I was sick, now I am poor: The impact of health care expenditure

For publishing in local dailies in Nagaland

What would have a Chakhesang Naga village farmer not done before deciding to sell off his paddy field to pay for his son’s medical bills? Left with nothing else, he did it; for who wouldn’t have done so if that can save the life of one’s only son? If a single showing is worth a thousand telling, the story of desperation written on his face was worth a thousand words. I met this man at Phek District Hospital as I was doing field work for my MPH dissertation. I was trying to study the health care delivery system of the district and I needed some interviews from patients availing the health services. This man had a son who was suffering from Tuberculosis of the brain and he had been admitted for months with no sign of recovery. The doctors and nurses were doing the best they could with the limited resources available; the family had given everything they had; and it wasn’t enough.

Studies have shown that among the factors which push households into indebtedness, medical expenditure is at the top. Every year, about 2% of the population in India drop below the poverty line due to health care expenditures. In a recent Study by Centre for Disease Control, 1 in every 3 household in America was found to be facing difficulty in paying medical bills. For those who are at the edge, it requires just a simple nudge to send them falling off the cliff. For Nagaland, we do not have such data but I think it is worth discussing here an important factor which is responsible for such events.

Why is health care in India so poor? Are Indian doctors less dedicated than others? Is it because our people are more ignorant or careless about their health? Is it because of the huge rich and poor divide? Is it poor management of resources? I think the answer is not simple and there are multiple determinants of health. Here, I would like to concentrate on a single factor, i.e. expenditures in health. India spends 4.5% of its GDP on health. Out of this, government spending on health accounts for only 1.4% of GDP. From 1.1% in 1990, it was reduced to 0.9% in 2005. After 2005, there is a slow marginal increase but it is still one of the least in the world being ranked 171st out of 175 countries. The result of this is the rise of private spending on health which accounts for a total of 67% of health care expenditures. The rise in private spending and fall in public spending on health has resulted in increased number of untreated illnesses especially among the poor population. Poorer countries like Sri Lanka and Thailand invest more in health and as a result have better health indicators. In Sri Lanka, almost every individual has access to free in-patient, out-patient and community health care services, and immunization and institutional deliveries are both close to 100%. Only 0.3% of households in Sri Lanka fall below international poverty line because of health expenditure. In countries which are doing well in health care, the government spending on health is dominant over private health care.

The Planning Commission constituted an Expert Committee group to advice on the target to achieve universal health coverage in India. The key recommendation that the committee came up with was recently quoted by the Prime Minister in the newspapers and by the President in her speech at the Parliament during the budget session. It was to increase the government spending on health from 1.2% of the GDP (projected for 2011-12) to 2.5% by the end of the 12th Plan, i.e. 2017. In the union budget, the government hiked its spending on health by 14% and allocation to NRHM by 15 % (20,822 crores) for 2012-13. However, to achieve the target of 2.5% GDP by 2017, the President specifically mentioned that this will mean increase in both non-plan and plan allocation by both the Centre and States. The expert committee report also states that the States have to substantially increase their spending on health in order to achieve this target which is seen as vital for providing health coverage for all.

Now, let’s look at the Nagaland State budget on health for the coming year. It has dropped from 34.50 crores (State Plan, later revised to 48.38) in 2011-12 to 32.64 crores for 2012-13. Since the early 1980s, State government’s spending on health as a proportion of its total expenditure has been decreasing. This is a reflection of the World Bank prescribed Structural Adjustment Policy in early 90s when countries were made to drastically cut spending on the social sector. In 1980-81, Nagaland was spending 9.57% of its total expenditure on health, which dropped to 6.30% in 1990-91 and further reduced to 5.39% in 1998-99. For 2011-12, the figure stands at a meager 3.5%. An explanation of this is perhaps the arrival of NRHM since 2005. But the NRHM is only a mission to give ‘support’ to the existing health care delivery system and not to ‘run’ or ‘take over’ the health and family welfare department. In Tamil Nadu, the NHRM budget (900 crores) is just 19% of the State Budget on health (4,761 crores). Over and above the State budget and NRHM, there is a project called Tamil Nadu Health System Project which allocated 194 crores for 2011-12. Assam is also planning to do away with NRHM. For poorer States like Nagaland, central assistance is a necessity but one should not rely too much on central project like the NRHM for the long run. Health is a State subject and the commitment and importance that each State government gives on health is shown by how much it will allocate its resources to it. For our way forwards I would like to propose some steps:

1. Increase State government spending on health
The people of Nagaland rely heavily on government health institutions for medical care. Even in places like Kohima and Dimapur, the government hospitals have been catering to a large number of people including referrals from other districts. In several districts, the government institutions are the sole providers of health care. As stated earlier, government spending on health is far from adequate in India. Health infrastructure, manpower, equipments and drug supplies are insufficient. Health indicators therefore follow suit. But even within the country, there can be wide variations that for example, there are 10 infant deaths in Goa for every 1000 live births while in Madhya Pradesh, 62 children in every 1000 live births die before reaching their first birthday. Even if the country’s expenditure is inadequate, Health being a State subject, there is much room to improve on our own if we are committed. One may ask how we can increase spending on health when we do not have much revenue at all. The government needs to find ways to do that which may require reallocation from other sectors or increasing tax base to generate additional revenue. But even with the limited resources at hand, health needs to be given more attention than now. When its per capita income was less than $500, Sri Lanka was able to achieve universal health coverage. Basic health care is a basic human need and access to health care has been recognized as a human right. Youths and sports and festivals are important but one needs good health in order to enjoy anything in life. To those areas one sees as important or more basic, one invests more of one’s resources. It often happens that only after losing it, one realizes the importance of health and I wonder if that happened while allocating the budget on health.

2. Upgrade district hospitals
Way back in the 1950s, the Sri Lanka government concentrated on building rural hospitals. These hospitals are not hi-tech, but they provide wide range of services that can tackle all the routine cases. Only the complicated cases are referred to some select referral hospitals in the cities. The health centres in the rural areas are well connected that a rural Sri Lankan has to travel not more than a kilometer or two to reach the nearest health care facility. In Nagaland, the difficult terrain has always been a real hurdle and a good excuse for non-performance. But if the 11 district hospitals can be upgraded to handle all the routine medical and surgical cases, a villager from Mimi in Kiphire do not have to travel over 300 kms to reach the nearest surgeon at NHAK Kohima. As in the case of our trauma centres and cobalt therapy unit, availability of infrastructure and equipments make little sense if there is no manpower to use them. There is a need for boldness for a major reshuffle that surgeons are relocated to hospitals which have operation theatres and pathologists and microbiologists in places where there are laboratories. Post creation not just for a handful of clinical departments, but also for paramedics and even management staff as in NRHM is necessary if the department is to mature. As a teaser for us, Tamil Nadu has projected for facilities like Dialysis Unit, Echocardiogram, Digital X-ray, Mammogram, Modular type multipara monitors, ventilators and life saving equipment for poisoning treatment for all its district hospitals for 2012-13. In the budget speech, it is proposed to upgrade the district hospitals in Nagaland but allocation of money is in no way commensurate with the proposal.

3. Health Insurance
RSBY (health insurance scheme) is being hailed as a savior for the poor to cover the health expenses. The State has won awards at the national level. It is planned to implement the scheme in all the district hospitals in Nagaland. But one needs to study why many other States are not interested in this scheme. 93% of the packages in this scheme are for surgical procedures which can be carried out only in a few hospitals in Nagaland. Out of the non surgical packages (7%), not even a third of them are conditions that our people usually suffer from. Unless the district hospitals are upgraded, they are not in a position to implement the scheme. Somehow, they may be able to, but the utilization will be too low. The package rates are also very low that over and above, the patients have to shell out from their pockets. Out-patient cases and procedures are not covered. Planning Commission’s expert committee reported that out-patient treatment accounts for 74% of the out-of-pocket expenditure on health, and this is not covered by RSBY. For Nagaland, the Central government will have to pay 90% while the State government will bear 10% of the expenses. It is very doubtful if the State government will be able to do this. Enrollment is being conducted all over Nagaland in a war footing, but considering the capacity to implement the scheme and the actual benefits expected, one wonders if this scheme is just a process of transfer of government’s money (public’s actually) into the pockets of private insurance companies with only a few benefits trickling to the poor sick villagers. Again as a teaser, Tamil Nadu has a Chief Minister’s Comprehensive Health Insurance Scheme, and a maternity benefit scheme is also in the pipeline which will pay Rs. 12,000 (highest in the country) to every pregnant mother, fully funded by the State. I do not have an alternative proposal for health insurance except to point out that the State need to consider the pros and cons before implementing a scheme like RSBY. But to implement any health insurance scheme, there needs to be proper hospitals in place.

4. Personal savings for medical emergencies
Until such a time when universal health coverage is a reality and comprehensive health insurance is in place, what can individuals and households do to avoid falling into indebtedness or selling of assets due to medical expenditure? At the Individual and household level, it is good practice to have savings for unexpected medical emergencies. It has been reported that after the government started to directly deposit monthly salary to the individual staff’s bank account, people are beginning to learn the importance of having savings. Mobile banking to rural areas is also a good initiative that will go a long way in helping the villagers.
In conclusion, a society’s progress is not measured by how splendid a show one puts up at a festival or how good the top layers in the society are performing. But it is measured by how much it does to protect those people who live on the edge of a cliff. For the economic progress of any society, a healthy work force is a prerequisite. It is a wise government which invests in the health of its people.

Dr. Sao Tunyi
Epidemiologist (IDSP)
& Joint Secretary, Public Health Association of India (Nagaland Chapter)


  1. Dear Sao,

    Excellent article. Harrowing to hear. We are all closing our eyes and ears to the misery around us. May we be stung into action. Thank you for speaking up!

    I have posted this to the EMFI Facebook Page:https://www.facebook.com/EMFIndia

    The new design of the blog is also a treat on the eyes! Congrats and keep writing!

  2. Thank you bro. Andi, that's very encouraging of you


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