Jan Arogya Abhiyan: Much more than a health insurance programme

By: |
New Delhi | Published: September 20, 2018 3:38:54 AM

PMJAY has all the necessary ingredients needed for its success—a strong leadership support, good initial design, assured public funding, support from the states, and the needed momentum. But those engaged in its operationalising also need to pay heed to realising its full potential from a health systems perspective.

Govt-supported demand is the prime mover of private investment in hospital care; return on private investment is critically depends on package rates the govt would pay. (Twitter)

The Pradhan Mantri Jan Arogya Yojana Abhiyan (PMJAY) is viewed differently by different people. To a potential beneficiary, it is an entitlement for hospital care. To a social scientist, it is an anti-poverty programme as well as a programme aimed at improving the health of the poor. To a politician, it is a populist programme that is aimed at garnering voters’ support in the forthcoming assembly/general elections. To a health planner, it is a significant step towards achieving Universal Health Coverage. To a systems specialist, it is a programme aimed at fixing the country’s health system.

It’s not just insurance
On the face of it, PMJAY is a programme for supporting demand for hospital care by providing financial protection of Rs 5 lakh per household to almost 10.7 crore poor households against hospitalisation costs. In reality, it is much more than that, as it is also aimed at developing the market, especially in areas where hospital care is almost non-existent or is in short supply. In other words, PMJAY deals not only with making hospital care financially accessible for the poor, but also making such care available in closer proximity to where the beneficiaries reside.
To improve the hospital care infrastructure in rural areas—where nearly 76% of the total beneficiaries reside—the government has a two-pronged strategy: to strengthen public hospitals at district and sub-district levels, as well as to forge partnerships with the private sector to augment supply in the under-served areas.

For strengthening of public hospitals, the government has rightly prioritised those districts having a higher share of potential beneficiaries and lacking in hospital infrastructure. On forging partnerships with the private sector, the government is encouraging private providers to partake in this national mission.

In tier-1 and in most tier-2 cities, hospital care is reasonably well-developed. In these cities, private players can decide whether or not to join the scheme, given the rates being offered by the programme. Depending on their cost-structure and the target-market segment, some private hospitals will choose to stay out, while others may opt in, which is fine.

Private providers
The real challenge is in getting the private sector to establish new hospitals in tier-3 cities and in rural areas. In these places, new hospitals need to be established, and the numbers are not in the hundreds, but in the thousands. By the government’s own admission, the shortfall in hospital beds is around two-thirds of the number required for the scheme to operate at full scale. However, for encouraging the private sector to set up new tertiary hospitals in tier-3 cities and rural areas, the government needs to reach a much better understanding with them, with a longer-term perspective.

The market mechanism is not a good enough guide for the private investor to enter the under-served areas. Why is this so? The government-supported demand would be the prime mover of private investments in hospital care in these areas. Therefore, a return on private investment is critically dependent on the package rates that the government would pay. It is true that private hospitals joining PMJAY would gain recognition that would help them tap the “residual” market that could be charged higher rates, but there is a lot of uncertainty around this. There are indications that the advantage of package rates would also be extended to the above-poverty line population over time.

So, package rates that have been set for now and about which the private sector is already complaining are central to the private sector play. Even though the government has promised a detailed review of these rates in the future, there ought to be a clearer understanding now on the principles to be followed while reviewing and revising the rates in the future.

Additionally, the government would likely need to extend other incentives by way of concessional loans, single-window clearance to comply with the various regulatory requirements and so forth. Also, there would need to be a clear understanding on the “sunset” provisions of these incentives. In short, both the sides need to ask the question of how they see this public-private partnership evolve over, say, the next 10 years, and accordingly need to arrive at a longer-term understanding.

Full potential
Although the private sector has an important role to play for the success of this programme, the programme’s success is not to be measured by the success of the public-private partnership or by the extent of the financial protection it provides. Undoubtedly, these are the key indicators of success. But its success is also to be measured by the extent to which the programme realises its full potential. The programme has the potential to improve efficiencies in public hospitals, to encourage the use of low-cost technologies to make hospital care affordable, to carry out reforms in the upstream areas such as medical education and training, to narrow down geographical inequities in the distribution of health infrastructure through incentives and regulations and so on and so forth.

Harnessing these complementarities is essential for the realisation of the full potential of the programme.

Therefore, PMJAY has all the necessary ingredients needed for its success—a strong leadership support, good initial design, assured public funding, support from the states, and the needed momentum. Those engaged in the operationalisation of the programme also need to pay heed to realising its full potential from the health systems perspective. Let the urgency of operationalisation not get in the way of doing things that are important if the programme is to be truly transformational.

-The writer is a development economist, formerly with the Bill & Melinda Gates Foundation and the World Bank

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1Merging the three banks was the best option available
2Automation without tears: Government, India Inc must invest in up-skilling for this
3Home office: Allowing remote working may have certain benefits, but it may not work for all industries