April 16, 2024

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 NITI Aayog, a Government of India think tank, published ‘Health System for a New India: Building Blocks’ in November 2019. It was released by NITI Aayog Vice Chairman Rajiv Kumar in the gracious presence of co-founder of Microsoft and co-chairman of Bill and Melinda Gates Foundation, Bill Gates. The report incorporates more than a year’s worth of research and dialogue with key government, private sector, and international stakeholders. Together, the report’s findings and recommendations provide integrated evidence on the current state of the health system in India, and potential options and directions for future reform to raise quality and value in the health system.  

 This report was guided by international experts, along with other national counterparts representing the government, private sector, insurance companies, researchers, and academia. Praising the significant improvements made in India's health sector, Bill Gates said primary healthcare is extremely important for all. India is in a very hopeful situation and is set to be an example for other countries. He also mentioned that the private sector needs to be involved to meet key challenges and that the Gates Foundation through its initiatives will extend all possible help.

 Focus Areas

It is highlighted a need to build India’s opportunities, the vision for health over the next fifteen years to transform the delivery of health services at greater pace, without financially burdening its citizens. The report identified five focus areas of future health system, deliver on unfinished Public health agenda, change health financing away from out-of-pocket so spend into large insurers, integrate service delivery vertically and horizontally, empower citizens to become better buyers of health, harness the power of digital health.

Key Challenges

With the continuous efforts in the health and associated sectors, as per NITI Aayog report, India Total Fertility Rate (TFR) has reduced sharply from 3.4 in 1992–93 to 2.2 in 2015–16. Millennium Development Goals in respect of the Maternal Mortality Ratio (MMR level of 130 against a target of 139) and Under-5 child mortality target (U5 MR level of 43 against a target of 42) is considerable achievements. However, numerous challenges persist. Primary challenges are fragmented delivery of healthcare services, health financing, and risk pooling. Health care services is completely fragmented. Over 98 per cent of healthcare facilities in India are those which employ ten persons or less. This cause health records of patients lie buried in manual systems or left unused for cross-sharing for framing of public policy and research.

 Health financing is fragmented at all three levels—revenue sources, health insurance (financial risk pooling), and strategic purchasing (how funds are used to set incentives for service providers to maximize efficiency, responsiveness, and quality in the health service provider market). There are elevated levels of fragmentation in the sources of revenues, with most health expenditure (about 64 per cent) coming directly from households, out-of-pocket. Disease, in combination with out-of-pocket expenditure, push considerable number of households below poverty line. Government spending on healthcare, 1.1 per cent of GDP (among the lowest in the world for low-middle-income countries), is also fragmented among union and state levels.


India has low level and very fragmented risk pooling, with household out-of-pocket funding at 64% of total expenses dominating the overall system financing. Source: ICHSS team analysis based on multiple public and international sources (National Health Profile 2017, National Health Accounts 2015, Union, ESIS reports)

Risk pooling—before the initiation of Pradhan Mantri Jan Arogya Yojana (PM-JAY)—was low, with merely less than 35 per cent of the population participating in any risk pooling scheme and less than 10 per cent being covered by a functioning risk pooling mechanism (one that provides effective protection against catastrophic events). The elevated level of out-of-pocket expenditure is also a clear sign of the lack of risk pooling.

Severe fragmentation, compounded by market failures and governance challenges, act as a vicious circle driving low health sector performance. Source: NITI Aayog

How critical health system transformations can help

Based on Economic calculations by Ajay Mahal and Cristian Baeza, by introducing critical health system transformations, India can save more than a million additional children lives and reduce working age adult’s death by an additional 16% and that will have consequential impact on increased real GDP 64% by 2030. At same time, it will help to reduce out-of-pocket expenses which will save at least 1.5 million additional households from falling into poverty due to illness. Further, such system will Improve consumer experience and citizen satisfaction. It is also expected to offer globally competitive healthcare insurance and service provision industry which will have substantial impact on employment and help India to emerge as place of medical tourism.


The institution recommended countermeasures to tackle the key challenges. Recommendation focussed on, reduction in out-of-pocket expenditure, risk pooling, strategic purchasing, health-service provisioning, and digital health. Reduced out-of-pocket expenditure in association with enhanced spending to have larger risk pools and better integration—through a single set of regulatory rules— will facilitate the development of payment innovations. It is also recommended to empower patients to become better purchasers and implement PM-JAY with an eye on its potential to influence the overall healthcare transformation in India.


Access the report at https://niti.gov.in/sites/default/files/2019-11/NitiAayogBook_compressed.pdf

Disclaimer:  The information in this article is intended to provide a general guide to the subject.


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