The NITI Aayog in collaboration with the ministry of health and family welfare (MoHFW) and World Bank released the Performance in Health Outcomes Index. In a first of its kind effort by the Centre, the composite index captures the overall performance of States in health along with annual improvements in outcomes, governance and processes. States have been ranked in three categories — larger States, smaller States and Union Territories — to allow for better comparability.

The overall objective of the index is not only to highlight the top performers but also States that are making significant improvements. Kerala, for instance, ranks at the top in terms of overall performance; however, with respect to annual incremental progress, it ranks at the bottom. This is because it has already made significant progress in health outcomes, and showing marginal improvements when the baseline is fairly strong is more challenging.

Among the larger States, Kerala, Punjab and Tamil Nadu have emerged as the top performers, whereas Jharkhand, Uttar Pradesh and Jammu & Kashmir have shown the maximum improvement in annual performance by reducing neonatal mortality and under-5 mortality rates, on the one hand, and increasing immunisation coverage and institutional deliveries, on the other. Worryingly though, one-third of States have registered a reduction in their health indices in 2015-16 compared to 2014-15.

Federalism

In a large federation, cooperation and competition among States plays a key role in transformation. In India, States have emerged as equal partners of the Centre in development, and competition among them has reduced the time for implementation of several key reforms. For instance, some States have reformed central laws in the areas of labour and land acquisition on which the Centre has had difficulty moving ahead, while others have swiftly moved to reform tenancy laws through modern land leasing laws.

In areas such as health, promoting competitive and cooperative federalism becomes even more important because most of the action happens at the State-level. The Fourteenth Finance Commission has increased the share of tax devolution to States from 32 per cent to 42 per cent of the divisible pool. The trend of devolving a larger share of resources to and increasing spending by States is likely to become stronger on account of greater decentralisation and urbanisation. By ranking States not just in terms of their overall performance but also their annual incremental progress, the index will nudge them towards transformative action in health.

Of course, promoting competition has to be accompanied by the provision of technical support in the form of human capital and management practices. This is important because the States that are lagging behind are typically the ones that have weaker capacities. In this context, NITI Aayog’s efforts such as the development of a knowledge portal for the dissemination of best practices as well as the provision of handholding support to States, will be crucial. While the geographic spread and diversity of India calls for State-specific interventions, several innovative practices have emerged across States which have the potential to be scaled-up and replicated. Moreover, what works in one State may well work in others with some customisation.

Fiscal transfers

Eleven out of the twenty-four indicators on which larger States have been ranked fall in the domain of outcomes like neonatal mortality rate, under-5 mortality rate and total fertility rate, as well as intermediate outcomes such as full immunisation coverage, proportion of institutional deliveries, and total case notification rate of tuberculosis.

The index will play an important role in shifting the discourse from inputs and outputs to the achievement of health outcomes. While increasing spending on health is important, it is equally crucial to improve the efficiency of spending so that the return on investment can be maximised. This is why financing mechanisms need to be redesigned to act as levers for improving the efficiency and effectiveness of the health system.

In this context, the announcement by MoHFW that certain incentives under the National Health Mission will be linked with performance on the index, is encouraging. NITI Aayog, in its three-year action agenda, had suggested that central transfers to States should follow principles that incentivise better outcomes, rather than the current input-based guidelines.

Globally, too, there are examples of performance-linked fiscal transfers. For instance, in Argentina, an index of ten indicators covering service delivery and outcomes was used in the Plan Nacer Programme for making payments to districts. Similarly, in Rwanda, incentive payments from the national government were made contingent to subnational public providers improving the quality of service delivery in the area of HIV/AIDS. Approval for payments was granted only after an independent audit of the performance reports was conducted.

Strengthening data systems

As highlighted in the Healthy States Progressive India Report, there is considerable scope for improvement as far as the quality of the health management information system is concerned. By bringing critical data gaps in areas like non-communicable diseases and out-of-pocket expenditure in public health facilities to the fore, the index can also serve as a catalyst for enhancing the timeliness, accuracy and relevance of data systems in the health sector. Availability of credible outcome data at more frequent intervals is critical for guiding health system action as well as putting health-related issues at the centre of the public discourse.

The index will undoubtedly be refined in the years to come but an important beginning has been made. This exercise, if institutionalised, has the potential to help India meet its commitments in health as part of its Sustainable Development Goals as well as leapfrog in the Human Development Index.

The writer is with the Office of Vice-Chairman, NITI Aayog. The views are personal