India’s expenditure on healthcare as a percentage of its GDP is 3.5% as of 2018. This is in comparison to 7.6% of South Korea as of 2017. A 1994 NIPFP paper points out that South Korea was spending 0.2% of its GDP on public health in 1960, which increased to only 0.4% in 1987. India was spending only 0.5% and 0.9% in 1960 and 1987 respectively. Subsequently, South Korea made a huge jump in its expenditure during 1987-2017 to 7.6%. India increased its public health expenditure by only 2.6 percentage points of its GDP during the period, from 0.9% to 3.5%.
In the US, by contrast, total public healthcare expenditure accounts for up to 16% its GDP spanning Medicare, Medicaid, children’s health insurance and insurance covering the disabled, low income, native American Indians, military, etc. However, this excludes the cost of out-of-pocket expenditure incurred by patients.
In Britain, by contrast, which spends up to 10% of its GDP on public healthcare, all healthcare expenditure — even for undocumented immigrants — is free in emergency and for certain infectious diseases, which is funded by general taxes. The coverage for the general population covers in-patient and outpatient care, maternity services, eye, dental and mental health, hearing aids, etc. According to some estimates, more than 85% of prescription drugs were dispensed free of charge in Britain in 2016.
In South Korea, public healthcare covers a major proportion (50-80%) of the cost of procedures, consultations, prescription drugs and accidents. This does not mean that healthcare is free for citizens. They need to bear on average 20% of the cost of healthcare, which accounts for about $100 a month.
How did India get from only 0.9% of its GDP in 1987 to 3.5% in 2018 on public healthcare? GoI launched the Ayushman Bharat programme in 2017 for low-income families with no earning member, those vulnerable and those socially deprived. It provides a health cover of ₹5 lakh per eligible family. As part of this programme, many senior citizens avail of prescription drugs at very nominal prices, as long as their underlying generic medication is identified.
Even though health is a state subject in India, public healthcare expenditure consists of public health expenditure by the central, state and local governments. But states in a federal structure are typically poor when the central government is impoverished — the standard state of affairs in this pandemic.
So, state governments continue to depend on the central government for basic funding to cover healthcare. But it would be wrong to say that India’s public healthcare infrastructure is crumbling. India is just going through what Italy and the US went through in 2020. If New York City ran out of ICU beds and ventilators for patients then, it’s unfair to blame India burdened with historical healthcare neglect.
So, what can GoI do to relieve the burden of healthcare expenditure on the public? All consultations, basic diagnostic testing, selective hospitalisation (where needed), procedures, medications and vaccinations should be free of cost. Currently, many private healthcare providers not only fleece patients but they are also not in a position to offer superior healthcare. A basic pandemic healthcare model should be expanded to other healthcare services — once we get over this crisis.