Cost-Effectiveness of Disease Interventions in India
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December 2007 RFF DP 07-53 Cost-effectiveness of Disease Interventions in India Jeffrey Chow, Sarah Darley, and Ramanan Laxminarayan 1616 P St. NW Washington, DC 20036 202-328-5000 www.rff.org DISCUSSION PAPER Cost-effectiveness of Disease Interventions in India Jeffrey Chow, Sarah Darley, and Ramanan Laxminarayan Abstract Health improvements in India, while significant, have not kept up with rapid economic growth rates. The poor in India face high out-of-pocket payments for health care, a significant burden of infectious diseases, and a rapidly increasing burden of non-communicable diseases. Against this backdrop, the central government has proposed doubling government expenditures on health over the next few years. Planned increases in public spending will involve making difficult decisions about the most effective and efficient health interventions if they are to translate into improved population health. To inform the selection of interventions that should be included in a universal health package, this study generated and reviewed cost-effectiveness information for interventions that address the major causes of disease burden in India. We find that India has great potential for improving the health of its people at relatively low cost. Devoting just one percent of GDP (approximately US$6 billion) to a well-designed health program nationwide could save as much as 480 million healthy years of life. Key Words: India, health expenditures, cost-effectiveness, public spending JEL Classification Numbers: H51, H70, I10, I18 © 2007 Resources for the Future. All rights reserved. No portion of this paper may be reproduced without permission of the authors. Discussion papers are research materials circulated by their authors for purposes of information and discussion. They have not necessarily undergone formal peer review. Contents I. Introduction ......................................................................................................................... 1 II. Analytical framework........................................................................................................3 III. Data and methods............................................................................................................. 6 IV. Cost-effectiveness analyses and results........................................................................... 7 Communicable diseases, reproductive health, and nutritional deficiencies ....................... 7 1. Diarrheal diseases ......................................................................................................7 2. Tuberculosis.............................................................................................................13 3. Acute lower respiratory infections...........................................................................19 4. Maternal mortality ...................................................................................................26 5. Neonatal mortality ...................................................................................................31 6. Malaria .....................................................................................................................42 7. Childhood vaccinations: Expanding coverage and adding antigens........................50 8. HIV/AIDS................................................................................................................62 9. Vitamin A deficiency...............................................................................................66 10. Iodine deficiency....................................................................................................72 Noncommunicable diseases.............................................................................................. 75 11. Cardiovascular disease...........................................................................................75 12. Diabetes..................................................................................................................79 13. Epilepsy..................................................................................................................83 14. Tobacco-attributable deaths...................................................................................85 15. Breast and cervical cancers....................................................................................87 16. Blindness................................................................................................................95 V. Comparative analysis....................................................................................................... 97 VI. Concluding remarks..................................................................................................... 103 Appendix A. Cost of improving health infrastructure in India...................................... 104 References............................................................................................................................ 116 Resources for the Future Chow, Darley, and Laxminarayan Cost-effectiveness of Disease Interventions in India Jeffrey Chow, Sarah Darley, and Ramanan Laxminarayan∗ I. Introduction India is undergoing an epidemiological and demographic transition made possible in part by sustained economic development, which has boosted incomes and reduced poverty. Over the past half-century, male life expectancy has increased by more than 30 years. In the past decade, infant mortality has decreased by 20 percent nationwide, with some states achieving declines of 40 percent. At the same time, the aging of the population, due to declines in mortality and fertility rates, has caused greater prevalence rates of chronic disease burden, such as cardiovascular diseases, cancer, and tobacco-related illnesses. Yet a high proportion of the population, especially in rural areas, continues to suffer health problems characteristic of persistent poverty: vaccine-preventable diseases, pregnancy and childbirth-related complications, and malnutrition. With its wide disparities in health gains between prosperous and impoverished states, India has seen only modest health improvements compared to neighboring South Asian countries. For example, the infant mortality rate in India was 65 per 1,000 live births in 2002, having declined 42 percent since 1980; it was lower still in Bangladesh, Indonesia, and Nepal, at 48, 32, and 62, respectively, having declined 63 percent, 60 percent, and 50 percent over the same period (World Bank 2004). India’s slower gains can be partly attributed to weak investment in health spending. At about US$20 (in terms of purchasing power parity) per capita, public health spending is among the lowest in the world and significantly lower than would be expected at India’s level of per capita GDP (Deolalikar et al. 2007). Consequently, private health spending enters the vacuum left by the low level of public spending. At four times the public expenditure, private health spending is, as a share of all health spending, among the highest in the world. This high level of private spending means that much of the burden of health expenditures falls on households, at least a quarter of who have incomes below the poverty line. High out-of-pocket health costs also are an important cause of persistent household impoverishment. Nationally, more than ∗ Jeffrey Chow, Research Associate, Resources for the Future; Sarah Darley, Research Assistant, Resources for the Future; Ramanan Laxminarayan, Senior Fellow, Resources for the Future, 1616 P St. NW, Washington, DC, 20036; email: [email protected]. 1 Resources for the Future Chow, Darley, and Laxminarayan Rs.100,000 crores (1 crore = 10 million) is spent annually in household expenditures on health. However, because private sector health care is unregulated, curative treatment is often prioritized over more efficient preventative care, resulting in wasteful and ineffective health spending. In 2005, India launched the National Rural Health Mission to provide accessible, affordable, and quality health care to its rural areas, particularly to poorer and more vulnerable populations. A central goal of the mission is increasing public expenditure on health—from the current 1.1 percent of GDP to roughly 2–3 percent of GDP within the next five years—to expand public health services, improve infrastructure and staffing, and reduce the burden of health spending on the country’s poor. The mission aims to help bridge the wide gaps in health between affluent and poorer states, to sustain the health gains in the better-performing states, and to address the chronic disease burden that will increasingly strain India’s health care system. Additional public health spending must be appropriately targeted if it is to yield significant health benefits. Public spending can be more effective than private spending only if it undercuts the perverse incentive in the private sector to offer expensive, wastefully inappropriate treatments. In deciding how to use the additional resources to effectively improve health, the National Rural Health Mission should focus on interventions that generate maximum levels of health gain across the population, while improving the basic staffing and infrastructure of public health services needed to provide these interventions. Target interventions also should address disease conditions that are major sources of infant and childhood mortality and infectious disease burdens, to better address the needs of those who are underserved by the current