The reality of the COVID-19 emergency necessitates a relook at our health policy targets, including public health spending and its trajectory

The Union Health Minister, Dr Harsh Vardhan, is reported to have asked the 15th Finance Commission for more resources to be allocated to States so that they can achieve the National Health Policy 2017 (NHP 2017) targets. While underscoring the need for increasing public health spending, the Minister highlighted the Government’s aim to gradually raise the share of public health spending to 2.5 per cent of the GDP by 2025 and spending two-thirds of the health budget on primary healthcare.

The Narendra Modi Government was acutely aware of the fault lines in India’s health sector: Low public health spending (and consequently a high share of household out-of-pocket expenditure on health), shortage of healthcare personnel, lack of prioritisation between primary care and hospital care, a weak healthcare delivery system coupled with the lack of integration of public and private care providers and so forth. Even as the Government was trying to address these issues, the fault lines got fully exposed under the pressure of the COVID-19 crisis. The sector is now under the spotlight. The need for a stronger healthcare system has never been felt so acutely.

Revise health policy targets: Now returning to the Ministry’s recent meeting with the Finance Commission, the NHP 2017 was drawn up in the pre-Coronavirus times. However, the reality of COVID-19 necessitates a relook at the health policy’s targets, including the public health spending target and its trajectory. This is particularly so when there has been a huge slippage in the achievement of the intermediate target of States spending at least eight per cent of their budget on health by 2020. The States are nowhere close to it. On average, they spent only five per cent of their budget on health with a significant variation across the country. Chhattisgarh spent 5.9 per cent, Kerala 5.5 per cent, whereas Punjab and Haryana spent 3.8 per cent and 3.7 per cent respectively in 2017-18. While these targets need to be revised to make them more realistic and State-specific, some States do need tailor-made guidance on a continuous basis in achieving those targets.

Achieving the eight per cent target has become more difficult for States as the pandemic is not just a healthcare crisis but has also led to an economic crisis which will adversely impact Government revenues. The Government may have unlocked the economy to a large extent but economic activities, especially in some labour-intensive sectors such as travel, tourism and hospitality, will take a long time to get normalised. Therefore, the capacity of States to generate and allocate higher funding for healthcare will remain adversely affected for some time. In this context, the Health Ministry’s meeting with the Finance Commission assumes special significance. The commission may come to the rescue of States by making a special provision to enable them to allocate higher budgetary spending to healthcare. But there are limits to what it can do.

The 15th Finance Commission has a useful but limited role: In the short-term, some additional Government funding for health will only have a beneficial effect in restoring non-emergency health services that got displaced due to COVID-19 and in strengthening the public health system in general. But achieving the health spending target of 2.5 per cent of the GDP by 2025 calls for a significant step-up in public health spending. At such level of spending, the issue is not just about funding but also about easing all other constraints — the manpower constraint, solving the care delivery puzzle, governance challenges especially at the district and sub-district level and so forth — facing the healthcare sector today. Solving these problems is a complex exercise requiring State engagement, stewardship and continuous learning to progressively deal with these complex constraints. A Finance Commission, given its role, mandate and a fixed term has its limitations in engaging in technically-complex dialogues requiring domain knowledge.

A couple of times in the past, Finance Commissions have provided health-specific grants to States. Specifically, the 12th Finance Commission recommended equalisation grants for health to seven “lagging” States while the 13th Finance Commission suggested performance-based health grants to all States.

It is important to note that these commissions gave limited health sector grants (only around `5,900 crore and `5,000 crore were allocated by the 12th and 13th Finance Commissions respectively) which had some effect but not a huge one in the larger scheme of things. The 15th Finance Commission, too, has a useful role to play. But its role is rather limited in fostering systemic changes in India’s healthcare system, including achieving the public healthcare spending target of 2.5 per cent of the GDP by 2025. If two-thirds of the health budget are to be allocated to primary care, as reiterated by the Minister, there ought to be a full-fledged discussion and rigorous implementation of interventions. In other words, there has to be some other modality for the Centre and States to have a deeper engagement on the health sector.

Centre-State health compact: The COVID-19 crisis offers a unique opportunity to form a health sector compact between the Centre and States which has eluded our federal structure, where healthcare delivery is a State subject. States indeed play a dominant role both in the funding and delivery of the public healthcare system. And they will continue to play a pivotal role both on the financing and delivery side in future, too. Given this reality, it is only appropriate that States are part of any health sector dialogue on India at any level, which can happen only when the Centre-State compact exists. The basic idea behind this is to create an apex member committee where States make binding health systems-related commitments and are suitably rewarded for honouring them. This health compact needs to be an effective body. The Government needs to do whatever it takes — legislative backing or otherwise, to make this body effective.

In times of COVID, health has become a political priority in every State. It’s a perfect time to form such a compact. Some agency — be it the Niti Aayog or the Health Ministry — has to take this initiative. As no such agreement currently exists — for example, there wasn’t any State buy-in on the intermediate target of spending eight per cent of budgets on health — there’s little wonder why the target never got achieved.

The purpose of having a health compact is to see States buy in on certain targets and ensure that those are met on time. States that refuse to join such a compact will do so at their own peril.

Seize the opportunity: Dealing with the Corona crisis is also giving a lot of good ideas on how India’s healthcare system could be redesigned and strengthened in future. For example, it is giving us insights into the appropriate mix of public and private care providers and how the two could be connected in strengthening primary care with the right infusion of technology and frontline workers. The partnership can work in health administration at the district level and below, in making healthcare affordable, in formulating healthcare regulations and in pursuing medical research. Prime Minister Narendra Modi has repeatedly mentioned that we must convert the current crisis into an opportunity. It is true that fighting the contagion is taking away the bandwidth of healthcare policy-makers/planners both at the Centre and State levels. Undoubtedly, dealing with the pandemic is an urgent matter at hand. But there are many important health sector design issues that need to be addressed both from the shorter-term and longer-term perspective.

The COVID crisis is showing us the way into designing India’s future healthcare system as well as creating conditions for making health policy choices and buying political commitments into implementing those choices. The policy-makers shouldn’t let the urgent and immediate crowd out what’s important.

(Ahuja is a development economist, formerly with the Bill and Melinda Gates Foundation and the World Bank and Pradhan is advisor and adjunct professor, Chitkara University, Punjab.)