Financing of Health Care in India: Results of NHA from Karnataka

Abstract

India spends a high proportion of its gross domestic product (GDP) on health care but is still poor in terms of health outcomes as compared to countries at a similar level of development. It is, therefore, extremely important to understand the financial dimensions of the health sector to enable policy makers to take wise decisions in this sector. Taking the case of Karnataka, a state in India, this article seeks to estimate the total health expenditure as a proportion of the state domes tic product (SDP); examine the role of private and public sectors as financiers and providers of health services; and estimate health expenditure by different income classes of beneficiaries, and functions like preventive and curative care. Using National Health Accounts (NHA) as a tool of analysis, this article presents the results for 1993-94. It indicates that 76 per cent of health sector revenues come from private sources, of which almost 50 per cent go to private providers and 21 per cent are spent on drugs. Further, 7 per cent of household out-of-pocket expenditure is used as non-drug expenditure for using government facilities for out-patient and in-patient treatment. This has important policy implications for the government. The role of financial intermediaries, especially the insurance sector, is also highlighted in the analysis. A further analysis by income categories and functional classifications is expected to highlight important results.