector to deliver the social good. Effective policies must ensure that state money goes to health. Policies must also ensure value for money by funding preventive activities, such as water and sanitation and primary care activities, rather than less cost effective but more visible, and therefore more politically attractive, interventions.
We feel that the idea of greater autonomy to the states is a step in the right direction. The states and the central government must coordinate their efforts and design policies to provide health for all Indian citizens. In particular, we must focus on strengthening information technology tools to ensure well informed and balanced decision making.