The much anticipated increase in fund allocation for healthcare has taken a backseat as the current government searches for other ways to finance an effective healthcare system such as private insurance. The massive mismatch between the declared objective of universal healthcare through the public health system and the actual level of expenditure remains a serious concern By M Neelam Kachhap
Making healthcare reform a priority was one of the pre-election promises Narendra Modi made to the nation, that led to his landslide victory in the last election. However, the first budget of the new government seems to back-out on the promise. A massive miss – national health assurance mission announced last October has no takers. Instead the government wants to encourage private insurance with an inclination towards public-private partnership. That the government needs to allocate more funds for public health is a no-brainier, however, the current government like its predecessor continues to relegate the matter.
Allocations for the year
Finance minister Arun Jaitley’s budgetary allocation for healthcare took many industry leaders by surprise. While the total outlay of Rs 33,150 crore for the sector is similar to the allocation in previous budgets it does not seem sufficient to run the various schemes of the government. Besides, the allocated amount does not translate to the much anticipated increase of GDP spend from 1.2 per cent to two per cent, which was projected as the government intent before and after the elections. “This budget for healthcare is the lowest since 2012 – 2013. This does not send the right message at all, at a time when we are talking about proportionately increasing the budget in terms of GDP,” said Ameera Shah, MD and CEO, Metropolis Healthcare.
In addition, India has had a history of underutilising the health budget and the finance minister has failed to address this. “Allocation of funds is an issue but the larger issue is that there is no proper system to make sure that the budget is used in the right arena,” added Shah.
“The budget does not deliver to the expected transformation of the healthcare sector in the country under the promise of the Universal Healthcare coverage,” said Vishal Bali, Co-Founder and Chairman, Medwell Ventures. “The budget is silent on the promise of the National Health Assurance programme,” he added.
However, the Union Minister for Health & Family Welfare, JP Nadda has termed the Budget as balanced, progressive, pragmatic and pro-people. He stated that the resolve to support the health sector in a big way has been shown by the outlay for health in the Budget of Rs 33,150 crore. Further, justifying its stand, Nadda stated through a written reply in the Rajya Sabha that by the end of 12th Plan period, the government would have increased its share in public spending on health. As per Economic Survey 2014-15, the expenditure by the Government (Central and State Government combined) on health as percentage of Gross Domestic Product (GDP) for 2014-15 (BE) is 1.2 per cent. As per 12th Five Year Plan document, the total public funding by the Centre and States, plan and non-plan, on core health is envisaged to increase to 1.87 per cent of GDP by the end of the 12th Plan. When viewed in the perspective of the broader health sector, the total government expenditure as a proportion of GDP is envisaged to increase to 2.5 per cent by the end of the 12th Plan.
Why did national health assurance mission fly out of the window?
The much touted national health assurance mission which was to be the governments’ flagship differentiators has not yet taken off because it was too expensive to apply. Experts believe that the government would have to shell out an estimated $11.4 billion annually on the project which would take about 10 years to cover the 1.2 billion people in India.
“The unfortunate fiscal fact is that India may not be able to have anything like doubly universal health coverage — that all people can have all medically effective treatments for all diseases,” writes Harvard scholar Lant Pritchett and Gulzar Natarajan in an article. (http://indianexpress.com/article/opinion/columns/putting-the-universal-in-healthcare/99/)
“The typical European country with doubly universal health coverage spends around $4,000 per person per year to do so — higher than the total Indian GDP per capita.
Indians currently spend about $120 per capita (PPP) on healthcare each year, of which only a quarter comes from the government. Mexico, whose Seguro Popular universal insurance scheme is regarded as a model for upper middle income countries, spends nearly $1,000 per capita, with half coming from the government. Even the Mexican levels of government spending would require 80 per cent of all Indian taxes to be devoted to health — leaving almost nothing for anything else — infrastructure, police, education, defence, etc ,” Pritchett explains.
What is NHAM?
The National Health Assurance Mission’s (NHAM) objective is to reduce out-of-pocket spending on healthcare by the common citizen. For the proposed programme, Indian government was to provide all citizens with free medications and diagnostic treatment, as well as insurance cover to cure serious ailments
Is insurance the answer to better health?
Taking a cue on healthcare financing from the US, the Narendra Modi government has, linked healthcare firmly to the private insurance sector. The finance minister proposed to increase the limit of deduction under section 80D of the income tax Act from Rs 15,000 to Rs 25,000 on health insurance premium. In case of senior citizens, the limit of deductions has been increased from Rs 20,000 to Rs 30,000.
“In recognition of health inflation the enhanced tax exemption on health insurance premiums from Rs 15,000 to Rs 25,000, and Rs 20,000 to Rs 30,000 for senior citizens, will provide the much needed impetus for adoption while also encouraging people to invest appropriately in their health insurance which can adequately service their healthcare needs,” says Anuj Gulati, CEO, Religare Health Insurance.
“Additionally, with respect to ESI, the employee will now have the option of choosing either ESI or a Health Insurance product recognised by the IRDA, enabling them to select healthcare financing option basis their specific healthcare needs. We are also pleased to see the government’s positive intent and action towards ensuring a larger populace access to the benefits of insurance through the state-sponsored programmes, namely, Pradhan Mantri Suraksha Bima Yojana and Pradhan Mantri Jeevan Jyoti Bima Yojana,” Gulati added.
Proposed free services at Government hospitals
- Universal Immunization of children against seven diseases,
- Pulse polio immunisation
- Family planning services,
- Maternal and reproductive health services
- Child health services that include both home based and facility based new born care,
- Adolescent Reproductive and Sexual Health (ARSH) services,
- Investigation and treatment for malaria, kalaazar, filaria, dengue, JE and chikungunya,
- Detection and treatment for tuberculosis including MDR-TB,
- Detection and treatment for leprosy,
- Detection, treatment and counseling for HIV/AIDs.
- Non-communicable diseases services
- Cataract surgery for blindness control- over six million free cataract surgeries done every year, Cornea transplant, glaucoma/ diabetic retinopathy, spectacles to poor children.
Analysing the move Dr Alexander Kuruvilla, operating partner , Multiples Alternate Asset Management says, “It is a natural sequential process following increase in FDI into the insurance sector to allow for exemptions and increasing incentives to enable more people to buy health insurance. As a nation, we cannot be looking for subsidies and expecting to grow further. The people should be enabled to buy and increase their purchasing power and with incentives and tax exemptions our government is trying to address this plague and enable growth.”
Industry experts, however, feel that the government is nudging the middle class to opt out of public health system by incentivising insurance. Amit Sengupta, co-convenor of Jan Swasthya Abhiyan says, “Theoretically, the government should be the putting the tax money in building and strengthening a public system. Instead, they are giving incentive to people to go to the private sector.”
This will also widen the gap between the haves and the have not, feel experts. “It is paradoxical as the fine print in the Budget statement will lead to increased out-of-pocketexpenses. The danger is that in-equities in healthcare will persist leading to more gaps between urban/ rural areas and between North & East India vs West and South India,” says Dr Harish Pillai, CEO, Aster Medcity.
Cost burdened insurance-based healthcare
As the US healthcare system has shown the road to insurance-based healthcare financing is rocky. One of the major drawback is the link between private health insurance companies and healthcare providers, which is also why the US healthcare cost is skyrocketing. If anything the situation in US calls for an inward retrospection on insurance and better regulatory environment. The health insurance nexus with hospitals and its regulation are a cause of concern in India. Still some industry experts feel that better days are ahead.
“The coming days will lay stringent norms on the hospitals and insurance companies to reduce out of pocket spend which is already evident with GIPSA Tariff being followed in many cities with private hospitals,” informs Kuruvilla.
The other drawback of insurance is that insurance covers only the cost of hospitalisation and not expenditure on outpatient care. National health accounts statistics show that close to 70 per cent of the out-of-pocket expenditure of the household is for outpatient care, which will not be covered by insurance. And even then what percentage of the population can afford that insurance. Besides, what use would insurance cover be for people who cannot access healthcare. It is a fact that many rural areas in India do not have hospitals, how then would insurance even if it is public insurance help patients? Insurance should not become a hurdle to healthcare. The government should focus on improving accessibility.
Accessibility prime focus
Increasing accessibility should have been the primary focus of the government, it they really wanted to transform India’s healthcare sector. Most of the new government policies focusing on transforming the economy wont work if the most important asset of India its people are not taken care off.
The budget did not focus on improving the existing healthcare facilities or even making healthcare accessible by increasing its infrastructure. “On infrastructure front , it is a bit of under expectation, with only mention of five AIIMS in various states,” says Anupam Verma, President, Wockhardt Hospitals.
“A centralised thrust on creation of more quality infrastructure on medical, paramedical, medical and allied education would have set clear directions,” he says.
“Also, the need for healthcare policy and an indicative allocation to roll that out with clear milestones would have been appreciated. Historically there have been gaps in intentions and outcomes. We hope that this is bridged to create a healthy India this time,” he added.
“A nations health is its strategic asset; we will need to wait for the day when health and education get better budgetary support as it is critical in the development of our most precious resource – people,” concludes Dr Pillai.
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