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Study on healthcare financing in Karnataka: Trend and Distribution

healthcare financing in Karnataka
Admin on July 4, 2014 - 5:14 am in Finance
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More than 70 per cent of the total public expenses on health in India are borne by the State governments. The major source of State government expenditure on health is from the State treasury which is its own revenue. The State incurs certain capital expenditures for health infrastructure through borrowed funds. Apart from this, the Central government introduces and sponsors various schemes/policies that are financed fully or partly by the Centre (Centrally Sponsored Schemes (CSS) and are implemented in the States. Other than these, private organizations and other international bodies/agencies and other countries’ government also contribute to health. All these figures are reflected in the State budgets.

There is continued emphasis on raising the government expenditures on health as it is expected to bring better health status of the people by means of improving the health indicators.  The National Health Policy (NHP) guideline prescribes that the States need to allocate upto 8 per cent of their total budget to the health sector. The National Rural Health Mission (NRHM) launched by Government of India in 2005 aims to increase public expenditure on health from the mere 0.9 per cent of GDP to about 2-3 per cent of GDP in the next five years so as to bring improvements in the health indicators – life expectancy at birth, infant mortality rate, under 5 mortality rate and maternal mortality rate.

On this backdrop, the study attempted to investigate the trends and composition of health financing in Karnataka in the last three years (2009-10 to 2011-12) and discussed the role of NRHM in overall financing in health.

The study used the State budget documents published by the Finance department of the State as the single source of information for health financing in Karnataka. The major budget components under the revenue account that are listed under the – 2210 and 2211, the capital expenditures in health incurred listed under the budget head – 4210 and the expenditures incurred both in medical and public health and family welfare, from the loans given to local bodies and to PSUs which are listed under the components – 6210 and 6211were analyzed for the study. The study also analyzed the trends in different budget components under NRHM during this period. In Karnataka state most of the salary component of the health staff is included in the Zilla Parishad budgets and hence these budgets were also examined. A template for data entry and analysis was prepared and a preliminary analysis of trends and distribution of the health expenditure data has been made.

Observations of the study

  • Trend in the rate of growth of total health expenditure during 2009-10 to 2011-12, is fluctuating.
  • Decrease of central share in total health expenditure is observed
  • Health expenditure as proportion of GSDP has reached 0.72% which is much lower than the NRHM target of 2-3%
  • The proportion of health expenditure in the total state budget is also much lower than the NHP target of 8%
  • There is almost complete utilization of the budget allocated to the health sector in the State
  • A severe reduction in revenue expenditures on urban health services & family welfare is observed whereas the expenditure on medical education, training  & research (tertiary care) has increased
  • The allocations to secondary sector has decreased & that of tertiary sector has increased
  • Under NRHM
    • The allocations for civil works has reduced
    • Increase in the budget allocation is observed for these components – human resources, medicines  & supplies and VHSNCs
    • The trend of budget allocation towards ASHA component has been fluctuating

At present, Government of India has already extended the span of NRHM for next five years (from 2012 to 2017) and in order to sustain the gains in health outcomes, financing of health system needs to be strengthened. The issue of sustainability of the finances for the maintenance of the health delivery system thus, poses serious concern. Increased State government contribution to the total budget is essential for absorbing the Mission components into the regular budget in a phased manner. The State need to take initiatives for enhancing resource allocation through additional taxes, earmarked taxes etc. and allocating a major proportion to health, continuous audit of financial flow and autonomy in use of funds at facility level. Reallocation of resources can be implemented in short term and earmarked taxing can take place in phased manner.

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