The healthcare dream

Written by Soma Das | Updated: Dec 9 2012, 09:14am hrs
With even the govt admitting that its health for all scheme, as envisaged in the 12th Five-Year Plan, is so lofty as to take years to roll out, Soma Das examines the hiccups in realising this dream

In one of the press conferences held by the government last year to celebrate achievements of UPA II, a journalist from a vernacular daily innocuously asked the Union health minister, Sir, when an aam aadmi falls ill, should he run to private hospitals to get robbed or should he head for a government hospital to die While this may seem like a case of dramatic exaggeration, it largely sums up the perception that Indians hold of their healthcare systems. And if one measures the health of healthcare indicators, they may not tell a very different story. Some health indices, such as maternal mortality and infant mortality rates, may have improved, but India ranks dismally compared to other emerging economiesBrazil, China and Russia.

Present state of affairs

Life expectancy at 65 years is the lowest in India, compared to 73 in Brazil, 74 in China and 68 in Russia. It is not even comparable to the US, the UK and Japan, where people can expect to live much longer with an average expectancy of over 79. In case of number of infants dying per 1,000 live births, Indias report card says 50, much higher than Brazil and Chinas 17 and Russias nine. Even more shameful is Indias record of mothers dying per one lakh births. At 200, India performs very poorly compared to Brazils 56, Russias 34 and Chinas 37.

Around 25% of families, with a member having cardiovascular disease, are forced to make catastrophic health expenditures, and 10% are driven to poverty. Around 50% of households with a member having cancer experience catastrophic health spending, and 25% become poor, says Nata Menabde, head of the World Health Organization (WHO) office in India. As per World Health Statistics, 2012, the annual per capita health spend in India at $44 is one-fourth of Chinas $191, a speck compared to Brazils $734, US $7,960 and the global average of $900. Of the total expenditure on healthcare, the government in India spends the lowest at 30%. The Chinese government bears over half of the total healthcare spend, while the Brazilian governments share stands at 43%. Of the 70% expense in India that is private, over 86% is borne by people directly out of pocket. That is because insurance penetration is very low in the country. With this report card as a backdrop, it hardly comes as a surprise that the health in Planning Commissions 12th Five-Year Plan became one of the most contentious and debated chapters. But the subject also got this never-before attention as the government has embarked on an ambitious but essential project of ensuring healthcare for all.

Proposed model

The Planning Commission has readied a blueprint to achieve the goal of universal healthcare in its final 12th Five-Year Plan document, which is set to be discussed for approval in the National Development Council meeting scheduled to take place towards the end of this month. The broad framework entails a list of health servicespreventive and curativespanning across primary, secondary and tertiary care, which would be termed as the essential health package (EHP). The government would then strive to provide this set of health services to all citizens across the country, in both rural and urban areas on a cashless basis.

Such lofty and complex are these goals that the Planning Commission at the outset admits that this would have to be implemented in a staggered manner and a complete rollout may take two-three five-year plans, effectively meaning 10-15 years.

Meanwhile, the groundwork would involve erecting healthcare networks. At the most fundamental level, this implies the government would build organic linkages between the primary healthcare, secondary healthcare and tertiary services in a demarcated geographical region to ensure the provision of a continuum of care, wherein the primary health care providers, within the network, will act as the gateway to secondary and tertiary care facilities.

For instance, in a government set-upmedical colleges, district hospitals, community healthcare centres, primary healthcare and sub-centreswould all have to be networked, and common disease conditions can be managed at lower levels first, and would only be referred to higher level centres if needed.

This would assure an efficient referral system and follow-up services in a pyramidal set-up where most beneficiaries are catered to by primary healthcare centres. This could cut the unnecessary load of secondary and tertiary facilities, identified as one of the major snags in the present healthcare set-up. This would mean that the current weak and ailing primary healthcare infrastructure will need to be spruced up.

Publicly-funded healthcare would predominantly be delivered by public providers. Private sector will be contracted in only for critical gap filling. In areas where both public and private contracted in providers coexist, patients shall have a choice in selecting their provider, says the 12th Plan final draft. While the document provides a direction, at this juncture it doesnt spell out very clearly the precise role of private playershow they would be contracted, which are the critical gaps they would fill and how big these gaps are.

By accounting for 95% of post-graduate doctors, 80% of out-patient care, 60% of indoor patient care, 30% of medical colleges, 99% of drug manufacturing and 100% of medical equipment, the private sector has a disproportionately large sway over healthcare services in the country.

And till adequate capacities in the public health space spring up, a section of private sector would have to be roped in. It is the how that may turn out to be the real bone of contention.

Public health activists are sceptical about the play that the private sector is finally allowed in the whole structure, stressing that an immensely fragmented private medical sector in India is already plagued with serious problems, such as an acutely skewed huge urban-rural distribution, unethical practices, exploitation due to excessive and irrational medication, frequent exploitation of patients by overcharging and unnecessary interventions, major variations in quality and overall substandard care and violation of patients rights, among other lacunae.

In its final draft, the Planning Commission has left the canvas wide open for states to collaborate with the Centre and customise plans tailored to their needs. The states have to draw their detailed plans in consultation with the health ministry at the Centre by sticking to the basic tenets of the framework.

Debate around RSBY

Earlier this year, a Planning Commission draft of the 12th Five-Year Plan's health chapter, now referred to as the July draft in civil society circles, proposed ensuring healthcare insurance coverage by allowing a select 'network' of private and other operators to sell their services on competitive basis to the government. They were proposed to be reimbursed on 'capitation' basis or at fixed rates for different treatments for every patient. The draft envisaged the government's role in delivering primary healthcare as restricted to mere essentials like antenatal care, leaving medical treatment to the 'managed-care' system where private players will compete with government-run hospitals to operate these 'networks'. This sent chills down the spine of public health activists and angered the health ministry as well. The Planning Commission later said it was misunderstood and privatising healthcare was never its real motive.

Some saw the July draft as an attempt to scale up the existing Rashtriya Swasthya Bima Yojana (RSBY) with modifications. RSBY, monitored by the labour ministry and introduced in 2007, was designed to meet the health insurance needs of the poor. RSBY provides for cashless, smart card-based health insurance cover of R30,000 per annum to each enrolled family of maximum five members. The beneficiary family pays only R 30 annually as the registration or renewal fee. The scheme covers hospitalisation expenses (out-patient expenses are not covered), including maternity benefit, and pre-existing diseases. The premium payable to insurance agencies is funded by central and state governments in a 75:25 ratio. But case studies by independent agencies show how RSBY, to some extent, and state-sponsored insurance schemes have been misused blatantly by private players to fleece government resources.

A recent analysis of the Arogyasri scheme by research scholars N Purendra Prasad and P Raghavendra shows that the Aarogyasri Trust has empanelled 491 hospitals in the state, of which nearly 80% are in the private sector while the remaining 20% are government hospitals. Although the Aarogyasri scheme is meant for poor villagers, there is not even one private hospital in the rural areas. It also exposes the practice of hiring touts by private hospitals to entice patients to get operated upon in private hospitals.

Further, covering a limited number of ailments and mandatory hospitalisation skews the priorities of the providers under the prevailing government scheme. The Planning Commission officials admit that RSBY suffers from high transaction costs due to insurance intermediaries, inability to control provider-induced demand and lack of coverage for primary health and outpatient care. They also admit that a general problem with any fee for service payment system financed by an insurance mechanism is that it creates an incentive for unnecessary treatment, which, in due course, raises costs and premiums.

Jan Swasthya Abhiyan, a network of public health activists, puts the same debate slightly differently. They warn that India is faced with a choice between two approacheseither public resources would be made to serve private benefit, or private resources would be made to serve public benefit.

According to them, scaling up RSBY or adopting similar health insurance models, is tantamount to adoption of the first approach. In Jan Swasthya Abhiyan, as we strongly oppose this dominant approach of using public resources for private benefit, which has been articulated most coherently in the Planning Commissions July draft health chapter, we need to start discussing how to develop the alternative approach of using sections of private resources for public benefit, says Amit Sengupta, convener, JSA.

To embrace the second approach, Sengupta and his ilk recommend a series of stepsreaching out to a significant section of charitable, mission and not-for profit healthcare facilities working in rural and remote parts of the country, using capacities of large numbers of hospitals which have been registered as trusts to gain public subsidies and income tax exemptions but do not even provide the mandatory 20% free or subsidised beds to poor, tapping thousands of general practitioners running their small individual clinics, on the lines of UKs National Health Service, and small and medium-sized hospitals which are feeling the pinch of large corporate entities.

Budget & financing of UHC

For the 12th Plan period, general tax revenues would be the principle source of finance. This could be aided by contribution from the corporate sector as a part of their corporate social responsibility. The modalities of this are not clear yet. A designated sin tax may be imposed to finance a part of the health budget, which the government hopes can lead to reduced consumption of tobacco and alcohol.

For financing the 12th Plan, the projections envisage increasing the total public funding, plan and non-plan, on core health from 1.04% of GDP in 2011-12 to 1.87% of GDP by the end of the 12th Plan. In such an event, the funding in the Central Plan would increase to three times the 11th Plan levels, involving an annual increase by 34%, estimates the Planning Commission.

The Prime Ministers Office had directed the Planning Commission earlier this year to up the health spend to 2.5% of GDP by 2017. The Planning Commission says once it adds funds budgeted on drinking water, sanitation, mid-day meal, integrated child development services scheme, the allocation to health would inch up to over 3% of GDP by the end of 2012.

Free drug distribution

In realising its healthcare for all dream, one of the priorities would be the implementation of free essential medicine distribution at district hospitals, community healthcare centres and primary healthcare centres. States would be encouraged to plan and partially fund universal access to essential drugs and diagnostic services in all government healthcare facilities. Drug supply is proposed to be linked to centralised procurement at the state level to ensure uniform drug quality and cost minimisation by removing intermediaries, says the final Planning Commission draft. The provision of essential medicines free of cost would have to be backed by logistic arrangements to procure generic medicines from suppliers of repute that match pre-qualifying standards. The government has decided to emulate the Tamil Nadu state model for professional management of procurement, storage and logistics.

Some detractors claim that the government is hurrying about the free drugs scheme, particularly because the ruling party wants to flaunt it as a promise in the upcoming 2014 elections. They claim while the government can showcase this as its own initiative, the real expenditure on the project expected to crawl up to R30,000 crore by 2017 would have to be shouldered by whichever political party wins the next election. Whatever may be reason, the sense of urgency it has brought about holds the hope of health for Indians.

International case studies

Sri Lanka

Risk protection over cost-effectiveness

Sri Lanka realised universal health coverage by relying on the tax-financed and government-operated health services. The island country achieved this by ensuring that the rural poor had access to hospital services and by removing financial and social barriers. The countrys health system is public hospital-dominated and the government budget has prioritised establishing rural hospitals since the 1950s. It financed the construction of a high-density, but low-cost, network of rural facilities to make sure that almost all the citizens live within 1-2 km of a clinic.

Its system protects the poor from catastrophic financial risk associated with illness and encourages rich patients to choose private care. This opens up facilities for the poor and reduces the burden on the government because the wealthiest voluntarily opt out of the government health system.

Even though the health system is hospital-based, it does not neglect primary care. It prioritises risk protection over cost-effectiveness and has proven to be efficient in terms of high patient throughputthe average bed turnover rate is high and the average length of stay shortand high labour productivity. The argument that Sri Lanka is a much smaller country than India and, therefore, does not brook comparison will not hold if we develop models of decentralised district-level planning and delivery of health services.


The Sri Lankan governments main challenge is to continue to provide free health services at the point of delivery. It cant increase the budget without raising the taxes substantially. Lack of funding also prevents the adoption of certain modern medical methods such as the management of chronic, non-communicable diseases. Most high-level facilities and services are available only in urban areas. As the rich increasingly turn to the private sector, this shift may undermine political support for a tax-financed government health system.


An emphasis on primary care

Two decades after Brazils landmark health reform in 1988 established the countrys Unified Health System, also known as Sistema nico de Sade (SUS), more than 75% of Brazils population relies exclusively on public healthcare for coverage. The central part of the SUS is the Family Health Programme which employs teams of community healthcare workers to reach the remote regions of Brazil and covers 97 million of the country's rural poor.

Financed through income and sales tax, the system provides free primary health and dental care, and a range of other hospital services, including diagnostics and surgeries through a network of public and private providers. The country also has a robust vaccination programme and subsidises 90% of the cost of many essential drugs.

Since the system is vastly under-funded, private insurance still exists, despite a large network of public health services, and people opt for it to avoid delays. The Family Health Programme prioritises the rural poor, trying effectively to remove health inequities. In 2007, the difference in life expectancy at birth between the wealthier south and the poorer north-east narrowed from eight years in 1990 to only five. The Unified Health System emphasizes primary care but offers a full set of other benefits, including dental and hospital care, and financial protection against costly drugs.


Despite responsible accounting in many municipalities, more than half of the 26 states fail to meet the required 12% funding target. The federal government does not provide enough support to the public health sector. Also, the Unified Health System began to depend heavily on the national budget since 1993 and has suffered chronic funding shortages since then. Many Brazilian taxpayers pay twice for their healthcare while paying income and sales tax, and buying private health insurance.


Universal coverage and access

Since its launch in 1948, the UK's National Health Service (NHS) has become the worlds largest publicly-funded health service. Except for the charges for some prescription drugs, optical and dental services, it provides free primary, preventive and mental healthcare, and hospital use for any resident. Children, the elderly, pregnant women and people with disabilities or certain mental conditions are exempt from any co-payments.

Roughly 11.5% of the residents purchase private insurance to avoid delays. The NHS is largely funded by general taxation and government health expenditures make up nearly 15.6% of its total expenditure. The major features of the NHS are universal coverage and access, very little cost-sharing and tight cost-containment. Each country in the UK has a health department responsible for its own policy decisions and health budget, and the purchasing and provision of services are delegated further to regional bodies and local public providers, respectively.

The total expenditure of the NHS is relatively low but the outcome is on a par with other developed countries. The National Institute for Health and Clinical Excellence assesses evidence for the clinical- and cost-effectiveness of certain drugs and medical procedures in an effort to improve the responsiveness of the system. Additionally, the Commission for Health Improvement, a regulatory body, inspects the performance of the NHS institutions to ensure high-quality care.


A shortage of both primary-care providers and specialists has led to concerns with wait times and care quality, especially for the elderly. It lacks an effective system to report and address failures and suffers from a lack of local flexibility. The NHS has never consistently measured changes in the patient's health. Therefore, it is difficult to measure the efficiency of the NHS as a health system. Though health outcomes across all segments of the population have improved over the last decade, the disparity between the rich and the poor has widened in the past 20 years.

Source: High Level Expert Group Report on Universal Health Coverage for India (instituted by the Planning Commission of India; November 2011)