Budget 2020-21 didn’t address the core issues of ailing health sector

Source: Indian Express

Gs2: issues Relating to Development and Management of Social Sector/Services relating to Health.

Synopsis: Four important issues ailing the health sector did not find a place in the budget.


  1. The budget allocation for the health sector in 2021-22 was (24 lakh crore) 137 % more than the previous year (69,000 crores).
  2. However, the actual share of Health and Family Welfare was only a third of the total allocation of Rs. 24 lakh crore.
  3. This is because, the increase in budget for ‘Health wellbeing’ also included funds for drinking water, sanitation, nutrition, AYUSH, health research, vaccination as well as grants assigned by the 15th Finance Commission.
  4. Also, a new centrally-sponsored scheme PM Aatmanirbhar Swasthya Bharat Yojana was announced as a part of Budget 2021-22.
  5. Even in this case, the funds allocated to this new scheme will be materialized only when the programmes are implemented.

What are the critical issues that have not been addressed by the Budget 2021-22 in the health sector?

Despite the above measures introduced in the Budget 2021-22, it has failed to address the four critical issues ailing the health sector. They are

  1. First, the Budget has failed to find a solution to bring down the costs of outpatient treatment.
    • Under Aayushman Bharat, 50 crores of eligible poor people are entitled to cashless hospitalisation. However, the cost of drugs, the high cost of high-end diagnostics leads to high out-of-pocket expenditure before a patient needs hospitalisation.
    • This ultimately reduces the number of people using affordable health care services. It defeats the very purpose of Aayushman Bharat.
  2. Second, Insurance coverage for the middle class is not adequate. Under the Ayushman Bharat health Programme, only 50-crore poor people are covered.
    • Whereas another  10 per cent organised sector employees are covered by different government or employer generated medical coverage schemes.
    • Still, around 30 crore Middle-Class Indians are without any state-supported medical insurance.
  3. Third, the Budget has failed to give effect to the 2017 National Health Policy recommendation. The Policy recommended for grading of clinical establishments to protect consumers rights. The states are not implementing the model Clinical Establishments Act 2010.
  4. Fourth, the need for a separate Empowered Medical Tribunal as recommended by 2017 National Health Policy, is not been addressed. The complexities of medical negligence or malpractice cannot be addressed by The Consumer Protection Act 1986. Thus, a separate health regulator on the lines of the State and Central Regulatory Commissions is critical for the health sector.

What needs to be done?

  • A viable solution is required to reduce out of pocket expenditure in outpatient care services. This will make public health services affordable.
  • Some international models can be analysed for health care funding:
    • In Germany and France, health care is funded through mandatory contributions of both employer and employees.
    • The Canadian model: The Canada Health Act of 1984 makes federal cost-sharing a government responsibility. Healthcare entitlements in Canada are also portable across the country.
  • The Employees State Insurance Corporation scheme created in 1948 could also be modified and used to cover white-collar employees in the unorganized sector.
  • Public health and hospitals can be brought on the concurrent list of the Constitution as recommended by the 15th Finance Commission. This will bring uniform principles and regulations throughout the state and ensures standards in consumer protection.
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