15th Finance Commission holds meeting with the World Bank and its HLG on Health Sector For the First Time Finance Commission to Devote Entire Chapter on Health Financing

For a better undertanding of the contours of India’s Health Sector and in view of the Union Government’s need and intention for reprioritization of its health spending, the 15th Finance commission held a detailed meeting with representatives of the World Bank, Niti Aayog and member of the Commission’s High level group (HLG) on the health sector.

The  Chairman XVFC Shri N.K Singh and all members and senior officals of the Commission were present at the meeting. The World Bank was represented by Dr. Junaid Ahmad, Country Director, Mr. Muhammad Ali Pate, Global Director, and other senior officials. Dr. Randeep Guleria, Director, AIIMS, Dr VK Paul, Member Niti Aayog, Dr Indu Bhushan, CEO, Ayushman Bharat also took part in the meeting.

The meeting started off with Dr. Junaid Ahmad stating that World Bank has been engaged in India’s health sector for long time. Recently, in context of the pandemic, a billion-dollar loan has been given by World Bank to the Government of India. It has been engaged in helping State governments to strengthen service delivery through district hospitals. World Bank has recently successfully concluded a 20 year long partnership with Government of India in the area of HIV. He stated that States in India are going to be the anchor in implementation of health programs. As States are so different from each other, the solutions for them will be custom made. Health, he said, was not just a social expenditure but also important for economic growth and development of the country. In this regard, he felt that the Finance Commission may like to look at health in three different ways: grants to enhance per capita spending, block grant for capacity building and a performance incentives for certain health outcomes. Similarly, in context of health a pivotal role may be played by local bodies. Also, more than 60% of health demand in India is supplied by private sector. Leveraging private clinics along with DBT may be used as tools to increase engagement with private sector. Importance of non-communicable disease can’t be undermined. Another area that needs focus is infectious disease programs like tuberculosis.

Dr. Junaid Ahmad also stressed on the importance of engagement with Centrally Sponsored schemes with Government of India for implementation of these programs. He cited the example where World Bank had engaged in implementation of Samgra Shiksha Abhiyan with five States of India. Similarly, in health sector, institutions like district hospitals, primary health centres, private providers, municipalities, social sector system may be leveraged carefully. World Bank, he suggested, could play a role in designing and implementation of such programs while working closely with such institutions. Government’s programs needed to be converged with Finance Commission recommendations along with efforts of World Bank towards a common goal, he said.

A presentation made by World Bank Highlighted that :

• There is scope for service delivery reforms by using innovation, leveraging technology, institutional strengthening, coordination and empowering of States.
• The adverse economic impact is likely to be proportionally larger than the direct impact of the coronavirus on morbidity and mortality. For example, as per projections done by IMF, per capita GDP is projected to decline by 6% which is one of the largest contractions the country has ever seen.
• Quality of care has emerged as a key issue in India’s health system. Also, there is huge variability across states and care providers.
• To ensure better quality of spending, there is a need for PFM reforms to improve budget execution, resource allocation formulas from states to districts should better reflect population need (mortality/morbidity/equity) rather than historical norms, reduce fragmentation of health protection schemes and a gradual shift to demand-side financing modalities.
• There is also a need for renewed focus on equity and need. For example NHM should be related to per capita spending on health, similarly, spending per beneficiary must increase in poorer States. Needs-based transfer formulas for health should be carefully designed. Also, a separate health equalization pot is needed. Explicit accountability frameworks including target results need to be explored.
• Greater attention to resource allocation is required within States.
• Service delivery should rely on a robust public/private mix.
• Government of India can be an enabler of ‘open source’ approach to promote service delivery reforms. For example, financing via centrally-sponsored schemes that allows flexibility in implementation and course-correction, setting accountability mechanisms with states linked to central schemes and promoting knowledge transfer platforms may be used.
• Service delivery innovations need to be encouraged like introducing technology solutions, primary health care centers in urban areas may be run by contracted private providers, public-private partnerships may be encouraged in areas of digital technology, data science, bottom of pyramid models; and multi-sector actions and community mobilization.
• Core public health functions need to be strengthened. Production of global public goods like new vaccines, medicines and diagnostics to be enhanced. Use of private sector engagement for TB diagnosis and treatment, performance-based incentives to states and districts through TB Performance Index may be taken up.
• Strengthening of surveillance and district level capacity should be done to identify and respond to future epidemics. The following measures may be taken:
  • Roll-out targeted investments to enhance integrated public health laboratory infrastructure and functions in states where capacities are weak.
  • Develop and deploy district surveillance teams with core competencies in integrated disease surveillance across different states and at the central level to enhance analytical capacity for early and appropriate response (Epidemic Intelligence Service).
  • Develop and roll-out real time surveillance & reporting system for Human and Animal Health Surveillance as most future outbreaks will be Zoonotic.
  • Strengthen national and state institutions to effectively prepare for pandemics (NCDC) and develop ICMR as a global center for excellence in medical research.
  • Strengthen inter-agency coordination for disease preparedness and response.
• Institutions like ICMR, NCDC and NDMA should be strengthened for disease preparedness, diagnostics, investigation, response and population health. Institutional reforms and innovations should be promoted in vertical disease control programs like TB, HIV, VBD. Local bodies like municipalities should also be strengthened in terms of resources and capacity building so that they can play incremental role in health care delivery.
• Dr. Paul, member, Niti Aayog emphasised on the importance of local bodies in delivery of health care services. He also emphasised that 65% of public spending on health comes from State Governments while 35% come from Union Government. There is an enhanced need to increase the overall expenditure on health sector.
• Dr. Guleria, Director, AIIMS, emphasised that public –private partnership in health sector should be encouraged. He also asked for enhanced focus on investigative infrastructure of health.
• Dr. Indu Bhushan stressed the need to cover the ‘Missing Middle’ population in PM-JAY. He also stated that private hospitals need help as they are stressed with falling revenues and rising cost. He also emphasised that health should be a concurrent subject.
• Chairman Shri N.K. Singhrecollected the Finance Minister’s intention to increase the budgetary outlay ministry of Health in her announcement of the special package for the economy.
• It may be recalled thatIndia COVID-19 Emergency Response and Health Systems Preparedness Package (ER&HSP) was approved by Cabinet on 22^ndApril 2020 for ₹ 15,000 Crores. This included mainly emergency response components such as development and operations of dedicated COVID facilities with isolation wards, ICUs, etc including the training of the health professionals, augmenting testing capacity, procurements of PPEs, N-95 masks, ventilators testing kits and drugs, conversion of railway coaches as Covid Care Centres, strengthening surveillance units, Untied funds to the Districts for the Emergency response etc.

Chairman stated that the Fifteenth Finance Commission, for the first time, will devote an entire chapter on health financing. He also opined that the High Level Committee on Health sector constituted by Fifteenth Finance Commission and the World Bank will dove-tail their study and analysis to come up with suitable recommendations for health sector. The Government of India’s spending on health through Centrally sponsored schemes will also be studied in detail by the Commission before it gave its recommendations to the Union government.