Health Economics Financing &Expenditure : India ... Expenditure Financing.pdf · Health Economics...

63
Health Economics Financing &Expenditure : India &Expenditure : India State Institute of Health and Family Welfare, Jaipur

Transcript of Health Economics Financing &Expenditure : India ... Expenditure Financing.pdf · Health Economics...

Page 1: Health Economics Financing &Expenditure : India ... Expenditure Financing.pdf · Health Economics Financing &Expenditure : India&Expenditure : India State Institute of Health and

Health Economics Financing &Expenditure : India&Expenditure : India

State Institute of Health and Family Welfare, Jaipury

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“Health”Is a “product” ofIs a product of

“Health care”

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Health System Components

Resource Production

Programs Organization

Economical Support

Management Service delivery

g

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ChallengesChallenges

• Manpower- Number & Norms• Rural / Urban differential• Geographical divide across States• S-E groups –accessibility/ reach• Gaps between Policy & Action• Health sector expenditure

N I f i• Newer Infections

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Why Bring Economics to Healthy g• New emerging diseases, • Changing disease profile, • Technical and diagnostic advances, • Longevity of life, • Expectations of people, • Subsidies and cross-subsidies• Increasing non-plan expenditure,g p p• Competing priorities and • Improving awareness among people; p g g p p ;

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EconomicsEconomics is the Science which studies human behavior as a relationship between ENDS andbehavior as a relationship between ENDS and scarce MEANS which have alternative uses–Prof. Lionel Robbins–1932.Study how man and society end up choosing to employ the scarce resources that could have alternative usealternative use

Choice-Decision makingScarce resourcesAlternative use

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Health Economics• Health economics is the application of the

theories concepts and techniques oftheories, concepts and techniques of economics to the health sector.

• Study of How resources are allocated to and• Study of-How resources are allocated to and within Health sector

• AllocationAllocation• Quantity• Efficiency

• Production of Health care and its distribution across pop.

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Why Health Economicsy

• NO health care system has achieved level of spending sufficient to meet all its client need for Health careclient need for Health care.

• Resources are scarce

• What e “ ant” is nlimited• What we “want” is unlimited

• Therefore involves “choice”

M b fi /Mi Effi i• Max. benefits/Min. resources = Efficiency

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• Developed countriesHigher investment in health High Life expectancyHigher investment in health High Life expectancy

Increased Purchasing power parityIncreased Purchasing power parity

Developing countries• Developing countriesPoor investment in health low Life expectancy

Low Purchasing power parity

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Health Expenditure p

Public PrivatePublic Private

Out of PocketOut of Pocket80% of Health expenditure is

privateprivate (WHO,2004)

Profit Maximization

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Concept Of Health Economicsp

Health concept Economic concept1. Health Services

(a) Medical Care –(b) Public Health

• Cost

• Capital and Recurring Expenditure(b) Public Health

Services(c) Environmental

Expenditure

• Depreciation

• Health is an investment and 2. Medical Education,

Training and Research–The cost analysis of

not an expenditure.

yinstitutions involved inthese activities will addup to the cost ofup to the cost ofhealth.

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Demand v/s Supply/ pp y

Demand for health care – influenced byDemand for health care  influenced by• Medical care• Occupationp

• Consumption pattern• Education• Income• Costs 

• Sex, marital status• Culture   etc

Monetary V/s Non-monitory costs

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Supply of Health Care – InfluencersSupply of Health Care Influencers

• Cost of delivery• Cost of delivery• Possibility of substitution …. 

k f (d• Market for inputs (doctors, nurses, drugs, equipment etc.)

i• Remuneration 

• How different remunerations affect behavior of suppliers of health care

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Drivers of Health Cost

• Human Resource• Technology• Drugsg

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Health Care Markets• Externalities – communicable diseases• Asymmetric InformationAsymmetric Information• Uncertainty of Demand• Risk of death / impairment of full functioning p g• Product uncertainty –Quality?• Unique supply position –licensing, highly subsidized medical education social concern etcmedical education, social concern etc.

• Monopoly – to some extent • Need Govt. intervention –efficiency vs.equityNeed Govt. intervention  efficiency vs.equity

Regulation, direct provision, Taxes/subsidies

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Need Availability

Utilization

Felt need+

Affordability/

Access

EquityUtilizationAffordability/Resources

+

q y

Out-of-pocket

Willingness expenditure

Price ( fee d h )and charges)

Demand Supply

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Types of Health Expenditure:

• Public goods-• Cannot be acquired by individuals (e.g.

Water and Sanitation program)• Are used by community• Are used by community

• Externality goods• Individuals can acquire (e g Immunization)Individuals can acquire (e.g. Immunization)• Individual use can benefit community

• Private goodsPrivate goods• Acquired by individuals (e.g. Private

Hospitals)• Used by individuals

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Some facts

• 1,392,954 Practitioners, 125000 in Govt., 59% in iticities

• 49% of beds, 42% of occupancy (private sector)• 40 Doctor/100000 32 Nurses/ 100000 pop• 40 Doctor/100000, 32 Nurses/ 100000 pop.

• (National average-59/ 100000, 79/100000)• Developed country average: 200/ 100000• Developed country average: 200/ 100000

• 76 drugs (25% of essential) under price control• 50% of spending in health is on drugs• 50% of spending in health is on drugs

Source: CBHI-10 & MCI

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• Health expenditure is 4.2, total (% of GDP)

• Proportion of Total Health Exp.: Govt-20%

• Private health exp.:

– 80% of total health cost80% of total health cost

– 97% : OOP

• One hospitalization: 60% of annual income

• Outpatient care accounts for 61 per cent of

private healthcare spendingp p gSource: CBHI & World Bank

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Wh ?Who pays?

• Health Authority?

G t?• Government?

• Taxpayer? p y

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Share in Health Care Spending source:CBHI,NHP-2010

27%27%

Private Expenditure

71%2%

p

External flow

Public Expenditure

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Who really Pays?y y

Opportunity cost• Opportunity cost -if we choose to do one thing, the cost of doing that g, gis the value which would have been obtained from th b t lt ti h ithe best alternative choice

• Who pays - the person who d t i t t tdoes not receive treatment

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Health Expenditure as % of total Plan Outlay

6.5

6

7Outlay

Source: CBHI, NHP, 2010

4 09 3 97

5

6

3.43.1 2.9

3.2

3.9

3.12.8

3.1 3.1 2.9 2.93.2

4.09 3.97

3

4

2

0

1

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Total Govt. Expenditure on Health as % of GDPGDP

Source: CBHI, NHP, 2010

1 11.2

0 810.91

1.050.96

0.88 0.90.83 0.86

0.910.96 0.98

1.031.1

0 8

1

0 49

0.63 0.61

0.740.81

0.6

0.8

0.22

0.49

0.2

0.4

0

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Per Capita Public Exp. on HealthSource: CBHI NHP 2010

184 56202.22

214.62

200

220

Source: CBHI, NHP, 2010

184.56 183.56

140

160

180

200

112.21

100

120

140

19 37

38.63

64.83

40

60

80

0.61 1.36 2.48 3.47 6.22 11.1519.37

0

20

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Status of Expenditure in FYPsSource: CBHI, NHP, 2010

FYPsTotal Plan

Investment HealthFamily Welfare

I 1960 65 2 0 1I 1960 65.2 0.1II 4672 140.8 2.2III 8576 225 24 9III 8576 225 24.9IV 15778.8 335.5 284.4V 39322 682 497.4VI 97500 1821 1010VII 180000 3392 3256.2VIII 798000 7575 9 6500VIII 798000 7575.9 6500IX 859200 10818 15120.2X 1484131 3 31020 3 27125X 1484131.3 31020.3 27125XI 2156571 136147.0

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Total Outlay – Plan and Health (including AYUSH & FW)AYUSH & FW) Source: CBHI, NHP, 2010 Total plan outlay

Heath sector

120000

140000

160000

2000000

2500000

80000

100000

120000

1500000

40000

60000

800001000000

0

20000

40000

0

500000

I II II IV V VI VII VIII IX X XI

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7% of total budget allocated to health

So rce CBHI NHP 20106.49

6

7 Source: CBHI, NHP, 2010

3 34

5

3.33

2.62 1 1 9

2.313

2.1 1.9 1.8 1.71.7

3.97

1

2

0I II II IV V VI VII VIII IX X XI

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Expenditure PatternsExpenditure Patterns

• Public expenditures –declining trends

• Out of pocket – increasing burden, especially the poor and in rural , p y pareas

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Health Spending: Facts• Public Domain

– Center: Rs 35 bi (0 13% GDP)– Center: Rs.35 bi (0.13% GDP)– State: Rs.186 bi (0.72% GDP)

Local: Rs 25 bi estimated (0 10% GDP)– Local: Rs.25 bi estimated (0.10% GDP) – Social Insurance: Rs. 12 bi (0.05% GDP)

Private Domain• Private Domain– Out-of-pocket: Rs.1200 bi (4.62% GDP)

I ( bli t ) R 8 bi (0 03%– Insurance (public sector) Rs.8 bi (0.03% GDP)Pharma Industry Rs 250 bi (0 96% GDP)– Pharma Industry Rs. 250 bi (0.96% GDP)

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Budget Rajasthang j

2.07

140000160000

230.

7

14

1477

6

80000100000120000140000

6287

0.95 10

2 2

8717

1.

n la

khs

400006000080000

7.21

3.99

4.53

775.

6836

.79

9493

.06

2022

8.12

6

Am

ount

i

020000

1 2 3 4 5 6 7 8 9 10 11

16 38 66 17 333 9

Five Year plans

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Health Financing

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Issues in Health Financing:

Red ce o t of pocket pa ments• Reduce out-of-pocket payments• Increase the accountability towards

health care provisionhealth care provision• Risk pooling & Risk sharing.

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Key Issues in Health Financingy g• What is total spending on health

Wh i di it• Who is spending it • What it is being spent on • What are the sources of this exp.• What are the main trends• How efficiently funds are allocated and spent• What can be done to improve Health financing

• Increase kitty • Increase allocative efficiency

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National Health SpendingUses Central

Govt.State & Local Govt.

Corporate/3rd Party

Households Total

Govt.Primary Care•Curative•Preventive

4.3

0 4

5.6

3 0

0.8

0 8

48.0

45 6

58.7

49 7Preventive• PromotiveCare

0.44.0

3.02.7

0.80.0

45.62.4

49.79.0

Secondary/ 0 9 8 4 2 5 27 0 38 8Secondary/Tertiary in Patient Care

0.9 8.4 2.5 27.0 38.8

Non Service Provision

0.9 1.6 NA NA 2.5

T t l 6 1 15 6 3 3 75 0 100 0Total 6.1 15.6 3.3 75.0 100.0

Source: World Bank, 1995.35SIHFW: an ISO 9001: 2008 certified Institution

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Recommendations

Plan allocations & % of GDP• Alma-Ata-5%• CSSR-ICMR-6% (1982)( )• CCHFW (1989)-7% of Plan; actual for 1990 was

only 1.3% of GDP• CCHFW (2001) suggested 2% of GDP from the

then current level of 0.9%

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1377

Health Care Spending (2004-05)

1200

1400

India

800

1000 808Rajasthan

400

600

200

400

73.5 22 4.570 24.5 5.5

0Per capita

expenditureHousehold Public Other

Source: NCMH, 2005

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2500

2000

2500

1700

Out of pocket expenditure on Health (2004-05)

15001500

1000

1700

500

1000 800 750550 550

1000 900

0

500

Based on NHA-2000-01, extrapolated for 2004-05

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What it is being spent onCurative49.7 %

Preventive9.0%

Primary Care

58.7%

38.8%• Secondary• Tertiary

2.5%Non Service ProvisionsTertiary Non Service Provisions

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R l f H lth E iRole of Health Economics

Choice-Decision makingChoice-Decision makingScarce resourcesAlternative useAlternative use

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Choosing-Decision making• Allocative efficiency

• Where to park the resources• Where to park the resources • What discipline to develop (Priority)

• Market researchMarket research• Investment cost

» Human resource availabilityy» Technology & outrage

• Expected Return» Purchasing power» Service utilization» Marketability» Marketability» Competition

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Rationing of Health Careg

• Economics concerned with choice betweenEconomics concerned with choice between competing alternatives

• Based on axiom of scarcity - resources limited yrelative to wants

• Fundamental ‘economic problem’ is therefore pallocation of these scarce resources

• ‘Rationing’ (priority-setting) just another term for resource allocation

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Scarcity y

NeedDemands

Desire

Resources

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Basis of Rationingg

Price system - objective = efficiencyPrice system objective efficiencyconsumer sovereignty

Non price objective efficiency or equity’?Non-price - objective efficiency or equity ?who decides on allocation?allocation by what criteria?allocation by what criteria?

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Alternative Use

Opportunity cost: pp ypossibility of alternative useof moneyof money

Are the benefits from “chosen” greater thanthose “forgone”those forgone

• Burden of disease• Prevalence• Prevalence• Visible impact• Cost benefit• Cost- benefit

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One IVF course = INR 85000What is the opportunity cost?

One-third of a

1 heart bypass operation

O e t d o acochlear implant

operation

150 vaccinations for Measles,

11 cataract removals

Mumps and Rubella

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Medical Care and Utility

•Medical care is an input in producing health•Subject to law of diminishing marginal productivityj g g p y

• Health yields utility to the consumer• Health yields utility to the consumer• Subject to law of diminishing marginal utility

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Economics Seek an Answer

• What influences health? (other than health care) ( )• What is health and what is its value • The demand for health care • The supply of health care • Micro-economic evaluation at treatment levelMicro economic evaluation at treatment level • Market equilibrium• Evaluation at whole system level; and, y ; ,• Planning, Budgeting and monitoring

mechanisms.

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Cost of Care:P i t / P bliPrivate v/s Public

• Direct-• Medicine

• Indirect-• commuting• Medicine,

• consumablesIntangible

• commuting, • wage loss,

social cost• Intangible-• pain,

l t

• social cost,• Fee for facilitation

L d i & B di• neglect, • Lodging & Boarding • subsidy

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Estimating Demand for Medical CareCare

• Quantity demanded • Out-of-pocket price• Real income• Time costs• Prices of substitutes and complements• Tastes and preferences• Profile• State of health• Quality of carey

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What Dictates Private Sector

• Capital & recurring costp g• Payment schemes• TechnologyTechnology• Cost of Training• Public expectationsPublic expectations• Regulatory mechanism

• Taxes• Taxes• Regulations

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What Health Economics Should M t P f iMean to Profession

• Matching inputs to outputs and outcomesI i Effi i• Increasing Efficiency

• Technical (output with minimum )resources)

• Allocative (produce output which people value mostvalue most

• Cost effectiveness(output at least cost)

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Taking Care of Cost: What To Do g

• Ensure stable financing mechanism• Enhance financial protection and social safety p y

nets. • Achieve more resource allocation and

t di t ff ti h lthgovernment spending on cost effective health interventions

• Improve institutional capacity and capability in• Improve institutional capacity and capability in budgeting, pricing, financial planning and management

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Sources of Financingg

• Taxation, • Health insuranceHealth insurance, • Private payments –Out of Pocket

expenditure (OoPE)expenditure (OoPE)• And external support(Donor agencies-

Grants/ Loans)G a ts/ oa s)

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Which Source

• People’s capacity to pay, • Administrative capacities to collectAdministrative capacities to collect, • The Nature and quality of services , and

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• Need for User charges-1 Too many to use the public1. Too many to use the public

services2 Li it d2. Limited resources3. Increasing demand4 Hi h i4. High recurring cost

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Why User Charges?y g

• People misuse just because it is “Free”• Revenue generated can improve quality• Marginal sections can be better looked

after (Cross subsidy)• System can be made self sustainable to• System can be made self sustainable to

a large extent• Payment increase sense of ownership &Payment increase sense of ownership &

Participation

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• Mechanism for introducing User charges-

• Dual pricing• Graded charges• Exemption criteria• Exemption criteria

• What determines User Charges?• Cost of care• Cost of care• Cross subsidy costs• Replacement cost including inflation and p g

rupee devaluation

58SIHFW: an ISO 9001: 2008 certified Institution

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• Some more approaches for Financing• Some more approaches for Financing Health care are-

Introduction of User fee with cross»Introduction of User fee with cross subsidy

»Public Private Mix using spare»Public Private Mix using spare capacity

»Introducing Sub-contracting &»Introducing Sub-contracting & leasing

»Build Opertate Transfer/ Own»Build, Opertate,Transfer/ Own»Expanding revenue base ( more

services brought under fee)services brought under fee)

59SIHFW: an ISO 9001: 2008 certified Institution

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Tools for Health Care Financingg

• Health InsuranceHealth Insurance• Regulation and Legislation• National Health AccountsNational Health Accounts• Resource allocation (Allocative efficiency)• Cost benefit and cost effectiveness analysis• Cost benefit and cost effectiveness analysis• PPP• RMRS• RMRS

60SIHFW: an ISO 9001: 2008 certified Institution

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Rajasthan Medical Relief Society• NGO-Registered society-Autonomy• Self-sustainableSelf sustainable• Reducing cost of care –No middle man• Instrument for cost recovery (user fee)Instrument for cost recovery (user fee)• Cross subsidy to marginalized• Promote PPP for capital intensive facilities in• Promote PPP for capital intensive facilities in

Health care• Structure(9-11 members)Structure(9 11 members)

– PHS/Commissioner/Collector, Supdt./PMO/CMHO/BCMO, Doctors (2-HO/BCMO, Doctors (23), PRI(2), Citizens(3), NGO, Associate /Institutional memberSIHFW: an ISO 9001: 2008 certified Institution 61

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RMRS: Progress

Expenditure RMRS Beneficiaries

RMRS: 53 Hospitals, 368 CHCs & 1504 PHCs

249417592009-10(Dec.)

Expenditure

6677032009-10(Dec.)

RMRS Beneficiaries

824570102008-09 5750132008-09

27217655

53801066

2006-07

2007-08

944431

631249

2006-07

2007-08

64831821

0 50000000 10000000

2005-06 1667639

0 500000 100000015000002000000

2005-06

0 50000000 10000000 0 500000 100000015000002000000

SIHFW: an ISO 9001: 2008 certified Institution 62

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Thank YouThank You

For more details log on towww. sihfwrajasthan.com

oror contact : Director-SIHFW

on

[email protected]

63SIHFW: an ISO 9001: 2008 certified Institution