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Government-Sponsored Health Insurance in India
this country, where more than 16 percent of the world’s population resides, scrapes by with less than 1 percent of the world’s total health expenditure. The share of health spending has also not kept pace with the country’s dynamic economic growth (in 2001–02, health spending accounted for 4.8 percent of GDP). Public spending on health has hovered at about 1 percent of GDP for the last decade. Government (central, state, and local) is the source of about one-fifth of spending; out-of-pocket payments represent about 70 percent—one of the highest percentages in the world.2 External sources constitute a small share (2.3 percent) of health financing. Within the public health spending envelope, however, central government spending on health has increased as a percentage of total central government expenditure from 1.5 percent in FY2003–04 to 1.9 percent in FY2008–09 (Duggal 2007). Nominal central government spending increased by about 23 percent annually between 2005–06 and 2008–09, largely due to investments by the government of India (GOI) in its flagship National Rural Health Mission (NRHM) (MOHFW 2009a: 35). India is significantly below its global comparators in terms of public expenditure on health as a share of GDP among countries with similar levels of income (GDP per capita in current U.S. dollars). At India’s current income level, most countries exhibit higher public spending on health as a share of their GDP (World Bank 2010a). Figure 2.1 illustrates this situation on a log scale in which each circle represents a country. The countries in South Asia have been labeled for ease of comparison. India also falls short in terms of health impact. Although it has achieved laudable annual percent reductions in infant mortality over the last decade, some of its neighbors, such as Bangladesh and Nepal, have achieved steeper declines (Deolalikar et al. 2008). India has gained less ground in reducing malnutrition, maternal mortality, adult mortality, and prevalence of communicable diseases than its neighbors. In relation to its income level and total health spending per capita, India has not performed as well as its comparators on lowering maternal mortality, and its performance is just about average for infant mortality (World Bank 2010a). Huge disparities in health outcomes are still evident across states and social groups (e.g., scheduled castes and scheduled tribes), and improvements have not been shared equally. Table 2.1 provides an overview of health financing in India by major sources for 2004–05 and 2008–09.3 Over this period, total health spending increased by 64 percent while government spending more than doubled. GOI spending on NRHM accounts for a large share of the increase in public spending over this period. In part due to the NRHM,