Indranil
“The State has played a critical role over last three decades in the expansion of organised health care market in the country. Be it through provision of free land and electricity for setting up private hospitals, or systematic destruction of public institutions through chronic under-investment, or ensuring supply of skilled health professional to private sector through complete ban on recruitments in public sector; or through user fees and public private partnerships, health sector reforms have been used by the neo-liberal establishment to expand private sector in large metropolitan cities at the cost of public services. Government’s persistence with insurance models epitomize the growing strength of for-profit sector which sees insurance as a vehicle to expand further in smaller towns and rural areas at the cost of public exchequer. Insurance programs are seen as immense opportunity to ‘commodify’ and ‘medicalise’ the ‘health market’ in areas where the demand for health services remains low otherwise. Under the aegis of finance capital, governments are being called upon to expand their financing function so that the private provider and insurance market gets ‘business’, to survive and thrive, in the name of providing ‘efficient’ and ‘quality’ care.“
Despite
the overwhelming evidence pouring on exclusions and lack of financial
protection in state sponsored insurance schemes these programmes seem to be
very popular among ruling political parties Centre and states alike. In the
Union Budget of 2018 Honourable Finance Minister has proposed to expand the
coverage of insurance program through the National Health Protection scheme.
The scheme promises to cover hospitalization expenses up to RS 5 lakh per year
for 10 crore households of the country. Media, pro government
think tanks and vast majority of commentators welcomed the announcement with
jubilation. It seemed finally India’s turn for Universal Health Coverage has
arrived and ‘Modi Care’, in line with former US President Barack Obama’s much
touted ‘Obama Care’ would bring in big relief to poor and vulnerable.
the overwhelming evidence pouring on exclusions and lack of financial
protection in state sponsored insurance schemes these programmes seem to be
very popular among ruling political parties Centre and states alike. In the
Union Budget of 2018 Honourable Finance Minister has proposed to expand the
coverage of insurance program through the National Health Protection scheme.
The scheme promises to cover hospitalization expenses up to RS 5 lakh per year
for 10 crore households of the country. Media, pro government
think tanks and vast majority of commentators welcomed the announcement with
jubilation. It seemed finally India’s turn for Universal Health Coverage has
arrived and ‘Modi Care’, in line with former US President Barack Obama’s much
touted ‘Obama Care’ would bring in big relief to poor and vulnerable.
The
obsession towards state sponsored insurance schemes is not new in India, a
plethora of publicly-financed insurance schemes have been introduced both at
the national and state level. Yeshasvini started as an insurance scheme for
worker cooperative in 2003 in Karnataka, including all rural co-operative
society members, members of Self-Help Groups /Sthree Shakti Groups and their
family members (including joint family). The Rajiv Aarogyasri Scheme (RAS), the
first of this class targeting below-the-poverty-line population of Andhra
Pradesh was introduced in 2007. It is interesting to observe that a scheme,
which was originally planned to be focused on BPL families, went ahead to
cover almost the entire population of the state. The Rashtriya Swasthya Beema Yojna
(RSBY) that was launched in 2008 initiated by the Central Government (Ministry
of Labour and Employment) as a national health insurance scheme targeting the
BPL population. Other notable state sponsored schemes include Chief Minister’s
Health Insurance Scheme in Tamil Nadu (2009) and Vajpayee Arogyasri (2009) in
Karnataka. Several states have jumped in to the insurance bandwagon and introduced
their own version of Rastriya Swasthya Beema Yojana.
obsession towards state sponsored insurance schemes is not new in India, a
plethora of publicly-financed insurance schemes have been introduced both at
the national and state level. Yeshasvini started as an insurance scheme for
worker cooperative in 2003 in Karnataka, including all rural co-operative
society members, members of Self-Help Groups /Sthree Shakti Groups and their
family members (including joint family). The Rajiv Aarogyasri Scheme (RAS), the
first of this class targeting below-the-poverty-line population of Andhra
Pradesh was introduced in 2007. It is interesting to observe that a scheme,
which was originally planned to be focused on BPL families, went ahead to
cover almost the entire population of the state. The Rashtriya Swasthya Beema Yojna
(RSBY) that was launched in 2008 initiated by the Central Government (Ministry
of Labour and Employment) as a national health insurance scheme targeting the
BPL population. Other notable state sponsored schemes include Chief Minister’s
Health Insurance Scheme in Tamil Nadu (2009) and Vajpayee Arogyasri (2009) in
Karnataka. Several states have jumped in to the insurance bandwagon and introduced
their own version of Rastriya Swasthya Beema Yojana.
There
is no doubt impoverishment and catastrophe due to household out-of-pocket
expenditure is a major issue but insurance cannot be the answer to
impoverishment of 55 million people. Around 34 million is impoverished because
they have to purchase medicines from market and for a large majority its
out-patient care which causes impoverishment and catastrophe. Insurance which
caters to inpatient care which constitute a 40% of out of pocket health spending while the major
part goes into outpatient care or medicines.
is no doubt impoverishment and catastrophe due to household out-of-pocket
expenditure is a major issue but insurance cannot be the answer to
impoverishment of 55 million people. Around 34 million is impoverished because
they have to purchase medicines from market and for a large majority its
out-patient care which causes impoverishment and catastrophe. Insurance which
caters to inpatient care which constitute a 40% of out of pocket health spending while the major
part goes into outpatient care or medicines.
Evidence
suggests that impact of insurance schemes on financial protection has been
minimal if not detrimental. As per the latest National Sample Survey
Organisation Survey on Health and Morbidity (2014), only 13% population is
covered by government funded insurance schemes. Coverage among the poorest
sections, in both rural (10.6%) and urban areas (8.6%), is even lower- leaving
out huge sections of intended beneficiaries.
suggests that impact of insurance schemes on financial protection has been
minimal if not detrimental. As per the latest National Sample Survey
Organisation Survey on Health and Morbidity (2014), only 13% population is
covered by government funded insurance schemes. Coverage among the poorest
sections, in both rural (10.6%) and urban areas (8.6%), is even lower- leaving
out huge sections of intended beneficiaries.
But
what happens to those who are covered and access hospitalization services? In
contrast to what is promised, free care is rare- only 3 out of 100 hospitalization cases with coverage are free. Those who are uncovered by any
insurance scheme spend around INR 14400 for hospitalization. Under government
funded insurance schemes, the average cost for households is INR 10900.
Moreover, the poor go to private hospitals, in the hope of free care and end up
paying more. If one goes to private hospitals with insurance coverage, the average
spending is around INR 18100. Whereas if one doesn’t have any insurance and goes
to public hospital, average expense is only INR 4560. Setting aside all other
issues of quality and appropriateness of care, private sector is much costlier
for people and insurance fails to bring any substantive financial relief.
what happens to those who are covered and access hospitalization services? In
contrast to what is promised, free care is rare- only 3 out of 100 hospitalization cases with coverage are free. Those who are uncovered by any
insurance scheme spend around INR 14400 for hospitalization. Under government
funded insurance schemes, the average cost for households is INR 10900.
Moreover, the poor go to private hospitals, in the hope of free care and end up
paying more. If one goes to private hospitals with insurance coverage, the average
spending is around INR 18100. Whereas if one doesn’t have any insurance and goes
to public hospital, average expense is only INR 4560. Setting aside all other
issues of quality and appropriateness of care, private sector is much costlier
for people and insurance fails to bring any substantive financial relief.
Between
2004-05 and 2011-12, as per the NSSO, hospitalization expenses have increased
faster for poorer households, despite increased insurance penetration.
Academicians from across the world have written about it. Government
Commissions have noted it and advocated against expansion of insurance
programs. Such a step can only be explained by dogma in certain quarter of
policy makers rather than any rational thinking.
2004-05 and 2011-12, as per the NSSO, hospitalization expenses have increased
faster for poorer households, despite increased insurance penetration.
Academicians from across the world have written about it. Government
Commissions have noted it and advocated against expansion of insurance
programs. Such a step can only be explained by dogma in certain quarter of
policy makers rather than any rational thinking.
Budget
Cuts:
Cuts:
Budget
cuts have become a routine affair in Union Budgets since 2011-12. Earlier cuts
were disguised under somewhat clever accounting jugglery. Every year the
Finance Minister would reduce the Revised Estimate from what he allocated last
year and show some increase in the current budget. As we can observe in fig 1, there is a
reversal of this trend since 2014-15. Revised estimates are now higher than
budget allocations, indicating much higher utilization and greater demand from
the state governments to increase allocation further. But the Finance Ministry
remains blind to these trends. Recent news reports suggest that ministry of
Health received only half of what it asked to the Finance Ministry.
cuts have become a routine affair in Union Budgets since 2011-12. Earlier cuts
were disguised under somewhat clever accounting jugglery. Every year the
Finance Minister would reduce the Revised Estimate from what he allocated last
year and show some increase in the current budget. As we can observe in fig 1, there is a
reversal of this trend since 2014-15. Revised estimates are now higher than
budget allocations, indicating much higher utilization and greater demand from
the state governments to increase allocation further. But the Finance Ministry
remains blind to these trends. Recent news reports suggest that ministry of
Health received only half of what it asked to the Finance Ministry.
Figure 1: Comparison of
Budget Allocation, Revised Estimates and Expenditure of Union Government on
Health
Budget Allocation, Revised Estimates and Expenditure of Union Government on
Health
For
the last few years Central government expenditure on health, as a percent of
GDP has fallen (fig 2). This year is not an exception. Government’s flagship
program on health, the National Health Mission has got a lesser 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. Thus any
efforts to improve public health care delivery mechanisms particularly related
to maternal and child health would get halted, lives of millions of newborns
would be vulnerable and mothers will suffer more while giving birth, without
the requisite care.
the last few years Central government expenditure on health, as a percent of
GDP has fallen (fig 2). This year is not an exception. Government’s flagship
program on health, the National Health Mission has got a lesser 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. Thus any
efforts to improve public health care delivery mechanisms particularly related
to maternal and child health would get halted, lives of millions of newborns
would be vulnerable and mothers will suffer more while giving birth, without
the requisite care.
In
the last Budget the FM announced that 1.5 lakh Health and Wellness Centres
would be set up to expand preventive health care as well as basic diagnostics
and medicines. The allocation to this important initiative is only half of
Ministry of Health had asked for. The very important initiative needs proper
planning, adequate human resource support and supplies of essential commodities
to be effective.
the last Budget the FM announced that 1.5 lakh Health and Wellness Centres
would be set up to expand preventive health care as well as basic diagnostics
and medicines. The allocation to this important initiative is only half of
Ministry of Health had asked for. The very important initiative needs proper
planning, adequate human resource support and supplies of essential commodities
to be effective.
It
has been argued that states do not have the capacity to spend, additional money
allocated remains un-utilised and hence increase in budgets is unwarranted. If
we compare the Allocation and expenditure during the period of 2005-06 and
2010-11, for most of the years there was very little gap between the two- thus
indicating a high utilisation of funds. What happens all of a sudden that funds
absorptive capacities in the states declines suddenly?
has been argued that states do not have the capacity to spend, additional money
allocated remains un-utilised and hence increase in budgets is unwarranted. If
we compare the Allocation and expenditure during the period of 2005-06 and
2010-11, for most of the years there was very little gap between the two- thus
indicating a high utilisation of funds. What happens all of a sudden that funds
absorptive capacities in the states declines suddenly?
States’
balance sheets reveal a different story. Recent trends show that fund
absorptive capacity gradually increased since the introduction of NRHM. In the
period 2005-06 and 2014-15, expenditure by states increased by 19.24 percent,
after adjusting for rise in prices this comes to a healthy 9.25 (Fig 3). During
the period of 2010-11 to 2014-15, when Union government spending virtually
declined spending by states actually grew at close to double digit rates
(9.86%). Thus Center’s convenient tendency to pass the buck to states doesn’t
stand and we need to probably understand this in light of fiscal conservatism
that has been practised without understanding the severe implications on the
plight of millions of citizens.
balance sheets reveal a different story. Recent trends show that fund
absorptive capacity gradually increased since the introduction of NRHM. In the
period 2005-06 and 2014-15, expenditure by states increased by 19.24 percent,
after adjusting for rise in prices this comes to a healthy 9.25 (Fig 3). During
the period of 2010-11 to 2014-15, when Union government spending virtually
declined spending by states actually grew at close to double digit rates
(9.86%). Thus Center’s convenient tendency to pass the buck to states doesn’t
stand and we need to probably understand this in light of fiscal conservatism
that has been practised without understanding the severe implications on the
plight of millions of citizens.
Figure3: Compound annual
growth rate of Union Government allocations and expenditure on health at
constant 2004 Prices.
growth rate of Union Government allocations and expenditure on health at
constant 2004 Prices.
As of now, states spend more than two third of total public
spending on health. Given constitutional responsibilities, any major expansion
in public spending has to happen through States. Given the unsatisfactory
situation of State finances, whereby States are being asked to cut expenditure
to meet fiscal deficit targets- such reallocation looks unlikely. Finance
Commission transfers and further restructuring of resource sharing, with
additional taxation rights devolved to states are essential to meet the
commitments of public spending. This is clearly an attempt to enhance Central
government’s control over aspects which are essentially into the domain of
States.
spending on health. Given constitutional responsibilities, any major expansion
in public spending has to happen through States. Given the unsatisfactory
situation of State finances, whereby States are being asked to cut expenditure
to meet fiscal deficit targets- such reallocation looks unlikely. Finance
Commission transfers and further restructuring of resource sharing, with
additional taxation rights devolved to states are essential to meet the
commitments of public spending. This is clearly an attempt to enhance Central
government’s control over aspects which are essentially into the domain of
States.
It is often argued that good health can be delivered at low
cost, if health care interventions are selected judiciously. Given that many
countries are grappling with rapid increase in health care costs, choice of low
cost technologies are important. For instance, if we compare two extreme
example of health system- Cuba and USA, we find that per capita spending by USA
is manifold higher compared to Cuba, while the later have slightly higher life
expectancy at birth. However, it has to be also noted that there is no country
in the world which has been able to provide health care at a sub-optimally low
level of spending, though that level has varied from context to context. The
relationship between good health outcomes and spending on health is like rain
and cloud. Adequate spending, which is like cloud, is necessary for good health
outcomes, but it’s not sufficient. A cloudy sky may not necessarily brings
rains.
cost, if health care interventions are selected judiciously. Given that many
countries are grappling with rapid increase in health care costs, choice of low
cost technologies are important. For instance, if we compare two extreme
example of health system- Cuba and USA, we find that per capita spending by USA
is manifold higher compared to Cuba, while the later have slightly higher life
expectancy at birth. However, it has to be also noted that there is no country
in the world which has been able to provide health care at a sub-optimally low
level of spending, though that level has varied from context to context. The
relationship between good health outcomes and spending on health is like rain
and cloud. Adequate spending, which is like cloud, is necessary for good health
outcomes, but it’s not sufficient. A cloudy sky may not necessarily brings
rains.
Public Spending on health in India is among the lowest in
the world-when compared in terms of share in GDP and per capita spending. There
were only few countries in the world which spent lesser proportion of GDP on
health in 2014 (WHO 2016). Some developing countries like Brazil, Chile, Costa
Rica, Cuba, Colombia, Thailand, Malaysia, South Africa, which have made
significant efforts in recent history towards provisioning of universal access
to health, spend much higher proportions of GDP on health. Governments in
neighbouring countries like Sri Lanka, China, and Nepal could mobilise more
resources towards health than what is done in India. Per capita public
investment on health in India, is almost at the same level with the average of
the low income countries (LICs) and much lower than the low middle income
countries (LMICs). Countries like Brazil, Thailand, and South Africa which have
recently attempted to universalise have stepped up public spending on health to
3-5 per cent of GDP over the period of a decade or so.
the world-when compared in terms of share in GDP and per capita spending. There
were only few countries in the world which spent lesser proportion of GDP on
health in 2014 (WHO 2016). Some developing countries like Brazil, Chile, Costa
Rica, Cuba, Colombia, Thailand, Malaysia, South Africa, which have made
significant efforts in recent history towards provisioning of universal access
to health, spend much higher proportions of GDP on health. Governments in
neighbouring countries like Sri Lanka, China, and Nepal could mobilise more
resources towards health than what is done in India. Per capita public
investment on health in India, is almost at the same level with the average of
the low income countries (LICs) and much lower than the low middle income
countries (LMICs). Countries like Brazil, Thailand, and South Africa which have
recently attempted to universalise have stepped up public spending on health to
3-5 per cent of GDP over the period of a decade or so.
The
State has played a critical role over last three decades in the expansion of
organised health care market in the country. Be it through provision of free
land and electricity for setting up private hospitals, or systematic
destruction of public institutions through chronic under-investment, or
ensuring supply of skilled health professional to private sector through
complete ban on recruitments in public sector; or through user fees and public
private partnerships, health sector reforms have been used by the neo-liberal
establishment to expand private sector in large metropolitan cities at the cost
of public services. Government’s persistence with insurance models epitomize the growing strength of for-profit sector which sees insurance as a vehicle to
expand further in smaller towns and rural areas at the cost of public
exchequer. Insurance programs are seen as immense opportunity to ‘commodify’
and ‘medicalise’ the ‘health market’ in areas where the demand for health
services remains low otherwise. Under the aegis of finance capital, governments
are being called upon to expand their financing function so that the private
provider and insurance market gets ‘business’, to survive and thrive, in the
name of providing ‘efficient’ and ‘quality’ care.
State has played a critical role over last three decades in the expansion of
organised health care market in the country. Be it through provision of free
land and electricity for setting up private hospitals, or systematic
destruction of public institutions through chronic under-investment, or
ensuring supply of skilled health professional to private sector through
complete ban on recruitments in public sector; or through user fees and public
private partnerships, health sector reforms have been used by the neo-liberal
establishment to expand private sector in large metropolitan cities at the cost
of public services. Government’s persistence with insurance models epitomize the growing strength of for-profit sector which sees insurance as a vehicle to
expand further in smaller towns and rural areas at the cost of public
exchequer. Insurance programs are seen as immense opportunity to ‘commodify’
and ‘medicalise’ the ‘health market’ in areas where the demand for health
services remains low otherwise. Under the aegis of finance capital, governments
are being called upon to expand their financing function so that the private
provider and insurance market gets ‘business’, to survive and thrive, in the
name of providing ‘efficient’ and ‘quality’ care.
Several
key issues underlined above calls for an urgent need to reverse this trend. An
alternative pathway, based on the expansion of public provisioning and
financing, rational use of technology and medicines and expansion of preventive
and curative services has been demonstrated in different part of the world,
including India. This is critical in order to protect public health system, to
cap health care costs from escalating, to provide much needed financial risk
protection, provision of rational care and to improve health outcomes of the
population.
key issues underlined above calls for an urgent need to reverse this trend. An
alternative pathway, based on the expansion of public provisioning and
financing, rational use of technology and medicines and expansion of preventive
and curative services has been demonstrated in different part of the world,
including India. This is critical in order to protect public health system, to
cap health care costs from escalating, to provide much needed financial risk
protection, provision of rational care and to improve health outcomes of the
population.
The author is faculty at Jindal Global University
