NHPS would require at least Rs 1 trillion annually to be successfully implemented. Inflation of care services and claim ratios could potentially complicate and dissatisfy users of the plan.
When Tedros A Ghebreyesus, Director-General of WHO, dubbed the Indian government’s Ayushman Bharat mission as bold during his visit in March, he was perhaps referring to the scope of challenges that besiege the quest for improving healthcare access to India’s 1.3 billion people. The mission proposes two strategies. One, the conversion of 1.5 lakh sub-centres currently providing maternal child health, family planning and infectious disease care into health and wellness centres to include non-communicable diseases, care of elderly, etc, throughout the country. Two, the provision of the National Health Protection Scheme (NHPS) that finance minister Arun Jaitley referred to as Modicare, which will secure a cover of up to Rs 5 lakh per year for hospitalisation, and cover 10 crore most vulnerable and disadvantaged families. The first one was announced during last year’s Budget, but has made little progress.
How does Modicare work?
The beneficiaries of NHPS would be eligible to receive secondary and tertiary care at any public or private empanelled hospital in the country. The benefits include cost of hospital stay and medication for special as well as referral cases, and aim to reduce out-of-pocket expenditure (OOPE) for the poor. OOPE accounts for 70% of the expenditure incurred on health, according to NSSO 2014 data—one of the highest in the world. The earlier public insurance policies that will be subsumed include the Rashtriya Swasthya Bima Yojana (RSBY) and Senior Citizen Health Insurance. These programmes only offered hospitalisation capped at Rs 30,000 which were, last year, announced to have been increased to Rs 1 lakh and additional Rs 30,000 for families that have elderly members. Some states have modified RSBY, such as Bhamashah (Rajasthan) and Aarogyasri (Andhra Pradesh and Telangana).
Entitlement under this policy will be determined by deprivation criteria according to the Socio-Economic Caste Census of 2011. A mission council at the Centre chaired by the Union health and family welfare minister and corresponding state-level councils will monitor the working of this scheme. Admissions to hospitals would be cashless, and to ensure seamless integration across geographies, a supporting IT platform is proposed to be created.
Poverty is a major factor
Illness and poverty make a vicious cycle, breaking free of which would seem impossible to many without the government increasing its contribution towards medical expenditure. One of the biggest factors accounting for poor health status and malnutrition is poverty. According to World Bank data, 270 crore people in India live on less than $1.90 a day. Close to 80% of them reside in rural areas. Poverty is highest among remote and disadvantaged communities. Casual labour, both farm and non-farm, is the largest source of employment for the rural poor (51%), while self-employment and casual labour form the corresponding agencies in urban centres (74%). Medical expenditure impoverishes many Indians.
It is estimated that 3.2% of the population was impoverished in 1999-2000 due to incurring expenditure on medical care. Those impoverished in 2004-05 increased to 4.7 crore, and to 6.3 crore. Most recent estimates are available for 2014, which put the figure at 7.47% or 9.4 crore. Because the poor are unable to save, they are also unable to afford treatment for unexpected exigencies. Population pressure forces them to live in clustered unhygienic conditions, which fuels more illness. Clearly, the need for external intervention could not have been more urgent.
How health insurance helps
The rate of growth or GDP is directly proportional to the ratio of saved capital in an economy. Insurance firms mobilise long-term savings by pooling small funds to form larger corpus. These can then be lent out to businesses in the form of priority sector loans to create the necessary infrastructure. Better infrastructure leads to more business and this, consequently, leads to more employment. This, in turn, refuels GDP growth.
Health insurance is crucial to ensure the productivity of a nation’s workforce. By providing health insurance to the poor, the government bypasses the need for immediate benefit transfer. Instead, it disperses the risk over many individuals and over time periods.
A study of Karnataka’s Vajpayee Arogyashree shows that insurance schemes can successfully reduce the differences in mortality rates between the privileged and the underprivileged for covered conditions. In this case, the deaths were found to be mostly connected to cancer and cardiac conditions. Further, those covered by the scheme were more likely to seek early healthcare for symptoms such as chest pain. They were also more likely to seek care at better quality hospitals. They had lower OOPE and this decreased the risk of their being pushed to extreme poverty, thus breaking free from the sickness-poverty vicious cycle. Timely implementation of the scheme made the difference.
Financing the scheme
NHPS would require at least Rs 1 trillion annually to be successfully implemented. Inflation of care services and claim ratios could potentially complicate and dissatisfy users of the plan. Some of the most successful implementations, such as in France or Singapore, distribute financing between the government and tax collection. Increasing the number of people who actually pay tax could be one solution. The experience from across the world shows that the cost of care increases rapidly with insurance-private sector care providers as two additional expenditure profit making mechanisms are included in models such as NHPS. The other factor to be kept in mind is that two-thirds of disease burden in India comes from non-communicable diseases.
These are not covered under NHPS. Expenditure on drugs accounts for more than two-thirds of OOPE. The government needs to expedite availability of generic medicine and make it mandatory for even private doctors to prescribe on generic medicines, as in the US. The efforts to make high quality generic medicines available must be expedited. For universal healthcare, the government needs to move fast on NHPS, but must also look beyond to cover outpatient care. It must mobilise other sectors for comprehensive preventive and promotive health to bring down the disease burden.
By: Sanjiv Kumar
Director, International Institute of Health Management Research, Delhi