Universal health coverage has been India’s bugbear for years. That is why the launch of the Pradhan Mantri Jan Arogya Yojana, or PMJAY, in 2018 was nothing short of a momentous first step. Almost five years on, PMJAY has not even reached half of its target population. Talks of a health cover for the “missing middle” – the approximately 400 million Indians that NITI Aayog estimates has no health cover and are too “rich” to be eligible for PMJAY – have remained just that.
Now an official government document has unveiled that 90 million Indians spend between a tenth to a quarter of their family income on healthcare. Worryingly still, the proportion of Indians in this bracket has gone up between 2017-18 and 2022-23, says the Ministry of Statistics and Programme Implementation’s Sustainable Development Goals National Indicator Framework Progress Report 2023.
In the complex landscape of UHC in India, this 90 million – 9 crore people –comprises the crème de la crème of India who can afford to pay for healthcare. But even these numbers are concerning because they are indicative of the inflationary trends that have plagued Indian healthcare (and health insurance as the 52.04 crore Indians who can afford it, know). Insurance premiums have gone through the roof post the Covid-19 pandemic. Government healthcare remains, for the most part, free or highly subsidised, but the quality is often atrocious and the conditions such that oftentimes, the patient’s very dignity is compromised. Private healthcare is swanky and hi-tech but also incredibly expensive; a cesarean section in a topline private hospital in Delhi could set one back by close to Rs 2 lakh. A high-priced healthcare system does not just inconvenience the rich; it also keeps the poor out.
The statistics ministry report shows that 90 million Indians spend at least 10 per cent of their family income on healthcare, while 31 million of them spend a quarter or more of their income for the purpose. To put this in perspective – in the financial year 2022-23, central and state governments spent 2.1 per cent of the country’s GDP on health. This means that 90 million Indians spend, as a proportion of their income, anything between five times and 12 times the proportion of money spent by their governments. UHC is one of India’s sustainable development goals (SDGs), and it clearly has a lot of ground to cover before the 2030 deadline.
It is a tough task, and that is why the linear approach of slowly expanding government healthcare for ‘eligible’ Indians is too little, too narrow and too late. There is a need to analyse health spend in its disparate parts and look at each segment from a solution lens – possible savings by investing in preventive care, better regulation of drug pricing, insurance for India’s missing middle, buy-in of the private sector, and better regulation. Only a multipronged approach can get us there by 2030.
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Incentivising prevention
The most effective – and also, perhaps, the most difficult – intervention to reduce out-of-pocket (OOP) expenditure would be making healthcare less pricey. What if we could treat untreated hypertension so effectively that it would not come to a stroke management situation ever? What if we managed diabetes so well at the primary care level that the need to manage chronic kidney disease never arose? And most importantly, what if hospitals became the seats of prevention rather than treatment? That can realistically happen only if we could make it financially viable for a hospital to not put a stent but to use medication and lifestyle counselling to better manage the conditions leading to a cardiac event.
In 2015 the government of the Chinese district of Luohu took a call to “shift focus from treatment to health.” They did so by integrating five district hospitals, 23 community health stations, an institute of precision medicine and several administrative units. The Luohu Model “funded hospitals via global budgets and allowed institutions to retain any funds not spent during the financial year.” Moreover, in November 2016, “the hospital group encouraged specialists in district hospitals to set up clinics in community health stations to increase the proportion of first contacts occurring in primary health stations.”
The global budget model meant that the hospital was, at the start of the financial year, paid the premium for its enrolled patients. Now it was on the integrated hospital/insurance corporation to use that money. This meant that the hospital now had a stake in preventing chronic health conditions from snowballing into catastrophic health expenditures. On the other hand, experts in the community helped strengthen primary healthcare. The institution of the family physician that could have played this role has unfortunately died a slow death in India. There are examples like Luohu in the West, too – such as the Kaiser Permanente Model of California, a care consortium that seeks to reduce the cost of healthcare through integration of health services.
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The drug pricing conundrum
Have you ever wondered about the business model of some pharmacies – think the ones lining Delhi’s Ring Road, just past the All India Institute of Medical Sciences (AIIMS) or a few around Fortis Hospital in Okhla – that manage to give a 10-50 per cent discount on the maximum retail price of medicines when corporate hospitals charge exactly the MRP? How do these pharmacies, with a fraction of the financial (and policy) heft of hospital behemoths, manage to pass on such significant benefits to customers?
The answer is simple – drug MRPs have a significant element of commission built into them for the marketing chain. Some pharmacies, to gain from the resultant volume of business, pass a fraction of the profit to consumers, while private hospitals do not. The room to offer a big commission to the drug seller is naturally limited in the case of essential drugs under price control, but there is a whole universe outside of that where prices could be significantly lower if the distributors’ and retailers’ commissions were fixed. This commission is also why your local chemist will often try to sell you a “different and better” drug than the one in your prescription or the one you wanted to buy over the counter.
But coming back to the question of big hospital chains, conversations about the need to regulate private healthcare usually tiptoe around the big issues of unnecessary tests, longer hospitalisation durations and wanton procedures. This is not to say that those things do not need scrutiny or that standard treatment guidelines should continue to be followed only in cases of violation. But medicines used by a hospital also comprise a big chunk of that exorbitant bill we get handed. It is a low-hanging fruit that can also impact the OOP expenditure we incur at chemist shops.
Stepping up the gas on PMJAY
Till 30 June 2023, that is a little more than four years and nine months after PMJAY was launched, the scheme that provides an annual family health cover of Rs 5 lakh to eligible families has only enrolled 23,88,07,318 beneficiaries. The scheme aims to cover 50 crore people. It is important to step up the gas on PMJAY enrolments in the light of the statistics ministry report because the PMJAY target population is the one that is just one catastrophic health event away from financial collapse.
Parallelly, the government also needs to move on to providing health coverage to the missing middle. It is difficult for many reasons. For one, this population may not always be content to go to a government hospital and may require a minimum level of services. It is nobody’s case that government hospitals do not need to address the issue of service delivery and quality, but till that happens, the government will have to think of innovative ways to ensure that one serious illness does not undo years of hard work for this vulnerable group. There may be many models – including participatory ones – and many numbers for that.
But the one number that definitely needs to change is the government health spend of 2.1 per cent GDP.
Abantika Ghosh is a former journalist and author. She is currently working with Chase India. She tweets @abantika77. Views are personal.
(Edited by Zoya Bhatti)