India has long had a
commitment to offer comprehensive healthcare to all citizens. This has been
reaffirmed in the 12th Five-year Plan as well as in the more recent National
Health Assurance Mission. However, despite this, India has not been able to
realize this goal. It is not clear if it has embarked on a path that will make
it possible to do so even in the distant future.
The most important
reason for this relates not to the absolute availability of resources but to
the fundamental flaws in the design of the health system. At 4% of gross
domestic product, the country expends more than enough money to deliver good
quality healthcare to all citizens.
However, 70% of this
money is spent on an out-of-pocket basis at the point-of-service (OOP-POS) with
the actual expenditure at any point of time varying from zero to more than Rs.10 lakh, and it is spent
to pay for care that is often not necessary or for conditions that would have
been easier and less expensive to treat if they had been detected earlier or
those that have a slow onset or are asymptomatic until they reach an advanced
stage.
This produces financial
hardship for all but the top 1% of the population and leads to low levels of
well-being across all income segments. The high variability of OOP-POS expenditure
on health and the deterrent effect it has on seeking care in a timely manner is
also one of the key factors responsible for the re-entry of the middle classes
into poverty. It is also a reason for the delayed progress of all below the
poverty line, effectively reducing the rate of economic growth.
However, healthcare is
not a standard market good and suffers from problems that result in people
delaying care until they are really very sick; inability of patients to fully
understand and properly evaluate the quality of advice and treatment that they
receive and to determine if it is priced in a fair manner; a number of chronic
diseases not being suitable for treatment within hospital settings; and the
tendency of hospital insurance to result in overuse of hospital services
leading to a steady increase in the insurance premium for such services,
particularly when patients have received no primary care and have come directly
to the hospital.
Developmental efforts of
all successful health systems have simultaneously sought to address concerns
relating both to financial protection of their citizens and the proper
provision of healthcare, with a high degree of implied paternalism to
compensate for the failure of traditional competitive market mechanisms to
arrive at optimal solutions.
Some, like Japan, have
flooded the market with healthcare providers which, in combination with tight
regulations, have kept prices low and quality high, have required all the
citizens to buy into a single national health insurance plan and have relied
heavily on the general good health, healthy dietary practices and high levels
of literacy to ensure their consumption of healthcare is optimal.
Others, like the UK,
have ensured taxes pay for all healthcares, with the government contracting
private doctors for primary care and directly providing higher level of care to
all its citizens.
Even though there are a
few notable exceptions at the state level, India, despite driven by a low
tax-to-GDP ratio of 15%, allocates 10% for healthcare as a proportion of its
total expenditure. Still it is unable to afford to pay for all the healthcare
needs of its citizens through taxation alone. It will remain so until there is
a sharp increase in the tax-to-GDP ratio or the government decides to increase
its allocation towards healthcare disproportionately at the expense of other
social services.
Any such scheme must
have three key components. First, the scheme should provide and pay for a
comprehensive essential health package (EHP) and not just restrict its
attention to maternal and child health or only to financial protection.
Historically, health insurance schemes in India, including those offered by
governments, have restricted coverage to in-patient hospital-based treatments.
Secondly, such a scheme
would have to be designed from its conception stage to serve both the poor and
the non-poor. This would mean the quality dimension would need to be paid
attention to, as well as the look-and-feel of the facility itself. Based on the
collections from direct taxes on income in the current assessment year in
India, such a system of pre-payments from the non-poor who are part of the
formal sector could raise between Rs.14,000 crore and Rs.34,000 crore with a total contribution ranging
from 5-12% of salaries. This amount on its own has the potential to contribute
up to 18% of the required health budgets, without the deadweight loss
associated with generalized increased in taxation that hurts growth.
In any developing
economy, and India is no exception, there is a large section of the population
that is above the poverty line but is not a part of the formal sector.
Innovative pre-payment mechanisms can be designed to cover this segment, including
explicit sale of the integrated insurance-healthcare product to them on a
full-cost basis. Kyrgyzstan is an example of a country that has an informal
agricultural sector, which has successfully devised mechanisms to collect
contributions towards health
insurance from these groups, and has thus, been able to extend health
coverage to more than 80% of the population.
The successes of the
Swavalamban Scheme and the microfinance movement in India suggest the informal
non-poor have the willingness and the ability to pay for schemes that directly
add value to them.
[Source: http://blog.livemint.com/Opinion/X4F3daIPrtCj3uxyzrpSVN/Financing-universal-healthcare-in-India.html
]
