Why India should invest in public health

Investing in health is a good thing, but is it also a smart thing? Given our focus on improving conditions for the poorest populations, the Bill & Melinda Gates Foundation is making significant investments in the health sector in two states, Bihar and Uttar Pradesh. With a combined population of more than 300 million and a high burden of disease, these states have disproportionate needs that their governments are working with partners to address. So we clearly believe health is a good thing in and of itself – it has intrinsic value. Does it also have instrumental value – i.e., contribute to growth — and how large is that value?

At the household level, there is ample evidence to suggest that health is vital to an individual’s development, contributing to improved learning, earning potential and the ability to utilize available opportunities. Improved early childhood nutrition, for example, contributes to productivity, economic development, and poverty reduction by improving physical work capacity, cognitive development, school performance, and health (including disease prevalence). The importance of good health at household level can also be revealed by the consequences of poor health, including productivity loss and health spending. The data for India is outdated, but the numbers are nonetheless telling: a whopping 63 million people were pushed into poverty on account of health expenses the 2004 NSSO tells us.

At a macro level, there are clear economic returns to investing in the health of the nation’s people: they are just hard to quantify. The most recent serious effort to do so was made by The Lancet Commission on Investing in Health (CIH). The Commission takes an innovative approach to the economic rewards of health by calculating its instrumental value but also by monetizing the intrinsic value of health. The report finds that the tools and financing for most low-income (LIC) and lower-middle-income countries (LMIC) to achieve a ‘grand convergence’ in global health are already at play.

This ‘grand convergence’ is a reduction in infectious, child, and maternal mortality rates to universally low levels by 2035. To achieve convergence in India, the CIH estimates that the country will need to spend an incremental $24 billion a year for the next 20 years. Comparing this with the current government health allocation of about $20 billion, CIH calls for a little more than doubling of the current spend. It also establishes that the areas requiring the largest investments are maternal and newborn health, malaria, TB, HIV and child health. By focusing on these investments, India could reduce maternal deaths by 63%, and child deaths by 73%, in order to avert about 1 million deaths (including 660,000 child deaths) annually from 2035 onwards. The CIH estimates that for each dollar invested in India achieving convergence between 2015 and 2035 there will be a return of $10– not bad!

There is real benefit in investing in public health, but how does India pay for a doubling of its current spend? Considering that donor contribution is miniscule, much of the increase has to come from the government itself. It is an acknowledged fact that government spending is extremely low —1.1 percent of GDP, compared to 2.9 percent in China and 4.1 percent in Brazil in 2011. India is capable of financing such new investments in health given its projected economic growth over the next 20 years.

Fiscal policies – such as taxation of alcohol, tobacco, and sugar-sweetened beverages – also have the potential to generate substantial revenue while simultaneously acting as a lever to reduce non-communicable disease and injuries. There is legitimate debate, however, on whether such sin tax proceeds should then be earmarked to the health sector (a “Health Cess”) or accrue to general treasury. And perhaps, with an innovative finance solution, the currently high level of out of pocket expenditure borne by India’s citizens could be channeled into a form of social insurance mechanism that would make health care affordable to all. These are ideas that need to continue to be actively debated and perhaps tried out.

Published in collaboration with Impatient Optimists

Author: Girindre Beeharry is the director of the India country office overseeing the Gates Foundation\’s global health and development operations in India.

Image: Children eat their lunch in a free meal centre at the cyclone-hit Gopalpur village. REUTERS