The Challenge of Additionality: The Impact of Central Grants for Primary Healthcare on State-Level Spending on Primary Healthcare in India.

Diana M Bowser,Manjiri Bhawalkar,Peter Berman,Rajesh Jha

doi:10.15171/ijhpm.2019.06

Abstract

Background: In planning for universal health coverage, many countries have been examining their fiscal decentralization policies with the goal of increasing efficiency and equity via "additionalities." The concept of "additionality," when the government of a lower administrative level increases the funding allocated to a particular issue when extra funds are present, is often used in these contexts. Although the definition of "additionality" can be used more broadly, for the purposes of this paper we focus narrowly on the additional allocation of primary healthcare expenditures. This paper explores this idea by examining the impact of central level primary healthcare expenditure, on individual state level contributions to primary healthcare expenditure within 16 Indian states between 2005 and 2013. Methods: In examining 5 main variables, we compared differences between government expenditures, contributions, and revenues for Empowered Action Group (EAG) states, and non-EAG states. EAG states are normally larger states that have weaker public health infrastructure and hence qualify for additional funding. Finally, using a model that captured the quantity of central level primary healthcare expenditure distributions to these states, we measured its impact on each state’s own contributions to primary healthcare spending. Results: Our results show that, at the state level, growth in per capita central level primary healthcare expenditure has increased by 110% from 2005-2013, while state’s own contributions to primary healthcare expenditure per capita increased by 32%. Further analyses show that a 1% change disbursement from the central level leads to a -0.132%, although not significant, change by states in their own expenditure. The effect for wealthier states is -0.151% and significant and for poorer states the effect is smaller at -0.096% and not significant. Conclusion: This analysis suggests that increases in central level primary healthcare expenditure to states have an inverse relationship with primary healthcare expenditures by the state level. Furthermore, this effect is more pronounced in wealthier Indian states. This finding has policy implications on India’s decision to increase block grants to states in place of targeted program expenditures

Highlights

As fiscal policies evolve and countries around the globe plan for universal health coverage, countries are re-examining their fiscal decentralization policies.[1,2,3] In many contexts, some form of fiscal federalism will be contemplated as part of the reform process
These results reveal a disconnect between the spending priorities at different levels of government, demonstrating that decisions on whether to maintain or supplement funding for specific programs depend on varying factors across Indian states
Central primary healthcare expenditure per capita at the state level increased by 110% from 0.65 USD to 1.35 USD per capita over the period 2005-2013 in real terms

Summary

Introduction

As fiscal policies evolve and countries around the globe plan for universal health coverage, countries are re-examining their fiscal decentralization policies.[1,2,3] In many contexts, some form of fiscal federalism will be contemplated as part of the reform process. Fiscal federalism is defined as both the conditional or unconditional allocation of funds by a central or federal government to lower level provinces or states and often involves a level of political and administrative decentralization with regard to specific programs, such as healthcare.[4] In countries such as Nigeria, Ethiopia, South Africa, and India, subnational levels are already responsible for a significant portion of the total health spending in the country. In India, as of 2007, 68% of public health spending is executed at the state or lower level.[5]. This paper uses variations in central level expenditure across different states in India to understand the relationship between central expenditure and lower-level spending on primary healthcare

Methods

Results

Discussion

Conclusion