Expanding fiscal health space in Nepal

The government needs to explore additional sources of financing to expand the fiscal space of healthcare services.

Photo: UNICEF

Gauri Pradhan

  • Read Time 4 min.

Health is a fundamental right of people as per the UN Declaration of Human Rights. The constitution of Nepal also ensures fundamental health rights, emergency health services and equal access to health services for all. Therefore, providing primary health facilities to people and protecting their health rights is an essential obligation of the state. However, looking at the present healthcare coverage and the burden of health expenses of the people, Nepal is on a difficult road. Nepal’s health budget is considerably lower than the global average of 10 percent of Gross Domestic Product (GDP). Referring to the budget for FY 21/22, there is a significant budget reduction in hospitals and academics, which may be due to the Covid-19 pandemic. The health budget in Nepal is very much centrally focused and lacks fair distribution to reflect the spirit of federalism.

Low investment, misplaced priorities

According to the WHO, health financing is a core function of health systems enabling progress towards universal health coverage by improving adequate services and financial protection of people. A big chunk of people’s income is being spent to meet their healthcare needs. Consequently, poor and vulnerable populations are further falling into the poverty trap due to the rising health expenses, particularly during their illness. Therefore, Nepal needs to appropriately review its health coverage status and extend the fiscal space for healthcare services to respond to the dire needs of people’s health issues. An international study reveals a need for $ 86 per capita investment in the health field of low-income countries like ours. But, Nepal’s per capita investment in health is meager, and it is about only $ 20 per person per year. Statistics reveal that the general government expenditure on health accounts for only four percent of the public budget. The out-of-pocket expenditure of an individual in healthcare is about $ 57.2 despite the government’s budget allocation of NPR 4.8 billion in FY 2021/22.

In the face of having a glorious vision of “prosperous Nepal and happy Nepali”, the development practice in the country lacks a pro-people spirit, economic sustainability and environmental friendliness. Government priority is focused on “Bulldozer Development”, such as building concrete urban jungles, river exploitation, road construction without proper socio-economic analysis, constructing mega airports damaging the environment and eco-system, building view towers and big gates instead of giving priority to public goods like health, education and social security. The so-called “Rashtriya Gaurawka Aayojana” (national pride projects) also lacks a concrete vision and appropriate analysis for social empowerment, economic growth of the people, and environmental protection. There is a close link between the general population’s health and overall development. Experiences have proved that no national security is conceivable without proper human protection.

Nepal needs to appropriately review its health coverage status and extend the fiscal space for healthcare services to respond to the dire needs of people’s health issues.

In 2001, when the world entered into the Millenium Development Goal (MDG) era, Nepal also increased its budget to meet the declared health targets. To meet the Sustainable Development Goals (SDGs) 2030, the government has further expanded the fiscal space of the health sector. As a result, Nepal has progressed significantly in terms of prevention and control of Infant Mortality Rate (IMR), Under Five Mortality Rate (U5R), and Maternal Mortality Rate (MMR) and life expectancy of people, despite a decade long armed-conflict and natural calamities like the devastating earthquakes of 2015. Nepal also has extended financial schemes to support the poor and vulnerable people in treating non-communicable but life-threatening diseases like cancer, dialysis, TB etc. However, the health system in Nepal faces profound challenges in the fair distribution of healthcare services. People, in general, are complaining that they are suffering from increasing healthcare expenses due to a lack of good public health services in the country. Inadequate health budget allocation, poor administration of healthcare, and ineffective health service monitoring systems are some of the crucial challenges facing Nepal.

Generally speaking, the government’s economic policies are focused on the growth paradigm. Still, unequal growth and lack of a proper social security system have also contributed to growing pains at people’s level. From the perspective of growth-based economics, the state’s investment in health, education, and social security is in deficit. But the government cannot get away with handing over these “state burdens” to the market economy. The state should not forget that the invisible cost of people’s illness and lack of proper health services might be an enormous burden to society if the issues are not tackled correctly. Hence, the government must focus on meaningful investment in promoting and protecting people’s health, which matters significantly for the country’s national development. UNICEF reveals that an investment of one USD in child vaccination is equivalent to the return of $ 16. Similarly, a little investment in the capacity building of midwives also can save thousands of pregnant women and newborn babies during the delivery.

In Nepal, the National Health Policy covers programs including vaccination, family planning, birth preparedness, free delivery services, abortion care, and community post-partum care to benefit society’s marginalized and vulnerable people. The government receives a considerable amount of international grants and soft loans. Traditionally, the government has been hugely taxing the production, import and sale of alcohol, tobacco-related products, vehicles and luxurious goods. Likewise, the government has also been expanding its sources of health budget by taxing services related to communication, drinking water, electricity and transportation. But this has also put a further burden on commoners.

What the government should do

The government needs to explore additional sources of financing to expand the fiscal space of healthcare services. The government also needs to extend its partnership with the Non-Profit Organisations (NPOs), Community Based Organizations (CBOs) and cooperatives working in health fields. The government also needs to promote corporate social responsibility (CSR) to contribute to national health goals. During a health crisis, government and non-profit organizations (NPOs) can campaign for cloud funding. Development assistance can also be regarded as a reliable source of revenue for the government, alongside taxation. But the issues of governance, transparency and accountability of the healthcare programs need to be appropriately addressed to further attract international financing and public trust in the government policies and programs. 

There should be an appropriate budget planning for the per-unit cost of essential healthcare services based on the size of inhabitants, remoteness, the burden of disease, and the degree of poverty.

Generally speaking, there are basically three significant health financing functions: re-prioritizing expenses, increasing sources of revenues and enhancing service efficiency in the health sector. Besides, there should be an appropriate budget planning for the per-unit cost of essential healthcare services based on the size of inhabitants, remoteness, the burden of disease, and the degree of poverty. The government-funded programs such as safe motherhood, under-privileged citizen health treatment and social health security need to promote easy access to healthcare services. Due to their vulnerabilities, the people living at risk must be supported to respond to their health emergencies.

Just imagine if we could introduce proper social security plans and health care schemes. 

Gauri Pradhan, a former member of the National Human Rights Commission (NHRC), is associated with Public Health Concern Trust (phect-NEPAL).

ncell_ad