A Catalyst for Transformation in India's Healthcare Landscape

A Catalyst for Transformation in India's Healthcare Landscape

The Impact of the National Health Mission on Healthcare Spending in India

The National Health Mission (NHM) has played a significant role in increasing healthcare spending by the central government in India. This is according to a working paper released by the Centre for Social and Economic Progress (CSEP).

The paper highlights that the NHM has had a distinct impact on health spending, particularly in its initial phase. Between 2000-01 and 2004-05, the rate of central health expenditure grew more slowly compared to total expenditure. However, this trend reversed after the launch of NHM in 2005.

The launch of the NHM was accompanied by an increasing role played by the central government in health financing. This is evident from the fact that Union health expenditure per capita grew at a faster rate annually compared to the overall expenditure in the initial years of the NHM.

The study states that between 2005-06 and 2019-20, the union government's health spending per capita grew by 12.4% annually. This is compared to its overall spending, which grew by 10.3%. The growth of health expenditures per capita relative to total expenditure slowed down during 2010-11 to 2014-15. However, it still significantly outperformed overall expenditure in the next five years.

The study also adds that NHM has helped reverse the declining trend of spending on health by states. This is achieved by providing them with non-wage resources in the context of their own low revenues.

To understand the impact of NHM on different states, the study identified six states with different health trajectories. These included non-high focus states under NHM such as Tamil Nadu, West Bengal, and Haryana, and high focus states Rajasthan, Meghalaya, and Madhya Pradesh.

The paper states that after the scheme's launch in 2005, the average annual health expenditure of these six states increased at a faster rate of 17% compared to total expenditure. This is compared to a growth of 15% between 2005-06 and 2013-14.

The study further adds that the share of health in total expenditures of the states rose from 3.04% in 2004-05 to 5.3% in 2020-21. This indicates a significant increase in the priority given to healthcare spending by states after the implementation of NHM.