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

BackgroundIn 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 ۱۶ Indian states between ۲۰۰۵ and ۲۰۱۳. MethodsIn examining ۵ 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. ResultsOur results show that, at the state level, growth in per capita central level primary healthcare expenditure has increased by ۱۱۰% from ۲۰۰۵-۲۰۱۳, while state’s own contributions to primary healthcare expenditure per capita increased by ۳۲%. Further analyses show that a ۱% change disbursement from the central level leads to a -۰.۱۳۲%, although not significant, change by states in their own expenditure. The effect for wealthier states is -۰.۱۵۱% and significant and for poorer states the effect is smaller at -۰.۰۹۶% and not significant. ConclusionThis 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.

Keywords:

Health Systems , Spending and Financing , Primary Healthcare , India , Fungibility