Healthcare services in India needs a healing: Here’s how the government can do this

Published: August 4, 2017 5:33:22 AM

The government should encourage insurance systems where people, based on their socio economic calibre, buy insurance from the market.

Streamline subsidies to heal healthcare services in India. (Image: Reuters)

BS Ajaikumar

Chairman and CEO, Healthcare Global Enterprises Ltd

In an emerging economy like India, every citizen must have access to equal and adequate healthcare services. Recently, government think tank Niti Aayog and the union health ministry signed a public private partnership (PPP) model contract for the management of non-communicable diseases in Tier 2 and 3 cities across the country. With the World Bank serving as a technical partner for this initiative, it is a welcome step toward boosting healthcare delivery. Under the model contract, private hospitals will provide secondary and tertiary medical treatment for cancer, heart diseases and respiratory tract ailments at prices that are not higher than those prescribed under the government health insurance schemes. For non-communicable diseases needing these three kinds of specialised treatments, hospitals will need to have out-patient departments, in-patient beds, beds for intensive care, operation theatres, a centre for angioplasty and angiography, laboratories, and radiology services. While the model contract promises to hone healthcare delivery in the country, India’s patchy track record of public private partnerships (PPP) in healthcare, raises several concerns. The problem with Indian healthcare is that the financial resources earmarked for the poor are often misused, leaving behind those in need.

Gaps in PPP

Over the last two decades, several state governments have tried to rope in private healthcare players to offer affordable treatment to the masses. But the government’s efforts of offering subsidised healthcare to the underprivileged has resulted in the exploitation of private healthcare facilities through various means. While this was truly meant for deserving people who are below the poverty line, it has been abused.

It has resulted in two things: one, people who are BPL are not really benefitting from this; two, by creating subsidies for them rather than improving their economic condition and bringing them up the economic ladder, we are spreading poverty and making it a perpetual dependence on the subsidies. This is what I call ‘giving opium to the people’. While this is happening to BPL, people in the higher economic group are abusing the system. They are using the system to derive benefits; and they are not willing to pay premiums for insurance or pay for the services through their own means. This is causing an extra burden to the treasury as well as on private enterprises whose their margins are being squeezed. Private enterprises are now at the crossroads, unable to invest in future tech or improve quality of healthcare delivery to the masses.

In the long run, this will create a severe strain on the private sector to such an extent that will take away the global competitiveness in healthcare. This is an unfortunate turn of events. Even though the intention is good, it has unintended consequences and will have repercussions on healthcare. What is the way forward? The government should encourage insurance systems where people, based on their socio economic calibre, buy insurance from the market by choosing the type of insurance they want. Insurance companies can provide the categorisation of the policies. The government can pay for people in the BPL category, who can access same type of healthcare.

For the elderly, while there are government entities that provide insurance for that the aged, insurance could be done through their children’s workplace or self-insured through their pension fund. If they do not get a pension, the government can subsidise them and compulsorily ensure they are insured irrespective of pre-existing conditions. In keeping with the interest of the economically weaker sections, the government should levy a sin tax by taxing cigarettes to discourage their production. The government could set aside a part of that money as endowment to subsidise BPL people afflicted by the harmful effects of smoking. The need of the hour, thus, is for the system to become autonomous where healthcare providers, insurers and the insured are all aligned, and the government takes a step back and monitors to prevent unethical practices and the abuse of the system.

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