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IMA Calls for Increased Healthcare Funds in Upcoming Union Budget

Written by : Jayati Dubey

July 8, 2024

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Apart from higher budget allocations, the IMA advocates for a tax-funded universal healthcare system that offers all citizens a basic service package.

As Finance Minister Nirmala Sitharaman prepares to present the Union Budget on July 23, marking her record seventh presentation, the Indian Medical Association (IMA) has demanded a significant increase in healthcare funding.

The medical body advocates for a tax-based health financing system to set a robust pace for the next five years under the Modi 3.0 government.

In a letter to the FM, the IMA expressed grave concerns over the government's historically low healthcare expenditure, which currently hovers between 1.1% to 1.6% of GDP. This allocation is among the lowest globally.

The IMA urges the government to increase healthcare spending to 2.5% of GDP. They believe this move is crucial for addressing the current shortfalls in the healthcare system and improving public health outcomes.

"Allocations varying from 1.1% to 1.6% of GDP are among the lowest in the world. We request that the allocation be hiked to around 2.5% of the GDP," the letter stated.

Demand for Separate Allocations

The IMA also stressed the need for separate budget allocations for essential health determinants such as drinking water and sanitation, which are critical to public health.

Currently, India's total health expenditure, including both public and private spending, is estimated to be 3.8% of GDP. This is significantly lower than the average 5.2% health spending share of GDP in low- and middle-income countries (LMICs).

Apart from higher budget allocations, the IMA advocates for a tax-funded universal healthcare system that offers all citizens a basic package of services.

They emphasized the importance of substantial investments in public-sector hospitals and suggested a broader goal of allocating 5% of GDP to the health sector.

The IMA also called for re-envisioning the Pradhan Mantri Jan Arogya Yojana (PMJAY) to include outpatient care and the cost of essential drugs, as well as provisions for direct patient transfer and reimbursement models.

Highlighting the need for a strategic focus on healthcare, the IMA suggested that the sector should be treated as a priority, much like industries, education, and agriculture, to achieve the goals of a developed India (Viksit Bharat) by 2047.

They proposed capital equity financing support for new hospital projects through institutions such as SIDBI and suggested infrastructure grants and state support for new healthcare facilities.

Concerns Over Insurance Regulations

The IMA also expressed concerns about the complexities of the third-party payor system introduced under PMJAY.

They noted that this system has led to indirect price controls and suboptimal pricing, which have compromised the quality of medical care and created ethical issues, such as illegal out-of-pocket expenses.

The IMA highlighted the need to review health insurance regulations and the impact of Goods and Services Tax (GST) on the healthcare sector.

Alongside the IMA's demands, drugmakers are seeking tax incentives and financial support for R&D of novel drugs.

Further, it seeks the support needed to boost India's pharmaceutical research capabilities and maintain its competitive edge in the global market.


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