Analysis | The Health Sector Debate: Affordability Versus Access

Over the last three years, we have seen a raging debate on how India’s health care sector has become expensive and unaffordable. A number of quick policy and regulatory measures were taken to reduce drug prices, starting off with a drastic reduction in prices of heart stents. The focal point was that out of pocket expenditure was high and that nearly 6 million people fall into chronic poverty because of expenditure on healthcare. On the other hand, the issue that was forgotten in this enthusiasm to cut costs of drugs and then of hospitalisation, was that nearly two-thirds of the country lacks access to quality healthcare. Ayushman Bharat was launched to address this criticism.

It is important to go back to the basics. The WHO defines Universal Health Coverage (UHC) as ensuring people get quality, affordable health care without suffering financial hardships. All UN Member States have agreed to try and achieve UHC by 2030, as part of the Sustainable Development Goals (SDG). In fact, SDG 3 includes a target to achieve UHC. The first move towards achieving UHC was launched in Germany in 1883 through the national health insurance system to provide injury and illness insurance for their low-wage workers. In 1911 and 1912, the United Kingdom and Russian empire respectively started giving coverage to wage workers for primary care and in the 1930s, similar systems existed in almost all of Western and Central Europe.

Let us now see how Universal health care took off among emerging economies. It was only in 1988 that Brazil initiated an extensive programme of health reforms and subsequently some Asian countries also introduced UHC in late 90’s - South Korea (1989), Taiwan (1995), Israel (1995), and Thailand (2001). Sri Lanka achieved a high degree of UHC through a multifaceted approach, where prevention and promotion played a critical role. It now boasts 100 per cent coverage for most of the indicators including immunization. Only 0.4 per cent of households in Sri Lanka were pushed into poverty by health spending in 2015, compared to 1.5% (Philippines), 1.7% (Vietnam), 3.5% (Bangladesh) and 3.9% (India).

Malaysia started giving healthcare serious attention soon after its independence and by the eighties had expanded health services under a model of direct public provision. More recently, the government proposed creating a health insurance fund that would allow Malaysians to choose between public and private providers. After UHC, IMR in Malaysia came down. MMR also decreased by 89% between 1963 and 2013. Smallpox was successfully eradicated in 1978 and in 2011, the WHO regional target on hepatitis B control was achieved, six years ahead of the given target.

Thailand successfully implemented UHC to full-population in 2001, described as one of the most ambitious healthcare reforms ever undertaken in a developing country. Two important factors that contributed to the UHC outcomes are extensive geographical coverage of a functioning PHC and design of schemes to ensure a comprehensive benefits package. Following UHC, there have been significant shifts in the country's health profile including reduced household spending on health, increased life expectancy at birth and decline in IMR and MMR.

India’s private sector, mostly unorganized, remains the main provider of healthcare. The government’s approach has been mostly disease burden specific. In 2005, the government launched the National (Rural) Health Mission that envisaged the achievement of universal access to equitable, affordable & quality health care services to people, especially the most vulnerable population. In 2008, the government launched Rashtriya Swasthya Bima Yojana (RSBY) at the national level, to provide social security to mitigate health risks for the BPL families. The objectives were to reduce OOP expenditure on health and increase access to health care.

In September 2018, the government of India launched Ayushman Bharat (AB), referred to as the National Health Protection Mission (NHPM) or Pradhan Mantri Jan Arogya Yojna (PMJAY) or Modicare. This scheme aims at covering 10 crore families with a health cover of up to Rs 5 lakhs per year. The allocation for the scheme in its first year is Rs. 2,000 crore, which, although early to tell, falls massively short of the commitment. For example, even if 1-2% of the target beneficiary families seek insurance annually, it amounts to Rs. 50-100k crore. As critics point out, even a budget of Rs 10,000 crore for 10 crore families to be covered by the scheme translates to just Rs. 1,000 per family.Not hard to imagine why paucity of funds committed and proposed scale of coverage have so far dominated the debate on the scheme.

The basic premise in this model is that the private sector will play a key role in ensuring high-quality care. Under the scheme, the government has put a cap on procedural treatment costs for over 1,350 treatment packages. This has led to unease among private hospitals, complaining about the price bracket and reimbursement. To effectively bring private hospitals on-board and to ensure compliance of quality and equity in service delivery, the government will have to increase its outlays to the private sector. While affordability is essential, without the quality of care, ‘healthcare’ for all cannot be achieved.

Moreover, primary health care centres suffer from the perennial shortage of doctors and even district hospitals are without specialists. Many of these centres lack basic amenities; both electricity and running water being rarely available. Limited availability of human resources at various levels of health services is a huge problem, with up to 40 per cent of health worker posts lying vacant in some states. Although under Ayushman Bharat, the vision to reform 1.5 lakh sub-centres (SCs), primary health centres (PHCs) and community health centres (CHCs) into health & wellness centres (HWCs), has been initiated, it must improve access and quality of health services. The annual spend on each centre would total approximately Rs.15-16 lakhs each year, which translates to the scheme costing Rs. 23,000 crore annually. The proposed sum of Rs. 1,200 crore for these centres is not enough for a meaningful transformation of the 1.5 lakh facilities.

While the Ayushman Bharat scheme brings hope for the marginalized and vulnerable, it will be interesting to see if the government will spend the money required into the scheme when the new budget is revealed come Friday. If indeed there is political mileage to be obtained in providing UHC, we should see a substantial increase in the allocation to Ayushman Bharat.

Amirullah Khan is a Health Economist and visiting faculty of economic policy at the Indian School of Business, Hyderabad