Intergovernmental Healthcare Funding Liability in India

Constitutional Framework, Fiscal Responsibility, and Judicial Interpretation

1. Meaning of Intergovernmental Healthcare Funding Liability

Intergovernmental healthcare funding liability refers to the constitutional, statutory, and financial responsibility shared between the Union Government, State Governments, and sometimes local bodies for financing and delivering healthcare services.

In India, healthcare is not the exclusive responsibility of one government. Liability is divided through:

• Constitutional allocation of powers
• Fiscal federalism
• Centrally Sponsored Schemes
• Finance Commission transfers
• Judicial interpretation of Article 21 (Right to Life)

The issue becomes legally important when:

• citizens are denied healthcare because of lack of funds,
• states claim insufficient central assistance,
• hospitals seek reimbursement,
• public insurance schemes fail,
• emergency healthcare is unavailable,
• pandemic management requires coordinated funding.

2. Constitutional Basis of Healthcare Funding Liability

(A) State List – Primary Responsibility

Under the Seventh Schedule:

State List Entries

• Public health
• Hospitals
• Sanitation
• Dispensaries

Thus, States are primarily responsible for:

• public hospitals,
• primary healthcare,
• state insurance schemes,
• staffing and infrastructure.

(B) Union Responsibility

The Union has responsibility under:

• Article 21,
• Entry 28 of Union List (port quarantine),
• Concurrent List subjects,
• national health programs,
• epidemic control,
• drug regulation,
• national insurance programs.

The Union also controls:

• major taxation powers,
• Finance Commission grants,
• centrally sponsored schemes such as:
  • Ayushman Bharat,
  • NHM,
  • vaccination programs.

Hence, although states administer healthcare, the Centre often finances substantial portions.

3. Nature of Liability

Intergovernmental healthcare funding liability may arise in five ways:

4. Landmark Case Laws

Case 1: Paschim Banga Khet Mazdoor Samity v. State of West Bengal (1996)

Citation

(1996) 4 SCC 37

Facts

A laborer suffered severe head injuries after falling from a train. He was denied treatment by several government hospitals due to:

• lack of beds,
• lack of infrastructure,
• administrative failures.

He approached the Supreme Court under Article 32.

Issues

1. Whether denial of emergency medical treatment violates Article 21?
2. Whether financial constraints can excuse the State?

Judgment

The Supreme Court held:

• The State has a constitutional obligation to provide adequate medical services.
• Preservation of human life is of paramount importance.
• Financial inability cannot be used as a defense when emergency treatment is denied.

Important Principle

The Court declared:

Government hospitals and medical officers are duty-bound to provide immediate medical assistance.

Significance for Intergovernmental Liability

This case is foundational because it:

• converted healthcare into a constitutional obligation,
• imposed positive financial obligations upon states,
• established that governments must allocate adequate funds for health infrastructure.

The judgment also indirectly affected Centre-State relations because:

• states argued insufficient central assistance,
• yet courts insisted healthcare obligations remain enforceable.

Thus, constitutional liability overrides fiscal excuses.

Case 2: State of Punjab v. Ram Lubhaya Bagga (1998)

Citation

(1998) 4 SCC 117

Facts

Punjab government changed its medical reimbursement policy for employees and pensioners. Earlier reimbursement was broad; later restrictions limited expenses reimbursable at private hospitals.

The petitioner challenged the reduction.

Legal Question

Can the State reduce healthcare reimbursement because of financial burden?

Supreme Court Decision

The Court held:

• Right to health is part of Article 21.
• However, no government possesses unlimited resources.
• Healthcare policy can be modified based on economic capacity.

Important Doctrine

The Court balanced:

• welfare obligations,
• fiscal sustainability.

It stated:

No State has unlimited resources to spend on any one public welfare scheme.

Relevance to Funding Liability

This is one of the most important cases on healthcare financing.

It established:

1. Governments have healthcare obligations.
2. But courts recognize budgetary limitations.
3. Allocation of funds is partly a policy matter.

Thus, intergovernmental healthcare liability is:

• constitutional,
• but financially conditional.

This case is often cited when states argue:

• lack of funds,
• central grant insufficiency,
• unsustainable reimbursement burdens.

Case 3: State of Punjab & Ors. v. Mohinder Singh Chawla (1997)

Citation

(1997) 2 SCC 83

Facts

A government employee underwent treatment in a private hospital after suffering heart disease. The state refused reimbursement.

Supreme Court Holding

The Court ruled:

• Right to health is integral to right to life.
• Government must bear medical expenses necessary to preserve life.

Key Observation

The Court observed:

The government has a constitutional obligation to bear medical expenses of its employees.

Importance

This judgment expanded healthcare funding liability by:

• recognizing reimbursement as part of constitutional governance,
• treating medical funding as enforceable entitlement.

It increased fiscal responsibilities of states toward:

• employees,
• pensioners,
• emergency care beneficiaries.

Case 4: Shiva Kant Jha v. Union of India (2018)

Facts

A retired government servant sought reimbursement under the Central Government Health Scheme (CGHS). Authorities denied reimbursement due to technical procedural objections.

Issue

Can reimbursement be denied on technical grounds when treatment was necessary?

Supreme Court Decision

The Court strongly criticized bureaucratic denial of healthcare reimbursement.

It held:

• Right to medical claim cannot be defeated by procedural technicalities.
• Healthcare is a constitutional necessity, not charity.

Major Principle

The Court stated:

A government servant during his lifetime is entitled to medical facilities.

Relevance

This case directly concerns:

• Union liability,
• reimbursement funding,
• public healthcare finance administration.

It reinforced that:

• financial schemes create enforceable obligations,
• government cannot evade liability through administrative formalities.

Case 5: In Re: Distribution of Essential Supplies and Services During Pandemic (2021)

Background

During COVID-19:

• oxygen shortages,
• hospital shortages,
• vaccine allocation disputes,
• interstate supply conflicts emerged.

The Supreme Court took suo motu cognizance.

Constitutional Issues

The Court examined:

• Union responsibility,
• state implementation,
• disaster management powers,
• healthcare infrastructure funding.

Court’s Approach

The Court emphasized cooperative federalism.

It required:

• coordinated funding,
• transparent allocation,
• national oxygen plans,
• equitable vaccine distribution.

Importance

This case transformed healthcare funding into:

• a national federal governance issue.

The Court recognized:

1. States cannot independently manage pandemics without central assistance.
2. The Union cannot avoid responsibility merely because health is in the State List.

This case greatly expanded the idea of shared healthcare liability.

Case 6: Consumer Education & Research Centre v. Union of India (1995)

Citation

(1995) 3 SCC 42

Facts

Workers exposed to asbestos suffered severe occupational diseases. The issue involved employer liability and state regulatory obligations.

Judgment

The Supreme Court held:

• Health and medical care are fundamental rights under Article 21.
• The State must ensure humane working conditions and medical protection.

Relevance to Funding

This case broadened healthcare liability beyond hospitals:

• occupational health,
• preventive care,
• long-term medical protection.

It implied governments must allocate public resources toward preventive healthcare systems.

Case 7: Prashanti Medical Services & Research Foundation v. Union of India (2019)

Facts

The issue concerned regulation and obligations relating to healthcare infrastructure and permissions.

Importance

Although not purely about reimbursement, the case highlighted:

• regulatory responsibility of the Union,
• accountability in healthcare governance,
• institutional obligations connected with public healthcare financing.

It reinforced the idea that healthcare governance involves layered responsibility between:

• Union,
• States,
• regulatory bodies.

5. Federal Tensions in Healthcare Funding

(A) Vertical Fiscal Imbalance

States handle healthcare delivery but the Union controls larger tax revenues.

Thus:

• states spend more,
• Centre collects more.

This creates dependence on:

• Finance Commission grants,
• centrally sponsored schemes,
• GST compensation,
• emergency grants.

(B) Centrally Sponsored Schemes

Examples:

• National Health Mission,
• Ayushman Bharat.

Funding pattern often follows:

• 60:40,
• 90:10 in special category states.

Disputes arise when:

• states fail to contribute their share,
• Centre delays release,
• utilization certificates are disputed.

6. Judicial Trend

Indian courts have gradually shifted from:

• viewing healthcare as policy,
  to
• treating healthcare as enforceable constitutional governance.

The judiciary now recognizes:

However, courts still avoid:

• fixing exact budget allocations,
• interfering excessively in fiscal policy.

7. Principles Emerging from Case Laws

Principle 1: Right to Health is Fundamental

Derived from Article 21.

Principle 2: Financial Constraints Are Not Absolute Defense

Governments cannot deny emergency care solely due to lack of funds.

Principle 3: Cooperative Federalism

Both Union and States share obligations during crises.

Principle 4: Reimbursement Rights Are Enforceable

Medical reimbursement schemes create legal obligations.

Principle 5: Healthcare Funding Is Part of Welfare State Obligations

India’s constitutional structure requires progressive healthcare financing.

8. Contemporary Challenges

Major Issues

• Unequal state capacity
• Delayed central grants
• Rural healthcare underfunding
• Pandemic preparedness
• Insurance reimbursement disputes
• Federal conflicts over vaccine procurement
• Public-private partnership accountability

9. Conclusion

Intergovernmental healthcare funding liability in India is a constitutional and fiscal concept shaped by:

• Article 21,
• federal distribution of powers,
• welfare state principles,
• judicial activism.

The Supreme Court has consistently held that:

• healthcare is not merely a policy preference,
• governments at all levels bear enforceable obligations,
• financial limitations cannot completely override the right to life.

At the same time, courts recognize practical realities of limited budgets and therefore encourage:

• cooperative federalism,
• equitable fiscal transfers,
• balanced healthcare governance.

The evolution of Indian jurisprudence shows a gradual movement toward recognizing healthcare funding as a shared constitutional responsibility between the Union and States.