Human Development

Budget 2021-22: Healthcare takes centre stage, again

  • Blog Post Date 24 February, 2021
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Diane Coffey

University of Texas at Austin

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Dean Spears

University of Texas at Austin

Assessing the 2021-22 Union Budget from a health-sector perspective, Coffey and Spears contend that improving India’s health outcomes will require old solutions to old problems – and this sort of thing is hard to find in a ‘new’ budget. In particular, they advocate for increased allocation for maternal and newborn health programmes in the next budget.

Healthcare takes centre stage, finally” proclaims a chapter title in this year's Economic Survey. For those of us who have advocated for policies to prevent people from falling sick, this is absurd. Countries around the world with worse budgetary health than India have long-documented that inexpensive tools like sanitation and maternal nutrition can keep people from needing healthcare in the first place. 

But curative healthcare spending is politically more exciting. This may be especially true in India, where the so-called ‘middle class’ is increasingly paying big bills at private hospitals. Covid-19 has not helped: it has increased the apparent demand for modern, technological solutions while keeping patients away from basic services, even reducing the number of births in health facilities. Improving health outcomes throughout India will require old solutions to old problems. That sort of thing is hard to find in a new budget. 

Something old and something new

There is something odd about how the annual budget is used, politically. One might think a budget would be a wonkish opportunity to reallocate spending across categories. But that will not make headlines for bold political leadership. So, the budget season has become an opportunity to announce exciting new programmes with exciting new names.

This year the new scheme is the Pradhan Mantri AtmaNirbhar Swasth Bharat Yojana. Newspapers report long and varied lists of what this scheme is intended to do, but it largely seems to be a response to the pandemic – new labs and new institutions to fight new diseases. In contrast, an old scheme that focusses on maternal and newborn health – the National Health Mission – has received a 4% increase in budgetary allocation for FY2021-22. This is hardly really an increase because inflation in India is more than 4% a year.

The trouble is, there is nothing new about what needs to happen to address India's longstanding, grave health challenges. India is home to one-sixth of the world's population, one-fifth of the world's births each year, and one-fourth of the world's neonatal deaths. India – even compared with much poorer countries – has an exceptionally large number of neonatal deaths.

Could a bigger health budget solve this problem? If the new Budget is put into action, India will spend about 4% of GDP (gross domestic product) on health. This is less than China, according to WHO (World Health Organization) data, and much less than the richest countries. But Bangladesh spends only 2.34% of GDP on health, according to these data. However, neonates there are more likely to survive their first month than in India.

This is no paradox, because the practices that are known to keep newborns alive are usually not expensive. Keeping babies warm; making sure they are breastfed early by well-nourished mothers; and having well-trained and well-motivated nurses and midwives to give basic prenatal care and monitor normal deliveries in a hygienic environment are inexpensive steps that would prevent most newborn deaths.

When something is not better than nothing

We are not the first to notice that there is something odd about the public economics of private healthcare in India. Official budgets and rhetoric often simply ignore that private providers exist. On this implicit view, it is the job of the public sector to provide healthcare. Yet, Kumar et al. (2015), and others, use NSS (National Sample Survey) 71st Round data to find that 70% of spells of ailment were treated in the private sector. 

Economists Jeff Hammer, Jishnu Das, and collaborators found that care in private settings differs from care at public hospitals and clinics. Private providers have an incentive to appear active, and to give the customers what they want (too often, antibiotics), even if it is not what is good for them. Public providers have little incentive, in too many cases, to do much of anything at all. In the special case of healthcare at birth, where less intervention is often preferred to more, this pattern can have surprising effects.

NFHS (National Family Health Survey)-4 (2015-16) data show that in rural Uttar Pradesh (UP), Bihar, and in other disadvantaged states, neonates are more likely to die if they are born in private facilities than in public facilities. In fact, in UP and Bihar, the neonatal mortality rate among births to rural residents in private facilities was 60 per 1,000, compared to 36 per 1,000 among births to rural residents in public facilities.  Demographers who are familiar with neonatal mortality rates would see this as an enormous difference.

Our research team has been investigating this pattern with qualitative field research. Part of the problem seems to be the incentives that private providers have, to demonstrate that they are ‘doing something’ for patients, such as using medicines to induce or augment labour despite the fact that these medicines increase the chances of foetal distress.  

Budgets, the saying goes, are where politicians articulate their priorities. A good priority to start with is keeping babies alive. And here, there is indeed a way for better budgeting to help.

Janani Suraksha Yojana: The race between incentives and inflation

Sixteen years ago, in an effort to improve maternal and newborn health outcomes, the Janani Suraksha Yojana (JSY) was announced to incentivise mothers to give birth in public facilities. Mothers who qualify for the programme receive a conditional cash transfer. As we have written about elsewhere, JSY (like any other policy or programme) is imperfect (Coffey 2014). So are the public facilities that it is designed to promote. But it arguably did its part – alongside big-picture trends in economic growth and changing norms – to increase public facility births (Dongre and Kapur 2013).

One part of the story that gets left out is that alongside public facility births, births in private facilities have increased too. Unfortunately, as we have discussed above, most of the private facilities that serve rural residents of north India (where neonatal mortality is high) are not safe places to be born.  If all private-facility births to rural residents in UP and Bihar instead faced the neonatal mortality rates prevailing in public facilities, about 30,000 neonatal deaths would hypothetically be projected to be averted annually.

Could the JSY programme be used to shift births from more dangerous private facilities to safer public ones? If births shifted from private facilities to public ones, would the public system be able to absorb additional births and save lives? To the extent that private facilities see more complicated cases, moving births to public facilities may not result in lower mortality rates. However, evidence increasingly suggests that shifting births to public facilities could reduce the harm that private providers cause in less complicated cases, which are the majority.

We think it is worth increasing the JSY incentive to make choosing public facilities more attractive to rural north Indian families. But if it is going to do so, its budget will have to be increased. Rural Indians are richer now than they were in 2005. Many are now willing and able to pay for private healthcare, unaware that it may lower their children's chances of survival.

Here, inflation is the enemy. JSY’s nominal cash payment of Rs. 1,400 is now worth about one-third of what it was in 2005. Competition from private providers has strengthened, too. It may require an even larger real incentive to move patients from private facilities to public ones than it did to move them from home births to public facilities. We hope that next year’s budget brings larger increases for maternal and newborn health in general, and specifically for increasing the JSY payment to a level that once again makes it relevant to rural families' decisions about where to give birth.

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1 Comment:

By: Shyamadas Banerji

Excellent comments. Much more needs to be spent in preventive care at the primary and district level health centers with better diagnostic equipment, and health extension services. Smart phones and TV provide effective tools to mount these education programs. Personal hygiene and sanitation is neglected and could be improved substantially with some educational effort. I have advocated that the government provides a smart phone free or at a subsidized price to every individual above 16 including some training . Health information systems can help improve efficiency of health care delivery , particularly preventive care, and Indian IT companies can design a block chain based secure health information app which could be used by every smart phone user. At a recent webinar organized by the Confederation of Indian Industry on public health, I stressed these same points. Climate change will increase environmental risks and the probability of getting a variety of virus and bacterial diseases which could be substantially mitigated by people observing basic sanitation, hygiene, taking proactive steps to avoid exposure. Clogged drains and stagnant pools provide a fertile breeding ground for many disease carrying insects and vermin. Adjacent countries like Vietnam and Thailand with similar climates as many parts of India have much better public health programs. India should be able to do the same for its citizens.

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