State of India’s Health Sector | 30 Nov 2022

Why in News?

Recently, Fifteenth Finance Commission chairperson N.K. Singh addressed the Confederation of Indian Industry (CII)’s 19^th Health Summit 2022 and highlighted various issues in the sector.

• The CII works to create and sustain an environment conducive to the development of India, partnering industry, Government, and civil society, through advisory and consultative processes.

What are the Recommendations/Issues Highlighted?

• Inclusion of Health in the Concurrent List:
  • Under the Constitution, the term 'health' should be included in the Concurrent List.
  • Also made a pitch for universalising health insurance to capture ‘the missing middle’.
    • The Missing Middle: People who are not rich enough to buy private health cover nor poor enough to qualify for government schemes.
• Increasing Public Outlays:
  • There is a need to enhance public outlays [on health] to 2.5% of GDP by 2025.
    • This would entail a major jump over this year’s Budget numbers and require States to target 8% of their Budgets towards the health sector, which is ‘a daunting challenge’.
• Inter-State Variations on Health Spending:
  • The need is to recognise the large inter-State variations on health spending and outcomes.
    • For instance, except Meghalaya, states are spending less than 8% of their Budget on the health sector, with the average being at 5.18% in 2018–19.
    • The per capita health spending of Bihar, Uttar Pradesh and Jharkhand is about half that of Kerala and Tamil Nadu.
• Development Financial Institution:
  • The Finance Commission chief also suggested setting up a development financial institution for the health sector.
    • Development Financial Institutions are specialized institutions set up primarily to provide development/ Project finance especially in developing countries. These are usually majority-owned by national governments.
• Restructuring CSS:
  • Additionally, it was suggested that Centrally Sponsored Schemes (CSS) should be restructured to make them more flexible for states to adapt and innovate.

What is the Scenario of the Healthcare Sector in India?

• About:
  • The healthcare industry comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment.
  • India’s healthcare delivery system is categorised into two major components - public and private.
    • The government (public healthcare system) comprises limited secondary and tertiary care institutions in key cities and focuses on providing basic healthcare facilities in the form of Primary Healthcare Centres (PHCs) in rural areas.
    • The private sector provides a majority of secondary, tertiary, and quaternary care institutions with major concentration in metros, tier-I and tier-II cities.
• Potential of the Indian Health Sector:
  • India's competitive advantage lies in its large pool of well-trained medical professionals. India is also cost competitive compared to its peers in Asia and western countries. The cost of surgery in India is about one-tenth of that in the US or Western Europe.
  • India has all the essential ingredients for the exponential growth in this sector, including a large population, a robust pharma and medical supply chain, 750 million plus smartphone users, 3^rd largest start-up pool globally with easy access to VC (Venture Capital Fund) funding and innovative tech entrepreneurs looking to solve global healthcare problems.
  • India will have about 50 clusters for faster clinical testing of medical devices to boost product development and innovation.
  • The sector will be driven by life expectancy, shift in disease burden, changes in preferences, growing middle class, increase in health insurance, medical support, infrastructure development and policy support and incentives.
  • As of 2021, the Indian healthcare sector is one of India’s largest employers as it employs a total of 4.7 million people. The sector has generated 2.7 million additional jobs in India between 2017-22 - over 500,000 new jobs per year.

Way Forward

• There is an urgent need to improve the infrastructure of public hospitals, which are overburdened as a result of India's large population.
• The government should encourage private hospitals because they make a significant contribution.
• Because the difficulties are severe and cannot be tackled just by the government, the private sector must also engage.

Source: TH