Saturday, February 17, 2018

Modi Doesn’t Care- Mindless expansion of Health Insurance

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 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.

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.

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.

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.

Budget 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.  

Figure 1: Comparison of 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.

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.

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?

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.

Figure3: Compound annual 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.

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.

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 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.

The author is faculty at Jindal Global University

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