Healthcare needs a critical push

Changing disease patterns, low public spend on healthcare, and high out of pocket expenses have been the primary concerns leading to the formulation of the government’s new health policy. Economic advancement in India over the last two decades has enabled the government to take the cue and clearly articulate its intent to increase the public financing of health to 2.5 per cent of GDP in the Twelfth Five-Year Plan to move toward affordable, accessible and quality healthcare for all.

However, the share of government funding in total healthcare spend remains at approximately 1 per cent of GDP (less than 30 per cent of the total spend) which ranks India 171 out of 175 countries in the world on these parameters.

In spite of the best commitments by successive governments and Plan documents, healthcare spend has not kept pace with the GDP growth rate due to a variety of reasons, including high fiscal deficit.

A welfare state like India needs immediate addressal of this situation; Budget 2015 presents an excellent opportunity. It should lay out a roadmap for increased funding for healthcare and a definitive approach to take India to universal healthcare coverage, a matter that has been debated in policy circles since 2010. On paper, a comprehensive package is available to the entire population through the public delivery system, but in reality the government is far from delivering on this promise, especially for the poor.

While the network of Primary Health Centres (PHCs) and Community Health Centres (CHCs) has grown over the years, the public healthcare infrastructure remains woefully inadequate both in terms of accessibility and quality.

There have been two meaningful interventions in the interim towards the quest for universal healthcare — the National Rural Health Mission (NRHM) and the Government Sponsored Health Insurance Schemes (GSHIS).

While access has increased substantially after the launch of the NRHM, quality and equity remain nebulous. This has larger ramifications in the form of lack of preventive healthcare and a poor referral system leading to excessive pressure on urban tertiary centres.

Another aspect is the role of the private sector in delivery. Currently, 80 per cent of outpatient and 60 per cent of inpatient care is contributed by the private sector.

Further, studies have indicated that incremental expenditure of approximately $86 billion is required to reach a bed density of 2 per 1000 population by 2025.

It is, therefore, imperative that the private sector continues to contribute towards plugging the infrastructure gaps; its role in overall healthcare provision would be even greater in the future.

Public-private partnership and the private sector’s role in healthcare provision, therefore, need to be an important consideration in any policy formulation for the sector.

Between 2003-04 and 2009-10, population coverage through the GSHIS increased more than fivefold. Insurance coverage is expected to reach more than 630 million persons, 50 per cent of the population by end of 2015, according to a World Bank study.

Empirical evidence shows that the GSHIS has had a deep impact on the ground. For instance, third party studies conducted on the Vajpayee Aarogyasri Scheme (Karnataka) has revealed that the risk of mortality for conditions covered under the scheme dropped by 64 per cent, out-of-pocket expenses reduced by 60 per cent, and also led to increased use of available healthcare facilities by the population.

The providers are empanelled (both public and private) on the basis of set criteria and risk disqualification if quality parameters are not adhered to. The scheme provides the participating bottom-of-the pyramid (BPL) households the freedom of choice between public and private hospitals and makes them potential clients worth attracting on account of the revenues that hospitals stand to earn through the scheme.

The purchaser-provider split, therefore, shifts provider payment from inputs to outputs and creates an enabling environment for increased accountability for results. Providers are held accountable for service provision.

Overall, experts are vying to use health insurance (both GSHIS and private voluntary) as a lever to improve quality in healthcare. This could address critical aspects of linking funding with health outcomes, and enhance accountability.

The challenges posed by moral hazards should be tackled by regulations prescribing the adherence to standard treatment guidelines, accreditation of facilities and implementation of national electronic health record standards. Moreover, public hospitals could get access to a lot of funds to improve infrastructure and quality, which might otherwise be very difficult to attain in the current grants mechanism.

This provides significant learning to the government which has to decide between being a payer or provider of services.

World over, governments have clearly articulated their role and related imperatives before embarking on a journey towards universal care. The existing focus on free drugs and diagnostics needs to be backed up by a framework of enhanced focus on primary and preventive healthcare and enabling a PPP-based social health security net for the entire population.

Finally, there is a need to consider new models where the Centre and the State governments collaboratively design a performance-based resource allocation to link a district’s funding to its health needs.

The current mechanism for rewarding better performing states under NRHM is marginal and has not changed the healthcare skew between the relatively better performing States (such as Kerala) and the laggards (Such as Uttar Pradesh). This also goes well with the spirit of cooperative federalism championed by the current dispensation.

The writer is the president of Assocham, and MD and CEO of YES Bank