House panel calls spike in govt health spend during 2021-22 pandemic relief-driven anomaly; asks statutory targets to be insulated from emergency fiscal cycles

The Parliamentary Standing Committee on Health and Family Welfare headed by Samajwadi Party leader Ram Gopal Yadav has termed the apparent progress in Government Health Expenditure (GHE), which peaked at 1.84 per cent of GDP in 2021-22, “an anomaly driven by one-off COVID relief and vaccination spending”. Stating that this pandemic-year figure created a misleading impression of advancement toward the 2.5 per cent GHE target, the Committee noted that the ‘distortion’ got corrected only when the delayed 2022-23 estimates revealed a sharp reversion to 1.43 per cent. Th Committee wanted the statutory target envisaged under the National Health Policy 2017 to be insulated from emergency fiscal cycles.

The Standing Committee’s report on ‘Affordability and Accessibility of Healthcare Facilities in Private and Public Sector recommended that the Ministry of Health and Family Welfare, in consultation with the Ministry of Finance, chalk out financial outlook depicting a year-wise, costed glide path, moving beyond a mere aspirational target, detailing how GHE will move forward from the current levels, i.e., 1.43 per cent, to 2.5 per cent of GDP by a revised goal but with binding timeline.

“This glide path must be secured by ring-fenced, multi-year budgetary commitments rather than single-year allocations that are vulnerable to cutbacks, with progress strictly reported to Parliament on an annual basis, the report said.

The Committee complained that the prioritization of healthcare within the broader fiscal framework has regressed alarmingly post-pandemic. “The data explicitly reveals that GHE as a percentage of General Government Expenditure (GGE) plummeted from a peak of 6.12 per cent in 2021-22 to just 4.89 per cent in 2022-23, pulling back to a level even lower than the pre-pandemic baseline of 5.02 per cent in 2019-20". The Committee believes that treating health allocations as expendable once a public health emergency subsides fundamentally undermines the structural integrity and resilience of the healthcare system.

The Committee wanted the government to establish and adhere to a statutory minimum threshold for health allocations as a fixed proportion of total government spending. “Such budgetary provision and allocation will guarantee that healthcare retains a permanently prioritized status in the national and state budgets, explicitly safeguarding public health investments from being crowded out or deprioritized in favor of other sectors during non-pandemic years”, the panel said.

The Committee said the financial protection gains witnessed during the pandemic were fundamentally non-structural. “The reduction of Out-of-Pocket Expenditure (OOPE) to 39.4 per cent of Total Health Expenditure (THE) in 2021-22 was highly dependent on emergency-level public spending crowding out private costs; consequently, OOPE rebounded to 43.4 per cent in 2022-23 as government spending receded. The Household health expenditure, as a percent of THE, followed the same reversing pattern from 44.10 in 2021-22 to 49.10 in 2022-23. The Committee believes that genuine affordability requires shielding citizens from these fluctuating cycles exposing to volatile out-of-pocket costs, particularly in the unorganized private sector”, it said.

The report recommended aggressive scaling up and deepening of insurance and pooled health financing mechanisms. This includes expanding PM-JAY coverage, strengthening state health assurance schemes, and improving primary and secondary care availability in public facilities to prevent patients from being pushed into the costly private sector. The Committee has also proposed the provision of a statutory target of enhancing Government Expenditure and capping on prices of medical drugs, diagnostics and devices to ensure reductions in OOPE as a percentage of THE, bringing OOPE below 30 per cent, tied to a specific target year.