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Ayushman Bharat—Long Live Private Healthcare

The Ayushman Bharat—National Health Protection Mission’s sustainability is questionable.

A healthy population is a key contributor to the development of human capital, which, in turn, is the primary ingredient for growth. According to the World Bank, health expenditure as a percentage of gross domestic product (GDP) in India was 3.8% in 2015. This was 16.8% for the United States and 9.9% for the world as a whole. Fifteen percent of the Indian population is insured, and 94% of the health expenditure is paid by individuals out of pocket. Hence, health shocks have the potential to drive individuals and families into perennial debt traps. Providing the poor with health insurance not only can improve the health of individuals, but it has much bigger potential positive spillovers. It might be the key to driving families out of the vicious cycle of poverty.

Against this backdrop, the Ayushman Bharat—National Health Protection Mission (AB-NHPM), also known as Modicare, generated a lot of interest. The AB-NHPM is to provide coverage of ₹ 5 lakh per family, targeting more than 100 million families belonging to the poor and vulnerable sections of the population, based on the Socio-Economic Caste Census (SECC) database. One of the major departures from previous schemes like the Rashtriya Swasthya Bima Yojana (RSBY) is that the AB-NHPM will also provide primary care assistance by upgrading the government health centres. The insurance amount has also been increased to ₹ 5 lakh from ₹ 30,000. There are also plans of digitisation of the entire process, which would be largely borrowed from the Rajiv Aarogyasri Health Insurance Scheme in Andhra Pradesh. The government aims to cover 40% of the entire population.

One of the major issues with the scheme is how to make it sustainable. It will further add to the fiscal burden. The government has claimed that it would be able to finance it through the savings generated from direct benefit transfer (DBT) that amounts to ₹ 90,000 crore. However, this money has already been taken into account in fiscal calculations. Also, since state governments have to bear 40% of the costs, this would further add to the fiscal burden of the states and they might ask the central government for more resources. This would be a problem parti­cularly for poorer states with a large population of people below the poverty line. Hence, this policy would be taxing the poorer states. 

The state of health infrastructure might prove to be a major problem. This is particularly important in peripheral areas. About 80% of doctors and 75% of dispensaries are serving urban India, which makes up only 28% of the country’s population, leaving the rest in dire need of basic health facilities. There are only 0.9 hospital beds per 1,000 population, whereas the figure is 6.5 per 1,000 population for developed countries. India had access to 0.6 doctors per 1,000 population while the figure was around three for developed countries. Only 37% of people had access to the inpatient department (IPD) facilities within a 5 km distance while only 68% had access to an outpatient department (OPD). As per the World Bank, even in 2015, 15% of the children did not have access to basic vaccines.

Lack of government health services would result in dependence on the private sector. It is well known that in regions where the public health sector is well developed, the cost of the private health facilities is lower. For example, in Tamil Nadu, the private hospitals have to compete with the government health services and hence the costs are relatively lower given the quality of services offered. In contrast, in the northern states, the costs in private hospitals can really skyrocket. Also, there are no credible monitoring agencies watching out for medical malpractice in such hospitals. If malpractice is not kept in check, it is very easy to exhaust the entire insurance amount in one go. For example, it could be that a patient suffering from a terminal disease is operated on multiple times. The patient might still die, but it will push the family into a much bigger debt trap than if they had no insurance, as they end up having to meet the accompanying expenses of being treated at an expensive super specialty hospital.

At the same time, monitoring of doctors in public hospitals is also required. It is common knowledge that government doctors indulge in private practice, which is much more lucrative. Given the fact that the health insurance covers private facilities, this might be an encouragement for government doctors to go in for private practice or set up private nursing homes.

Beneficiaries could also face problems caused by moral hazard. Since people know that they have access to expensive private hospitals, they might choose to use their services for even minor ailments. It might also encourage people to save less and indulge in more risky expenditure like on cigarettes and tobacco. We require monitoring agencies that will look into all these aspects. It is not clear if these problems have been anticipated by the implementing agencies and whether they have taken steps to curb these.

Hence, one can say that the AB-NHPM has a lot of potential, but it might turn into a nightmare if not carefully implemented. These issues need to be kept in mind by the policymakers. We also need better data so that the various dimensions can be analysed.

Updated On : 26th Nov, 2018

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