Report on Financing Reproductive and Child Health Services in Kerala

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Report on Financing Reproductive and Child Health Services in Kerala

AnilKumar

2008

Introduction

Human development is a process of enlarging people’s choices and India has a mixed record concerning human development. Some states are performing well consistently while others are lagging behind continuously. Among Indian states, Kerala, with 3.184 million people, is well and truly on top of all the other states. Kerala’s success vis-à-vis human development is fondly cited as “Kerala Model of Development’ as the state’s development experience departs significantly from traditional models of economic development. The state is characterised by the co-existence of a good quality of life with the almost stagnant economy due to slow agricultural and industrial growth. The state has shown that even at low levels of economic development, basic needs can be met through appropriate redistribution strategies. Hence, Kerala is looked up on as a ‘model’ for other developing states/nations to emulate.

Kerala is known for its high level of human development in spite of poor economic growth and low-income percapita when compared with other Indian states. In terms of many indicators of human development - literacy, longevity, and health care among other things - Kerala is a well-developed State, and in terms of human development index it has been consistently retaining the first rank among the other Indian States. The health development of Kerala has its roots in both health sector interventions and social economic factors that lie outside the health sector. The gender-related health index, which measure the gender equalities in health and education is also highest in Kerala (88.12) followed by Tamil Nadu (62.13). As regards the reproductive health index, Kerala ranks again on the top (84.61). The achievement in health sector, which is par with any developed country standard, is often quoted as “Good Health at Low Cost”. Although Kerala has made significant strides in achieving excellent health indicators, the health scenario in Kerala is changing rapidly. Kerala has been passing through an advanced phase of health transition as experienced in the developing countries. Health transition in Kerala encompasses three elements viz demographic, epidemiological and health care transition. Demographic transition is the most dominant among three of them since it influences the other two via changes in the age composition and morbidity pattern of population and raises the demand for medical care. Kerala has achieved a low fertility rate (below replacement level) and is far ahead of the other states in India in the demographic transition stage. Demographic transition, the decrease in birth rate and death rate, encompasses the phenomenon of “population aging”, an increase in the proportion of people aged above 60 in the population. The percentage of aged population is higher in Kerala and Punjab than the other states. Further more, the absolute number of aged in Kerala is higher than in other states. Since 1971 the decrease in crude birth rate (CBR) of Kerala was much more pronounced than the decrease in Crude Death Rate (CDR). In 1961, Kerala had 2.2 million elderly and by 2023 the elderly population is projected to increase to 8.3 million. The proportion of elderly population has been increasing steadily from 5.9% in 1961 to 7.52% in 1981 and 8.77% in 1991. According to one population projection, the old age dependency ratio will be 30.9% in 2026. By 2026, Kerala will have 6.3 million people aged 60-74 and 2 million people aged 75 and older. A state wide survey conducted among the elderly to assess their health problems reported that more than 31% of the elderly suffer from hypertension, 9.8% from heart problems and 15.97% from diabetes.

Along with demographic transition, Kerala is also witnessing a change in the disease profile of the state. Over the years there has been a marked decline in the share of infectious diseases in the overall disease burden of the state. Compared to other states in India where respiratory infections, diarrheal diseases, T.B. and measles account for major share of burden of diseases, the incidence of these diseases is coming down in Kerala. For instance, the prevalence rate of leprosy has come down from 0.71 in 2002 to 0.66 per 1000 population in 2003. Similarly, prevalence rate of filarial, T.B. etc. has come down in 2003 compared to 2002. The spectrum of diseases in Kerala has been changing from communicable to non-communicable diseases to chronic diseases especially CVD and diabetics. Affluence, progressive aging of population, upward socio-economic conditions and changed life styles caused increase in chronic and non-communicable diseases, which is showing an overall upward trend-a typical characteristic of the second phase of epidemiological transition.

The changes in demographic and epidemiological pattern have a great implication on cost of medical care. ant The NSSO data indicates that the hospitalization rate in Kerala was155 per thousand population in elderly compared to 96 per thousand population in those aged 40-59 . Even with domiciliary care, their treatment is more costly because both the services of specialists and medicines required are far more expensive. In addition the cost of drugs and innovations in medical technology are highly expensive and increases the demand for medical care. With the extension of life the elderly population is prone to multiple diseases, which exerts significant pressure on the existing health system. Owing to the fiscal crisis of the state government there has been a decline in the public investments in government hospitals. Health expenditure as a proportion of revenue expenditure has declined from 10.18% during the period of 1957-58 to1969-70 to 4.99% in 2000-01 to 2003-04. The 60th round of national sample survey ranks Kerala as having the highest private health expenditure in terms of medical care among all in India. Kunhikannan and Aravindan pointed out that the increase in percapita total expenditure on medical care was twice that of increase in general consumption expenditure. In another study they found out that per capita medical expenditure increased from Rs 88.92 to Rs 548.86 in over the period of 1987-1996. According to them the mediflation in all forms of treatment during the period in nominal terms amounted to 517%. But there is a clear lack of understanding of the emerging epidemic of non-communicable diseases on part of the state government as reflected by the absence of any clear policy in this regard. There is also a dearth of information regarding the flow of public funds spent to address this problem. Considering the size and magnitude of this problem, there needs to be a clear understanding of the resource flow within households and between various actors of the health system.

Although the performance of the state in reproductive and child health area is excellent there are many concerns with respect to the high expenditure incurred for seeking treatment for these ailments. Health care expenditure is one of the major causes of indebtedness and poverty in Kerala. Household out-of-pocket spending is the dominant source of health care financing accounting for 86.3% of total health expenditure or 4.15% of GSDP.While government is still a major player in providing care to those for reproductive health problems, more than 60% of population avail treatment from private sources. Rural people seem to use the private sector more than the urban people primarily due to under-development or inefficient functioning of government facilities in rural areas. The high cost of treatment disproportionately affects the poor and weans away a significant part of household’s resources and thereby making them more vulnerable to poverty. The erosion of public provision and emergence of the high cost private care have increased the inequities in accessing affordable health care and thereby undermining the achievements of human development which the state has achieved over the past decades.

One option open to the policy makers is to map the resource flow across various actors and functions and intervene appropriately to minimize the cost of treatment. The size and distribution of government resources spent on reproductive health care, other sources of financing, and how are the resources spent are not clear and haven’t been studied. Given the size and share of resources demanded by reproductive health diseases, an analysis of resource flow would help the policy makers to design appropriate strategy to utilize the resources cost-effectively besides targeting the government resources better and on the needy.

Objective and Methodology of the study

Overall aim of the proposed study is to inform the policy makers about the resource requirements, likely flow of resources, and the relative roles and shares of public and private sectors in providing reproductive health services in Kerala. Given the aim, the main objective of the study is to estimate the size, distribution and use of resources spent on reproductive health services. Specific objectives are

• To estimate the size and distribution of resources spent on reproductive health services in Kerala.
• To understand the roles played by government, private and external sources in the reproductive system of Kerala.
• To map the public and private sources of financing reproductive health services in Kerala.

Resource flow tracing for reproductive health is used to find the will be used to find the resource flow for reproductive health services in the state of Kerala. The study would uses Reproductive Health Accounts framework with appropriate modification to find out the size, distribution, and flow of resources meant for reproductive health services. The sub-analysis poses practical challenges as government budget does not list non-communicable diseases as one of the line items. Secondary data sources such as NSSO, NFHS, budget documents, policy documents, and other (un) published materials were used as the principal data sources for the study.

National Health Accounts and Sub Analysis

National health accounts (NHA) is used as tool to assist policymakers in their efforts to understand their health systems and to improve system performance and to formulate evidenced-based policy decisions. National Health Accounts are used as a framework for analyzing health expenditure data and it which describes expenditure flows - both public and private - within the health sector of a territory. The core concept of NHA is the definition of flow of funds within the health sector, from their sources, through financial intermediaries, to providers and functions. The emphasis in NHA is to describe in an integrated way who pays, how much they pay, and what they pay for . The essential framework of health accounting encompasses a two dimensional matrices that describes the sources and uses of funds within a specified boundary. Many health accounting methodologies have evolved overtime and the most commonly used models are System of National Accounts (SNA, Satellite Accounts), System of health accounts (SHA, OECD) and the Harvard approach (NHA). It has been found that the system of health accounts are used more in developed nations and the Harvard model or national health accounts are more used in developing countries and lower income countries having pluralistic structures for health care financing. Many less developed nations like Srilanka have successfully developed flexible national health accounting models, which are compatible with the international classification of health accounting. The NHA matrix shows the amount of funds provided by financing sources (e.g., government, autonomous bodies, non-profit organizations, and households), financing agents (Department of health, insurance etc), Providers (public and private sources), Functions (Inpatient care, curative care, preventive care etc).

In many developing countries the issue is how to finance and make available a minimum set of interventions that address the increased incidence and prevalence of communicable diseases such as HIV/AIDS, malaria, and tuberculosis, while at the same time face the challenges of the growth of non-communicable diseases associated with the demographic transition. National health accounts methodology also includes sub analysis which focuses on different sublevels of financing like geo-political, disease specific, program specific and socio economic differentials within the nation. Sub analysis can facilitate health sector reforms since they can be used as effective tools in mapping the resource flow at lower tiers as well as address the issues of equity and efficiency. Disease sub accounts answers the concerns of spending for various health problems, disease groups or intervention clusters. Disease specific sub national accounts are also used to find the available resource envelope available for specific diseases and to find the flow of funds through by various entities like government, insurance agencies, household spending etc. Disease specific sub accounts have been developed for diseases such as HIV/AIDS, Dengue and Malaria. India’s first skeletal NHA dates back to the mid-1990s after which state-level NHA were constructed for Karnataka and Punjaband Andhra Pradesh. But a comprehensive NHA for India only took shape during the last two years for the period 2001-02.

The Reproductive Health Accounts

The Reproductive Health Account (RHA) developed in this report is a sub-account or satellite account of a NHA. In RHA actors, activities and transactions are limited to those that are involved in reproductive health and HIV/AIDS. Reproductive health expenditures encompass all expenditures for activities whose primary purpose is to restore, improve or maintain reproductive health. A useful way of viewing activities is in relation to specific objectives such as safe motherhood, teenage pregnancies, mother-to-child transmission of HIV, prolongation of life for people living with AIDS, increased access to health services, increased gender equity in health, etc. Viewing activities in relation to the objectives they serve provides a good basis for the monitoring and evaluation of the activities, and the formulation of a set of indicators to measure the performance of the activities. That way reproductive health accounts represent not only an effective resource tracking instrument, but also a powerful monitoring and evaluation instrument. Monitoring and evaluation view reproductive health programmes as composed of a set of activities that use (invest) inputs or resources (financial, manpower, technology) and that produce results (output) at the programme level intended to lead to changes at the population level (outcome).

The activity boundary for reproductive health expenditures encompass all expenditures for activities whose primary purpose is to restore, improve or maintain reproductive health for individuals during a specified period of time. The activities of reproductive health care include:(a)promoting reproductive health and preventing reproductive health related disease(b)curing reproductive health related illness and reducing maternal mortality (c) nursing care for persons with illness or impairment that are related to reproductive health (4) providing and administering reproductive health service and programmes, including those for family planning and HIV/AIDS. The time boundary includes the chosen fiscal year and the space boundary includes the health expenditures by usual residents of that country.

A brief review of existing studies

The Institute of Policy Studies in SriLanka reviews costs and financing of reproductive health services in Bangladesh, India, Nepal, Pakistan and Sri Lanka (IPS 2004). The study reveals large gaps in the available evidence base and existing information systems. The study shows that the only countries and states for which financing for reproductive health services can be easily quantified are those which have established health accounting systems (Bangladesh, Sri Lanka), or recent health accounting studies of reproductive health expenditures (Rajasthan). In only these territories do databases exist which systematically quantify and classify public expenditures by purpose, and thus enable ready identification of reproductive health service expenditures and costs. Household out-of-pocket expenditures are a substantial source of financing in all countries, but again only in those territories with health accounting systems have the level and composition of household spending been reliably quantified. In all countries, existing household surveys of expenditure and utilization suffer limitations with respect to the detail of their coverage of reproductive health. With respect to the costs of public sector services, similar limitations exist owing to the lack of reliable and representative facility cost studies outside of Bangladesh, Sri Lanka and a few Indian states.

The IIHMR study shows that in the fiscal year 1998/99, the state of Rajasthan spends 6 percent of the State Domestic Product on health care, the same percentage as India. The Government of India (GOI) and the Government of Rajasthan (GOR) with donor assistance finance about 29 percent of health care services while household spending constitutes 71 percent of the total. Of the 71 percent, households allocate 66 percent to direct payments to private providers and 33.6 percent to payments for services initiated in the public sector. Less than 1percent of household spending goes to pay official user charges in public facilities. Of the total state health care expenditure, 21 percent is for reproductive and child health (RCH). These services are a significant part of primary health care. They attend the immediate, basic needs of women of fertile age and of young children and infants by providing services like family planning, delivery assistance, immunizations, abortion, treatment of reproductive tract infections and others. They also support public health measures that aim to halt the spread of sexually transmitted infections including HIV/AIDS. In the study period, the GOI and GOR finances only one fifth of RCH services in the state. On an out-of-pocket basis, households finances four fifths of RCH services. Their direct payments to private providers constitutes nearly half the services financed (49 percent). They also make payments to public providers (31 percent of total RCH spending). It is interesting to note that public institutions receive far more of their financing from households than from governments and donors (31 versus 20 percent). A surprising result of this study was that the treatment of reproductive tract infections (RTIs) accounts for almost half of all RCH expenditures. RTI accounts for 41 percent of RCH expenditures, of which nine percent is spent by the government and 91 percent is spent by households. The high expenditures for RTI are related to the high prevalence of RTI. Only 20 percent of those who report a symptom report seeking medical help, mostly from private providers, although private providers charge three times the cost charged by government providers. Half of the expenditures for RTI treatment are for medicines.