National Level Government Health Sector Expenditure Analysis - 29 states (2005-2013)
What follows Study objectives Scope Process Methods - data sources & constraints Expenditure trends and comparisons Emerging questions for further enquiry
The RTM Conceptual Framework Resource Mobilization Resource Allocation Resource Utilization Resource Productivity Resource Targeting What is the potential for raising more resources for health? From where? What determines the resource envelope at national and subnational levels? How are funds allocated to different programs and functions at national and subnational levels? What factors determine the allocation to primary care? Are the allocated funds being utilized? What factors drive successful budget execution? What are the existing bottlenecks? How effectively are resources being translated into services? Is delivery efficient and what can be gained from efficiency improvements in terms of volume and quality? Are inputs benefiting the intended individuals and population? Is public spending reaching the poor?
Scope Time frame: 2005-06 to 2013-14 Geographic scope: 29 states and 16* select states for PHC analysis Inclusions: Treasury route (incl. NHM) Society route (NHM) Exclusions: Expenditure on HIV/AIDS Private sector ( *(Andhra Pradesh, Assam, Bihar, Chhattisgarh, Gujarat, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh, West Bengal)
Total health expenditure Key Indicators analysis Primary Care Expenditure for select states Across Time NHM as a share of total health expenditure Per capita expenditure on Health and Primary Care UP Bihar EAG, 16 select states Expenditure Analysis Across State categories: EAG, non-eag, NE, 16 select states Primary Care Expenditure as a proportion of Total Health Care All states Health Expenditure as a share of Total State Expenditure Across States In each category Health Expenditure as a share of GSDP
Methods Treasury route (Funds pooled by the state from general taxation) GOI Other (Centrally sponsored schemes through the treasury route) Health financing analysis Expenditures incurred Major codes 2210, 2211, 4210, 4211 (Treasury) GOI transfers (to SHS; and state treasury for infrastructure and maintenance for NHM) Primary care PH, Rural Health, Family Welfare, NHM
Data Sources Desk based analysis of secondary data State Finances A Study of Budgets, Reserve Bank of India for treasury financial data Ministry of Statistics & Programme Implementation, GoI Yearbook 2013 for mid-year population data NHM MIS, March 2015, MoHFW, GoI for NHM expenditure data Economic Survey Statistical Appendix (2014-15) for GDP (national) and GSDP (state)
Expenditure definition and boundaries Government Primary Health Care Expenditure (GPHCE) (Estimated) Total Government Health Expenditure (TGHE) (Estimated) 1. State Health Society (NHM) 2. State Treasury (Health) 1. State Health Society (NHM) 2.1 Medical and Public Health (only 03 and 04 budget codes included) 03 Rural Health Services Allopathy 04 Rural Health Services Other systems of Medicine 2.2 Family Welfare (All sub budget codes included) Streams of funding 1. State Health Society (NHM) 2. State Treasury (Health) Specific components included to estimate Health Care Expenditure 1.1 Central Releases 1.2 State Releases 1.3 Accounts Balance carried over 2.1 Medical and Primary Health - Revenue and Capital (2210 and 4210) 2.2 Family Welfare - Revenue and Capital (2211 and 4211) 2.3 Central Transfers under Infrastructure and Maintenance
Expenditure definition and boundaries contd Other Relevant Variables General State Government Expenditure (GSGE) General State Government Expenditure (All Departments) Gross State Domestic Product Gross State Domestic Product Mid Year Population Annual mid-year population
Limitations NHM figures only include central releases, state contributions to NHM are included in the treasury and could not be separated out for all states. Due to the time lag in the availability of expenditure data for FY 2014-15 the latest year in the study is 2013-14. Due to time constraints primary care health expenditures were estimated only for 16/29 states. For estimating primary care, we included only the budget and expenditure line items assigned under the following Major Codes: 2210, 2211, 4210 and 4211routed through Medical, Health and Family Welfare related Departments of different states, except for Assam and Tamil Nadu
Experiences of previous decade (2005-2014) Supply side initiatives: The first term of the Congress led government in 2004, followed by its second term (2009-2014), made a commitment to financing the health sector with more active engagement from the central government. Establishment of National Rural Health Mission in 2005, then NUHM was established for urban poor. All subsumed under the National Health Mission (NHM) umbrella. Central government goal to increase health financing to 2-3 percent of GDP. Despite the commitment, the target falls short. The state contributions increase at a slower pace than central government.
Experiences of previous decade (2005-2014) contd Demand side initiatives Janani Suraksha Yojana (JSY), which provided incentives to village level workers called Accredited Social Health Activists (ASHA) and pregnant women to deliver their babies in health facilities. Several state led insurance schemes Andhra Pradesh, Tamil Nadu etc The Rashtriya Swasthya Bima Yojana (RSBY) 2008 established by the central government to meet the health insurance needs of the poor.
New objectives of the current government health assurance to all Indians and to reduce the out-of-pocket spending on health care BJP election manifesto Swachh Bharat Mission - 2014, to end open defecation by 2019, financed by an earmarked tax of 0.5 percent of all taxable services. 14th Finance Commission (FC) - a greater devolution of central government tax revenues to states, shifting some funds that had earlier been spent through a variety of centrally sponsored schemes.
New objectives of the current government A new IT-supported implementation platform is being considered to enhance RSBY that would integrate other social and health schemes that address health and its determinants. Establishment of new All India Institutes of Medical Sciences (AIIMS) at Jodhpur, Bhopal, Patna, Rishikesh, Bhubaneswar and Raipur, which are part of the Pradhan Mantri Swasthya Suraksha Yojana
New objectives of the current government The abolition of the Planning Commission, will affect how health is financed in the future. National Institution for Transforming India (NITI Ayog) established as a policy think tank for the Government of India and to reinforce common national interest and thereby foster Cooperative Federalism.
Timeline
Key findings
States ability to mobilize own resources 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Own Tax to GSDP Ratio: 2013-14
Proportion of total state budget allocated to health over 3 years States 2012)13 2013)14 2014)15 BELOW262PERCENT Andhra'Pradesh 4.72% 4.79% 4.39% Arunachal'Pradesh 3.97% 4.06% 6.04% Assam 4.60% 4.31% 5.19% Bihar 3.70% 3.64% 4.12% Chattisgarh 4.36% 4.54% 5.35% Goa 5.78% 5.78% 5.79% Gujarat 5.07% 5.09% 5.96% Haryana 4.02% 3.92% 4.32% Himachal'Pradesh 5.73% 5.73% 6.21% Jammu'&'Kashmir 5.40% 5.36% 5.61% Jharkhand 4.17% 3.90% 5.02% Karnataka 4.28% 4.62% 5.18% Kerala 5.99% 5.70% 6.87% Madhya'Pradesh 4.87% 4.55% 4.82% Maharashtra 4.08% 4.29% 5.05% Manipur 4.66% 5.17% 6.01% Meghalaya 5.35% 4.81% 5.14% Mizoram 3.82% 3.87% 6.17% Nagaland 4.01% 3.86% 5.57% Odisha 4.03% 3.73% 5.19% Punjab 5.66% 5.55% 5.01% Rajasthan 5.07% 5.54% 6.16% Sikkim 5.00% 4.82% 5.48% Tamil'Nadu 4.86% 4.80% 5.22% Uttar'Pradesh 5.49% 5.21% 5.30% Uttarakhand 6.56% 5.44% 6.14% West'Bengal 4.52% 5.54% 5.05% ABOVE262PERCENT Delhi 9.98% 9.73% 12.87% Tripura 6.75% 7.36% 7.22%
Key Messages States ability to mobilize own tax revenue varies significantly across the country. Richer states are better able to mobilize own tax revenue than poorer states. Most states do not prioritize health and allocate less than 6 percent of its state budget to health, except Delhi and Tripura. Some of the richer states consistently have allocated less than 6 percent, including Tamil Nadu or Maharashtra.
TGHE by groups of states 1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 - Total Government Health Expenditure by Groups of States (in Rs. Million) 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 EAG+1 Total NE Non-EAG 29 states
TGHE as a proportion of GSDP (2013-14) 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00%
Nominal Growth in TGHE between 2005-06 & 2013-14 (select Non-EAG states) 397% 284% 302% 308% 287% 263% 294% 231% 241% 202% 239% 199% 262% 228% Growth 29-state mean
Nominal Growth in TGHE between 2005-06 & 2013-14 (EAG states) 441% 393% 311% 373% 338% 262% 209% 194% 220% 44% Assam Bihar Chattisgarh Jharkhand Madhya Pradesh Odisha Rajasthan Uttar Pradesh Uttarakhand Growth 29-state mean
NHM as share of TGHE 40% 35% EAG states continue to rely heavily on NHM 30% 25% 20% 15% 10% 5% 0% 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 EAG+1 NE Non-EAG 29-state mean
Central govt. contribution to NHM as a share of GSDP (2013-14) 0.61% 0.53% 0.47% 0.46% 0.41% 0.37% 0.34% 0.33% 0.29% 0.27% 0.26% 0.23% 0.23% 0.23% 0.22% 0.20% 0.19% 0.19% 0.16% 0.15% 0.14% 0.13% 0.10% 0.10% 0.09% 0.09% 0.08% 0.05% 0.03% 0.79%
NHM going forward Is it better value for money, for NHM to concentrate in a few states with poor outcomes than spreading its investments thinly across all 29 states? It is conceivable that these better off states can mobilize funds equivalent to what they receive from the Central government. b. What is the transaction and administrative cost of NHM borne by the states and the central government? By concentrating in a few states, can this transaction cost also be potentially reduced?
Key Messages The TGHE as percent of GDP is still very short of what was promised. Reasons: financial crisis of 2009-10, lower allocations from the states to the health sector, and weak utilization of budgeted resources Ten years since NHM the imbalance in health spending and health outcomes between the states persists. Better-off states with better budget utilization capacities and lower population figures, contribute to the persistent inter-state disparities.
Per Capita Total Health Expenditure (nominal Rs.) 3,000 2,500 2,000 1,500 1,000 500 399 466 551 709 862 958 1,104 1,179 1,306 0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 EAG+1 states NE States Non-EAG States 29-state mean
Per Capita Total Health Expenditure (2013-14) Nominal Real 4,500 4,258 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 3,023 2,562 3,222 29-states mean: Rs 1,305 (nominal) Rs 719 (at 2004-05 constant ) 1,7711,8191,745 1,745 1,551 1,572 1,287 1,1571,122 978 907 714 801 767 758 788 755 788 750 592 615 583 432 461 339 -
Growth in Per Capita Expenditure on Health between 2005-06 & 2013-14 300% 250% 200% 213% 253% 208% 227% 150% 100% 78% 99% 81% 88% 50% 0% EAG+1 states NE States Non-EAG States 29-states mean Nominal Real
Total Government Expenditure on Primary Care
Trend of GPHCE per capita Trend of GPHCE per capita 400 350 300 In Nominal Rs 250 200 150 100 50 The difference between Bihar, UP and non EAG per capita GPHCE is widening over time (7 times more) 0 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Bihar 111 150 132 176 179 204 222 Uttar Pradesh 175 218 235 235 286 274 EAG 93 194 213 247 247 313 365 Non-EAG 136 179 220 260 260 355 363 All States 116 183 218 254 254 334 364
Comparison of avg per capita GPHCE between EAG and non-eag states 6 year average Per capita Primary Care Expenditure in EAG states 6 year average Per capita Primary Care Expenditure in non EAG states 500 500 450 450 400 400 350 350 300 250 200 150 100 50 0 241 300 250 200 150 100 50 0 265 State AVG EAG AVG State AVG Non-EAG AVG No significant difference between EAG (Rs 241) and non-eag (Rs 265) average per capita GPHCE
Growth in TGHE and GPHCE between 2005-06 and 2013-14 TGHE grew slightly more rapidly than GPHCE in non-eag states but GPHCE grew more rapidly in EAG states. However, since non-eag states start at higher level, we could expect to see increasing disparities in TGHE but decreasing (small) 251% disparities in GPHCE. 222% 213% 201% 264% 294% 231% 220% Bihar UP EAG+1 Non EAG Growth in TGHE Growth in GPHCE
Comparison of per capita GPHCE and TGHE in 2013-14 (in nominal Rs) Comparison of per capita GPHCE and TGHE in 2013-14 (in nominal Rs) 828 461 575 222 339 274 354 341 Bihar UP EAG+1 AVG Non-EAG AVG GPHCE per capita TGHE per capita
GPHCE as a share of TGHE 2013-14 74% 72% 71% Primary Care as a share of TGHE: 2013-14 65% 62% 62% 61% 58% 56% 51% 48% 46% 41% 38% 36% 29%
Key messages Primary care spending is very low overall and not sufficient to finance an adequate package of primary health care. Better off states spend a smaller proportion of their total health spending on primary care, less than 30 percent for Karnataka in 2013-14. Most states (11/16) in the sample show a plateaued or declining trend of primary care expenditure as a proportion of TGHE, and the difference between the EAG and non-eag states is widening over time. There is a 294 percent cumulative increase in the GPHCE for the EAG+1 states during the study period. No discernable pattern in the distribution of GPHCE per capita among the 16 states.
Budget utilization
Average budget utilization rate of treasury budgets for health across states
Average budget utilization rate of NHM budgets for health
Reasons for budget underutilization (based on UP and Bihar) NHM as a share of TGHE in EAG states is almost twice the share in non-eag - poor utilization of NHM would have a substantially higher impact on health outcomes and equity in EAG states A detailed 16 states study to estimate primary care expenditure reveals more than 50% of primary care is financed by NHM low utilization of NHM directly affects primary care implementation. Utilization against available funds (Bihar and UP), is even lower NHM utilization rate is lower than treasury, however, more number of the EAG + 1 states have above average utilization of NHM funds than treasury funds If NHM utilization is increased to 100%, the TGHE will increase half in Bihar, and by one-quarter in UP. Where the purpose of the expenditures is explicit- better utilization rates. Budget lines that require discretion in the optimal use of funds utilization is lower.
Reasons for budget underutilization (based on UP and Bihar) contd. Bottle necks in PFM system in both treasury and NHM - are a persistent problem. Substantial delays in approvals of plans, particularly for NHM, have a cascading effect downstream on releases of fund (large amounts of funds released in the last quarter), and therefore resulting in unspent balances. NHM Planning is not well synchronized with planning & budgeting under the Treasury route District Health Plans have assumed a new centrality and urgency in the current context of the National Rural Health Mission, however, the credibility of the plans and the budget continues to be weak at least in some (poorer) states Bihar, Jharkhand
Substitution effect
Central govt. funding stimulant or substitution effect? We used a model that captured the level of central allocation to primary health care in Indian Rupees in state i at time t, and measured its impact on state s own contribution to spending on primary health in state at time t, according to: stateown it =α+β1central it +β2gsdp it +β3priority it +β4rev it +f i +d t +ε it Where central it was the central level allocations to the each state for primary health care, stateownit was state s own contribution to primary health care, GSDP it represented the per capita GDP in each state at time t, priority it represented the ratio between state health spending and total state health expenditures, and rev it represented each state s own tax revenue, were state fixed effects, were nationwide time dummies, and ε it was an error term.
Central govt. funding stimulant or substitution effect? contd.! Log$State s$own$primary$ Health$Spending$per$capita,$ (2005$Rs)$ EAG=1$(poor)! Log$Central$Allocations$Primary$ F0.175$(0.240)$ Health$Spending$per$capita$ Log$State s$own$primary$ Health$Spending$per$capita,$ (2005$Rs)$ EAG=0$(rich)$ F0.435$(0.086)***$ GSDP$per$capita$ 0.0001$(0.0001)$ 0.0001$(0.0001)$ Ratio$State$Health$Spending$on$ 2.224$(0.892)**$ 3.446$(1.016)**$ PHC/Total$State$Health$Spending$ State$Revenue$per$Capita$ 0.0001$(0.0001)$ 0.0001$(0.0001)*$ Constant$ 2.538$(0.540)***$ 3.417$(0.327)***$ N$ 72$ 70$ States$ $$8$ 8$ R2$ 0.62$ 0.85$ * p<0.1; ** p<0.05; *** p<0.01, cluster robust standard errors in parentheses
Central govt. funding stimulant or substitution effect? contd.! Log$of$State s$own$primary$health$spending$per$capita,$ (2005$Rs)! Log$Central$Allocations$Primary$ C0.292$(0.133)**$ Health$Spending$per$capita$ GSDP$per$capita$ 0.0001$(0.0001)$ Ratio$State$Health$Spending$on$ 2.497$(0.638)***$ PHC/Total$State$Health$Spending$ State$Revenue$per$Capita$ 0.0001$(0.0001)$ Constant$ 3.306$(0.336)***$ N$ 142$ States$ $$16$ R2$ 0.70$ * p<0.1; ** p<0.05; *** p<0.01, cluster robust standard errors in parentheses
Central govt. funding stimulant or substitution effect? A one percent increase in the per capita central grants to primary health is associated with 0.292 percent reduction in subsequent investments to primary health care by each states (p<0.05), There is no relationship between GSDP and state revenue per capita and primary health care spending. This study shows on average the richer states within our sample are diverting about 4.3% away from primary health for every 10% increase in the central government grant, year over year.
Final thoughts
ü Some Observations Total government health expenditure and Government primary health expenditure are remain low. ü Government health expenditure is well below the promised 2-3 percent of GDP ü Bihar and UP consistently performed lower than other EAG states, and over time, the disparity between these 2 states and other EAG states has increased ü On average GPHCE grows more rapidly in EAG states, however, overall investment in total health grows more rapidly in EAG states, further exacerbating the disparity between EAG and non-eag states ü NHM has not been successful in reducing the disparity between EAG and non-eag states ü Better off states invest less on health and primary care in general and substitute their own funds for central funds for primary care.
Policy Implications How to advocate for more funds for health overall, but more specifically, how to advocate for increased prioritization of health to a very diverse group of states. What processes and mechanisms should be instituted to ensure better utilization of the treasury and society budgets, including improved budget planning and management at the state and lower levels. What alternatives to the society route could be developed to improve use of funds? Investigate why GPHCE is so variable and whether this makes a difference in population health outcomes. What mechanisms need to be in place to enable central government funds to achieve better additionality as a means to remedy inter-state disparities in health spending?
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