Menu
Account

Can India's New Healthcare Scheme Work?

 
 

In a previous article, I argued that gross domestic product (GDP) by itself does not reflect the well being of a country’s people, as it does not touch upon social indicators. India is a perfect example of this discrepancy.

For the last two decades, India’s GDP has been growing by around 7 percent each year. Despite the high growth, backed by strong macro-economic fundamentals, India’s performance in several social indicators like healthcare, education, housing, and the environment leaves much to be desired.

In particular, India still lags far behind other developing countries such as China, Brazil, and Thailand in meeting the healthcare needs of the bottom 40 percent of its population. India’s own National Sample Survey Organization (NSSO) has pointed out that about 85.9 percent of rural households and 82 percent of urban households have no access to health insurance.

Enjoying this article? Click here to subscribe for full access. Just $5 a month.

The Global Burden of Disease Study, published in the Lancet, ranked India at 154 out of 194 countries, placing its performance in healthcare ranks below smaller South Asian neighbors like Sri Lanka, Bangladesh, and Nepal.

One of the main reasons for this dismal performance is the lack of a well-thought-out national healthcare policy and also the meager budget – just 1.15 percent of GDP — allocated to the healthcare sector. The study also pegged substandard healthcare services as the sole reason for an estimated 1.6 million deaths a year in India – the highest number anywhere in the world.

According to World Health Statistics, India has 0.9 beds per 1,000 population, far below the global average of 2.9 beds. China, for comparison, has 3 beds per 1,000 and Sri Lanka 3.1 beds. It is estimated that over 600 million people living in rural areas have no access to healthcare. This is primarily due to the unwillingness of doctors from cities to practice in rural areas. Even in nonrural areas there is only one government doctor for every 10,189 people, one government hospital bed for every 2,046 people, and one state-run hospital for every 90,343 people. There have been many cases where ward boys and compounders have doubled up for doctors in performing surgeries.

The government of India, in an attempt to improve basic health, and healthcare services, especially for millions of poor people who don’t have access to proper medical care, has recently rolled out its flagship health scheme, known as the “Ayushman Bharat National Health Protection Mission.”  This scheme will cover the bottom 40 percent of India’s 1.25 billion people by providing a yearly health insurance cover of 500,000 Indian rupees (about $7,000) per family for use at secondary and tertiary care hospitals. This will be the world’s largest funded healthcare program.

The government has also set an ambitious goal of opening 150,000 new centers to bring the healthcare system closer to the homes of people. These centers will provide comprehensive healthcare, including for noncommunicable diseases and maternal and child health services.  These centers will also provide free essential drugs and diagnostic services.

The scheme will operate through a network of Empaneled Healthcare Providers. One of the noteworthy features of the scheme is that it will provide cashless and paperless access to services for all the beneficiaries. If the scheme is implemented successfully, it can become a game changer, as it has the potential to catapult India into the 100 top countries in terms of healthcare in the world.

Given these goals, the budget of 12 billion rupees per year for this flagship program seems to be meager. It is not clear how the government proposes covering the total healthcare costs, which, according to some estimates, would be around 110 billion rupees.

Perhaps the government is banking on public-private partnerships to make this program a success. Indeed, it’s hard to imagine India successfully setting up 150,000 new health centers without strong public-private partnerships. India’s public health system is already overburdened and plagued by a shortage of facilities and doctors. Most of the government hospitals cater to tens and thousands of poor patients and, because of lack of proper facilities, these hospitals often either turn away patients or force them to sleep on the floor of the hospital due to lack of beds. It is for this reason that over 55 percent of households prefer private hospitals for primary care, leading to a huge financial burden on the families.

However, it’s far from certain whether private hospitals will abandon their commercial business model to please the government and support its new healthcare plan. Many private hospitals have already raised concerns over the defined package rates envisaged for surgical procedures, as they are far below the market rates.

The scheme will provide coverage of up to 500,000 rupees per family for secondary and tertiary care. This cost will be shared according to a 60-40 formula between the central government and states. The government also plans to collect 110 billion rupees through a one percent cess.

As we have seen in the case of the “Pradhan Mantri Fasal Bhima Yojna” (The Prime Minister Crop Insurance Program), though, many states have expressed their unwillingness to share the financial burden of growing premiums. For instance, the BJP government in Madhya Pradesh notified the central government that increased premiums account for almost 60 percent of the state’s existing agricultural budget. They have pointed out that this will put a strain on its financial resources. Moreover, the insurance companies have only settle 25 percent of claims, leading farmers to question the scheme.

Many states have declined to implement the crop insurance scheme because of the high financial burden. It stands to reason, then, that many of India’s states are not in a position to absorb their share of 40 percent of the new health insurance plan.

Both the central and state governments need to find ways for sustainable funding to implement this ambitious scheme to reach the millions of people who don’t have access to even basic healthcare services. Further, the Indian government should take the financial health of the states into consideration before deciding the actual contribution of each state. Study after study has shown that there are huge inequities between states and many states will not be able to absorb their share of healthcare costs.

If, despite these challenge, the government succeeds in effectively implementing its scheme, the Health Protection Mission will be a game changer in Indian healthcare.

K.S. Venkatachalam is an independent columnist an political commentator.

Newsletter
Sign up for our weekly newsletter
The Diplomat Brief