India has a long way to go till we meet all the Millennium Development Goals (MDGs): the eight standardised parameters of measuring human development and health status set by the United Nations that were supposed to be accomplished by 2015. While these MDGs evolved to become the Sustainable Development Goals to be achieved by 2030, we have managed to meet only four of the goals.
Two of the remaining four — reducing child mortality by two-thirds and cutting maternal mortality by three-fourths — can be vastly improved by simply ensuring mothers show up at hospitals. At 1.2-1.5 per cent of GDP, India’s minuscule spend on health is a national security concern and is in dire need of policy rejuvenation.
Traditionally, the Centre has juggled two roles in healthcare development: first as the payer of health expenses via reimbursements and insurance schemes, and the other as provider of medical care (via hospitals and medical colleges). While the government’s entry and subsequent investment decisions into these sectors made sense 50 years ago, the fact that we have met just half the MDGs in 2015 is a clarion call to narrow the focus and achieve excellence in one role — that of the payer.
Universal health coverage
A big, audacious goal for all developing nations, universal health coverage or a basic level of health care and financial protection for all citizens, once achieved, helps pave the road to achieving better and cheaper medical care. Some ways of financing universal health coverage are through taxes, a single-payer system that reimburses expenses which is usually the government, such as in Canada, and insurance.
Among these, insurance is intuitively the best option for India since it is easier and faster to mandate and get off the ground. With the advent of Aadhaar and the increasing penetration of smartphones, insurance is rapidly scalable, easy to propagate and has low recurring costs. Moreover, insurance can be administered either directly by the government, via a public-private partnership, or left open to private players completely, all of which can lead to competitive, self-adjusting markets.
Health insurance
Last year we saw a favourable move in the form of increased allocations to the National Health Mission: a 150 per cent increase for RSBY and a new insurance cover of ₹1 lakh per family. The Twelfth Five-Year Plan and Health Policy 2015 also proposed to increase government expenditure on health to 2.5 per cent of GDP, which though positive, is a far cry from other BRICS nations that spend between 3.5-8.5 per cent on health.
While these moves are welcome and show commitment by the Government, the amount allocated to insurance is miniscule – only ₹1,500 crore, compared to the overall health expenditure of about ₹39,500 cr. The Government continues to invest in remaining a provider, allocating a major chunk to setting up hospitals and pharmacies or upgrading existing ones.
What Mr Jaitley should do
It is recommended that the government take the bold move of making a special provision for allocating ₹5,000 crore to promote universal health coverage. It would cost about ₹3,000 crore for the government to subsidise RSBY insurance premia for all 8.3 crore BPL families, and the remaining amount would be used to create a paperless registration process and actively market health insurance through the country.
Universal health coverage focuses on health outcomes and cascades improvement across the healthcare value chain by generating demand from patients and thus proliferating hospitals; ensuring providers deliver good quality care; reducing unnecessary prescriptions; and promoting adherence and health maintenance among patients, failure of which increases their premium. All of these would, in turn, fix the entire system.