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Insurance-based health cover only benefits pvt hospitals

By Indranil Mukhopadhyay and Mohan Rao Feb 8 2018, 1:20 IST

Most democratic governments, answerable to the people, attempt to protect their citizens from disease and suffering. Many of these provide this equitably through state funding. This is not, however, the case in India. Healthcare continues to remain out of reach for a vast section of population, leads to impoverishment, untreated ailments, avoidable and untimely deaths. Frequent news reports depicting the follies of a failing public healthcare system, on the one hand, and an unregulated profit-hungry private sector, on the other, with people's outrage in reaction to miserable experiences at both sectors, point towards an urgent need for government intervention in healthcare. Government initiatives have been half-hearted and too little at best. Public spending tanks every passing year.

In this context, when Finance Minister Arun Jaitley announced a 'National Health Protection Scheme' covering hospitalisation expenses up to Rs 5 lakh per year for 10 crore households of the country, sections of the media and a vast majority of commentators welcomed it. It seemed, finally, India's turn to introduce 'Universal Healthcare' and 'ModiCare', taking off on America's ObamaCare, had arrived, bringing relief to the poor and vulnerable. However, as initial euphoria settled down and as we unpack the scheme, some serious concerns arise.

There is a lot of discussion on how much money would be needed. The Niti Aayog has said that to provide 50 crore people financial protection against secondary and tertiary hospitalisation, the premium needed would be only Rs 1,100 per family per year. This approximately means a bill of Rs 12,000 crore – 40% of which is to be borne by the states. Many have critiqued the Niti Aayog estimate, saying the premium cited is too low. The average premium paid under the Rashtriya Swasthya Bima Yojana, which covers only secondary hospitalisation up to Rs 30,000 is Rs 750. With coverage increasing to Rs 5 lakh and with the inclusion of tertiary care, the Niti Aayog estimates are clearly off the mark.

Fiscal conservatives have raised concerns saying that such a programme would be expensive. As public spending on health in India is among the lowest in the world, an increase in public spending is always welcome, if it really helps in improving access, quality and financial protection. Unfortunately, an expansion of the current design of insurance schemes might not be able to achieve any of these and yet increase the healthcare bill of the government considerably. At least, the current experience with RSBY and most other state government-funded insurance schemes suggest so.

The tax-funded insurance schemes promise free hospitalisation care and to bring private sector healthcare within reach of the poor and vulnerable. But free care continues to elude people: among those who had such insurance coverage, data indicates only three hospitalisation cases out of every 100 got free care. Despite expansion of insurance-based hospitalisation, the healthcare expenditure for the poorer sections of society has increased steeply over the last few years.

Out of every Rs 10 spent on healthcare, only Rs 4 is on hospitalisation, while the rest is on doctor visits, medicines, diagnostics and other kinds of care where hospitalisation is not required and hence not covered by insurance. A financial protection scheme designed only to cater to hospitalisation thus, by definition, has limited efficacy in reducing out-of-pocket expenses.

Expansion of state-sponsored insurance schemes have led to expansion of the for-profit private sector in smaller towns. The big corporate hospital chains are acquiring smaller hospitals and nursing homes. Private investments are being funded by venture capital and angel funds, where the only logic is higher and faster return. With the change in the ownership structure of private hospital business, professional ethics is giving way to the language of profit maximisation. Patients are being fleeced, subjected to unnecessary 'care'. The case of several districts where women have had unnecessary hysterectomies illustrates this moral hazard.

One may argue that regulation will solve the problem of a private sector that is completely unaccountable. The global experience suggests that regulation is costly, needs huge capacities and firm political will. But, depending only on regulation where the private sector has a virtual monopoly over provisioning of care may not be effective at all in curbing healthcare costs. In developed nations like the US and some countries in Europe, where provisioning is mainly through the private sector, healthcare is becoming increasing unaffordable even to the governments. The US spends more on healthcare than any other country in the world, and yet has the most abysmal health indices among the highly industrialised countries.

A more prudent and sustainable approach could be to have a viable public sector providing good quality care. Many developing countries have shown that expansion of the public sector helps in improving access to care at an affordable burden on the exchequer. But it needs higher investments, without which the much-desired improvements in expansion and improvements in quality and management capacities cannot take place.

The Centre's expenditure on health has declined continuously since 2011-12 with some reversal in the last two years. Allocations have remained virtually static this year. The National Health Policy target of reaching public spending on health to 2.5% of GDP by 2025 thus looks difficult. The government's flagship programme, the National Health Mission, has got a lower budget compared to last year's revised estimates. This, despite the fact that states have actually spent more than what was allocated and asked for more money.

In the last budget, the finance minister had announced that 1.5 lakh 'Health and Wellness Centres' would be set up to expand preventive healthcare as well as basic diagnostics and medicines. The allocation to this important initiative is only half of what the health ministry had asked for. The very important initiative needs proper planning, adequate human resource support and supplies of essential commodities to be effective.

It is to be hoped that this flawed initiative will not be named after the prime minister. For, as it flounders, and more people are squeezed under the poverty line due to healthcare costs, it will only bring ignominy.

(Dr Mukhopadhyay is Assistant Professor, School of Government and Public Policy, Jindal Global University; Dr Rao is Professor, Centre of Social Medicine and Community Health, JNU)

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