This document discusses national health expenditure estimates in India using the System of Health Accounts methodology. It provides an overview of the purposes and components of health accounts, including the functional, provider, and financing classifications. It then summarizes key findings from India's National Health Accounts estimates for 2017-18, such as household out-of-pocket expenditures being the dominant component of total health spending. The document concludes by noting some limitations of the estimates and future needs, such as extending the analysis to state-level accounts.

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System of Health Accounting and India’s National Health Expenditure Estimates
Dr T R Dilip
International Institute for Population Sciences
Course E3.1: HEALTH ECONOMICS AND HEALTH FINANCING
9th March 2022
Where and how do you get such health expenditure estimates?

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Contents
Purposes of Health Accounts
International Classification for Health Accounts (ICHA) for health care, providers and financing
schemes
Defining current health care expenditures
Limitations of SHA/NHA
Illustration using National Health Accounts-India 2017-18
Purposes of Health Accounts
Can we monitor financial resource flow in health care systems?
How to we arrive at total/ current health expenditure in a health care system?
Are these expenditure data comparable over time across health care systems?
Health expenditure when estimated at national level using System of health accounts (SHA) methods generates the
National Health Accounts (NHA)

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National health accounts (NHA)
It is a systematic approach to mapping the flow of health sector funds through the national
health system over a defined time period
• gives a snapshot of the flow of funds in the health system
• NHA are an important tool to focus attention of policy-makers on financing issues, and to
communicate to them the major issues facing health financing at the national/state level
Provides consistent and comprehensive data that contributes to evidence based policy making
Can track changes in policy priorities and understand if the introduction of reforms and new
programs resulted in changes in health resources allocation and expenditure
Defining current health care expenditures (Boundaries)
The functional classification of health care (ICHA-HC) delineates the boundaries of health care
activities from an international perspective
the boundary contains all activities with the primary purpose of improving, maintaining and
preventing the deterioration of the health status of persons and mitigating the consequences of ill-
health through the application of qualified health knowledge [medical, paramedical and nursing
knowledge, including technology, and traditional, complementary and alternative medicine (TCAM)]

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Functional boundaries of health care expenditures in SHA
Includes health care activities whose “primary purpose” is
● Health promotion and prevention;
● Diagnosis, treatment, cure and rehabilitation of illness;
● Caring for persons affected by chronic illness;
● Caring for persons with health-related impairment and disability;
● Palliative care;
● Providing community health programmes;
● Governance and administration of the health system
Core and extended boundaries
The advantages of this tri-axial approach
include an optimal use of the data sources
to ensure that neither
double-counting nor omissions occur.

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Core accounting framework
Organised around a tri-axial system for the classifying/recording of health care expenditure
functions of health care (ICHA-HC)
health care provision (ICHA-HP)
financing schemes (ICHA-HF)
These three core classifications address the three basic questions
 What kinds of health care goods and services are consumed?
 Which health care providers deliver these goods and services?
 Which financing scheme pays for these goods and services?
Functional classification of health care (ICHA-HC)

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Functional classification of health care (ICHA-HC) detailed
Classification of Health Care Providers (ICHA-HP)

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Classification of Health Care Financing Schemes (ICHA-HF)
Definition of health care financing schemes (SHA 2011)
Health care financing schemes are structural components of health care financing systems: they
are the types of financing arrangements through which people obtain health services. Health
care financing schemes include direct payments by households for services and goods and third-
party financing arrangements.
Classification of Health Care Financing Schemes (ICHA-HF)

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Other classifications / Miscellaneous
Revenue of health financing schemes
Factors of health care provision
Beneficiary characteristics
● Age and gender;
● Type of disease or condition;
● Socioeconomic status;
● Geographical region
Health care functions
The basic dividing lines for structuring the health care functions
are individual versus collective health care goods and services,
the purposes of care (e.g. curative, rehabilitative, long-term care), and
the modes of provision (e.g. inpatient, outpatient).
SHA 2011 distinguishes the health care functions (HC) and certain health care related functions
(HCR)

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Benefits of NHA
The provision of timely data can have an impact on resource allocations
Enable policymakers to make timely decisions
Evidence base for the negotiation between Ministries of Health and Ministry of Finance
It can highlight the need to focus on regulatory issues
It can track the impact of financing changes on health sector reforms
Facilitate cross country comparisons
Monitoring health financing targets at national/sub-national (Health policy) and global level (eg SDGs)
Provide the country or state with a better bargaining position with donors.
Citizens have the right to access information about wealth redistribution
The huge amounts of resources in the health system should be
monitored and accounted for
Satisfaction of health needs require a large amount of resources,
allocation of resources require decisions linked to social values
Health services require resources to be generated and decisions on
allocation affect the distribution of their benefits
NHA is a tool for Transparency and Governance

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Limitations of NHA
Provides snap shot picture of source and use of funds and not trend
Focus only on financial dimension of health system, must be combined with non financial
data to answer policy questions
Accrual method of accounting and actual expenditure estimates
Information on quality /efficiency of expenditure beyond NHA purview
National Health Accounts in India

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NHA Initiative so far in India
National Health Policy 2002 targeted setting up NHA by 2005
NHA Cell set up at MOHFW in 2003
First estimates released in 2005 for the year 2001-02
Second set of estimates released in 2009 for the year 2004-05
National Health Accounts Technical Secretariat (NHATS) with the guidance from NHA
Steering Committee and the NHA Expert Group for India
NHATS prepared NHA estimates for 2013-14, 2014-15, 2015-16, 2016-17 & 2017-18
https://nhsrcindia.org/national-health-accounts-records
India is slow starter in NHA and yet to take it to the state level

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NHA Estimates India 2017-18

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-NHA Estimates India 2017-18
-NHA Estimates India 2017-18

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-NHA Estimates India 2017-18

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Capital Formation NHA Estimates India 2017-18:
Is there any capital formation in private sector??????
NHA Table: Illustration on free from double counting (Estimates India 2017-18)

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NHA Table: Illustration II on NHA Table/Matrix for India 2017-18)
NHA India Estimates: Limitations
Household Out of pocket expenses (OOPE) is the
dominant component in total health expenditure
OOPE estimates based on national surveys
where data quality is important
Health expenditure will be biased if quality of
survey estimates are not considered

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NHA India Estimates: Future needs
Estimates only available at national level (Health is a State Govt subject)
NHA capacity building across stakeholders in health system requires a strengthening
Debates at policy level limited to a few of the so called “key” NHA indicators
NHA not fully institutionalized (turn around of staff involved in preparation of estimates)
Resources:
National Health Systems Resource Centre (2021). National Health Accounts Estimates for India (2017-18). New
Delhi: Ministry of Health and Family Welfare, Government of India https://nhsrcindia.org/sites/default/files/2021-
11/National%20Health%20Accounts-%202017-18.pdf
OECD, Eurostat and World Health Organization (2017), A System of Health Accounts 2011: Revised edition, OECD
Publishing, Paris. http://dx.doi.org/10.1787/9789264270985-en
Dilip, T.R. and Nandraj, S., 2017. The More Things Change, the More They Remain the Same: National Health
Accounts Estimates. Economic and Political Weekly, 52, pp.20-23.
https://www.epw.in/journal/2017/23/commentary/national-health-accounts-estimates.html