Does investment impact public healthcare utilisation?

Universal health coverage means all people have access to the health services they need, when and where they need them, without financial hardship. At least half of the world’s population are not receiving the health services they need, and almost 100 million people are pushed into extreme poverty each year because of out-of-pocket spending on health.

Customer giving money to buy drug at drugstore pharmacy. Close up view. Various capsules, tablets, Pills in medicine shop on table background

Some people have written off the Indian public health care system but this analysis shows that they should not. When States spend more, people use the public system more – that implies that it has impacts on quality and availability of care that people recognise.

Professor Barbara McPake

In India, there are many socioeconomic inequalities in health. The Indian Constitution assigns the responsibility for health to the states and due to their differences in wealth, each state spends different amounts of money on public healthcare. There has been little evidence from low- and middle-income countries on the association between public spending on health and how people use the health system, our researchers are using the funding disparity between Indian states to measure the impact of public healthcare investment on public healthcare utilisation.

Primary care in rural India is often delivered by private informal providers without formal medical qualifications[1] and despite out-of-pocket user fees for patients generally being lower in government services,[2] private health services are preferred[3].

Our study examined the relationships between state-level public spending on health and the decision as to whether to seek care or not; the relationships between state-level public spending on health and choice of medical provider; and  whether these relationships varied by socioeconomic groups. We found States with higher spending on healthcare had higher usage of public healthcare compared to private healthcare, but there was no increase in the number of people using healthcare.

States with more spending on healthcare, were perceived to have higher quality public healthcare system which lead to less people choosing low quality private providers. While the idea that increased public spending on healthcare will improve the public system is well understood. The idea, that increased public spending on healthcare can help regulate the private sector is underexplored in healthcare. Our findings provide large scale evidence for the regulation by competition in healthcare in a low-middle income country.

This study builds a strong argument for focusing health system strengthening, and strategies for achieving universal healthcare on public investment.

Patrick Mulcahy is an academic researcher in health economics at the Nossal Institute, who during the COVID-19 pandemic is working as an epidemiologist on Victoria's response.

Read the study
Is there an association between public spending on health and choice of healthcare providers across socioeconomic groups in India? - Evidence from a national sample

1Das et al., 2016

2 International Institute for Population Sciences, 2015

3 Mohanty and Srivastava, 2013

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Patrick Mulcahy