Public Health Financing: The Key to Universal Health Systems

Source: The post “Public Health Financing: The Key to Universal Health Systems” has been created based on “Public Health Financing: The Key to Universal Health Systems” published in “The Hindu” on 4th July 2026.

UPSC Syllabus: GS 2 – Governance

Context: Strong public health systems are essential for achieving Universal Health Coverage (UHC) and improving health outcomes. However, declining foreign aid, rising public debt, and fiscal constraints make it imperative for countries like India to improve the efficiency and quality of public health spending rather than relying solely on increased expenditure.

Need for Better Public Health Spending

1. Declining foreign health assistance

1. Development Assistance for Health (DAH), which peaked during the COVID-19 pandemic, has declined sharply after the pandemic.
2. The United States has reduced its foreign health assistance by 67%, while the United Kingdom, France, and Germany have also significantly reduced their health aid.
3. According to the OECD, global health funding could decline by up to 60% from its 2022 peak.

2. Fiscal constraints

1. Rising public debt has reduced the fiscal space available for health spending.
2. Global public debt reached $102 trillion in 2024, with developing countries accounting for $31 trillion.
3. Developing countries paid $921 billion in net interest payments in 2024, leaving fewer resources for sectors such as health.

Challenges in India’s Public Health Spending

1. Poor budget utilisation

1. India often fails to fully utilise the funds allocated for the health sector.
2. Only about two-thirds of the allocation under the flagship Health Infrastructure Mission was spent during 2024–25.
3. Under the National Health Mission (NHM), only 26% of the funds allocated for communicable and non-communicable disease programmes were utilised.

2. Inadequate spending on essential services

1. Public expenditure is concentrated on salaries, while spending on medicines, equipment, and other health services remains inadequate.
2. This limits the ability of healthcare workers to provide quality healthcare.

3. Excessive focus on curative care

1. A large share of public health expenditure is directed towards secondary and tertiary healthcare.
2. India spends less than one-fourth of its public health expenditure on preventive healthcare.

4. Weak governance

1. Corruption, poor administrative capacity, and inefficient public financial management reduce the effectiveness of health spending.
2. Weak governance prevents higher public expenditure from translating into better health outcomes.

Measures to Improve Public Health Spending

1. Improve budget execution

1. Governments should ensure timely utilisation of allocated funds and reduce implementation delays.
2. Better budget execution will ensure that available financial resources translate into improved health services.

2. Prioritise preventive and primary healthcare

1. Greater public investment should be directed towards preventive healthcare, vaccination, sanitation, disease surveillance, and primary healthcare.
2. Early detection and management of chronic diseases should also receive greater policy attention.

3. Improve the quality of expenditure

1. Adequate funds should be allocated for medicines, medical equipment, diagnostics, and healthcare infrastructure instead of focusing predominantly on salaries.
2. Public spending should prioritise areas where market failures exist, such as infectious disease control and public health services.

4. Strengthen governance

1. Transparency, accountability, and administrative efficiency should be improved to maximise the impact of public health expenditure.
2. Good governance can significantly improve health outcomes, including reducing child mortality.

5. Strengthen Public Financial Management (PFM)

1. Budget credibility and timely cash disbursement should be improved.
2. Healthcare providers should be involved in the budgeting process to enhance accountability and motivation.
3. Procurement systems should be strengthened to ensure better value for money.
4. Health budgets should remain flexible to respond to emergencies such as pandemics.

6. Strengthen decentralised governance: Since healthcare delivery is increasingly decentralised, improving governance and financial management at the State and local levels is essential.

Conclusion: While increased public investment in health remains necessary, better utilisation of existing resources is equally important. India can build stronger and more resilient public health systems by improving budget execution, prioritising preventive healthcare, strengthening governance, and ensuring efficient public financial management, thereby advancing the goal of Universal Health Coverage.

Question: In the context of declining foreign health aid and fiscal constraints, discuss how better public spending can strengthen health systems in India. Suggest measures to improve the efficiency and effectiveness of public health expenditure.

Source: The Hindu