The World Health Report (WHR 2010) just released by the World Health Organisation (WHO) focused on financing universal healthcare coverage. It was a reflection of the commitment made by member-states of WHO in 2005 to develop their health financing systems so that all people have access to services and do not suffer financial hardship in paying for them. In India, the focus is, more than ever before, on how to achieve universal healthcare coverage. Recently, the Planning Commission set up a high-level ‘expert group’ to develop a blueprint and investment plan for attaining universal healthcare coverage by 2020. India has already pledged more funding for the health sector.
However, there has been growing debate on various strategies of developing the health system and achieving universal coverage. This is centred on two paths— strengthening the supply side of the public healthcare system so that low-cost healthcare is made available, or strengthening demand-side financing by promoting universal health insurance programmes, where government funds the premium for the poor (at least in the initial stage). Are the two strategies mutually exclusive for a vast and diverse country like India?
Indian healthcare policies often reflect a mix of both routes; however, recently, there has been a growing preference for strengthening demand-side financing through insurance schemes for universal coverage. Health insurance programmes are now considered an integral part of healthcare financing. The Central government has introduced the Rashtriya Swasthya Bima Yojana (RSBY) — a health insurance programme for the below-poverty-line (BPL) population. States such as Andhra Pradesh, Tamil Nadu, Karnataka and Rajasthan have also launched separate health insurance programmes for the poor.
However, the health insurance route for India is not as easy as it appears. In fact, the idea of universal coverage has two aspects, which the WHR 2010 also highlighted — it should cover, firstly, all citizens, and secondly, the entire healthcare expenditure. Otherwise, it will be ‘partial’ health insurance programmes in both respects. For example, the RSBY mainly targets the BPL population (leaving out a majority of the middle-income class), and covers only hospitalisation expenses up to a ceiling of Rs 30,000 per family per annum, but not outpatient expenses. Similarly, other prevailing health insurance programmes, whether public or private, mainly cover hospitalisation expenditure only, which means that even those who have health insurance have only partial financial protection.
In fact, the ongoing ‘partial’ health insurance programmes will leave some undesirable consequences in the health sector. The experience of several countries makes it clear that health insurance programmes increase the prices of healthcare services. The sudden introduction of a health insurance programme for some sections of the people, leaving the majority uninsured, will lead to increased demand for private healthcare and an escalation in the cost of health services in the long run. In fact, though we complain that healthcare is unaffordable in India, the cost of healthcare (except in the metros) is not very high compared with the rest of the world. It has adjusted to what the people can afford in various locations in the country, and India is still a low-cost healthcare destination. Being uninsured in the United States is a tragedy, but this is not so in India. The majority of Indians have adapted to a situation of being uninsured historically and by the healthcare system as a whole.
It is not that we should not introduce health insurance programmes in India, even if it is ‘partial’; however, we should develop some pre-conditions for them. At present, the Indian healthcare market is unregulated and not well developed. We have neither a benchmark for fixing the price of healthcare services, nor standardised treatment protocols. The majority of us use the ‘fee for service’ mode for payment to healthcare providers, which can vary across providers, instead of a ‘case-based reimbursement’ where the provider is paid a predetermined amount covering all services per case or episode of illness.
Contrary to the insurance route, the idea of strengthening the public healthcare system is generally considered a failed model in India, based on historical experience. But now things are changing. Recent initiatives such as the National Rural Health Mission (NRHM) have begun to revive public healthcare, especially the primary and secondary healthcare system, drastically. Therefore, instead of depending heavily on private healthcare, we need to strengthen the public healthcare system at the secondary and tertiary levels as well, through higher resource allocation and better training and education for more healthcare professionals.
Also, apart from offering higher salaries, ‘pay for performance’-based incentives must be introduced for medical staff in the public healthcare system for better service. There should be healthy competition between the public and private health sectors, which should collaborate for the provision of healthcare services. In short, the solution is to neither strengthen the public health system nor introduce health insurance, but to develop both systems simultaneously.
The author is a health economist at Public Health Foundation of India, New Delhi. Views are personal. sukumar.vellakkal@phfi.org
