Neglecting Health Expenditure in Favour of the Chimera of Insurance

When the data tells us insurance-based health schemes have not reduced out-of-pocket expenditure for the poor, Jaitley’s budgetary focus should have been on boosting public provision of health care.

Getting a check-up in rural India. Credit: Shome Basu

Getting a check-up in rural India. Credit: Shome Basu

Despite sustained economic growth for over two decades, improvements in health indicators in India have not kept pace. By 2015, India was able to meet only four out of the ten health targets set under the Millennium Development Goals (MDGs) for that year. India continues to be the largest contributor globally to infant deaths as well as malnutrition. The country faces a double burden of undernutrition as well as obesity/overweight on the one hand, and the continued prevalence of communicable diseases such as malaria and tuberculosis along with an increasing burden of non-communicable diseases (NCDs) such as diabetes and hypertension.

In spite of the National Rural Health Mission (NRHM) (now under the National Health Mission), which resulted in greater investments in the health sector by the Central government and introduced with a host of reforms towards improving access to public health care, there are still large gaps in healthcare delivery in the country. Instead of building on the gains of the NRHM, the last three-four years have seen a stagnation in Central health spending and this budget continues this trend of neglect of the health sector.

Underfunded health mission

The budget for this year for the National Health Mission is Rs. 19,037 crore, which is almost the same as last year. Along with inadequate investments in health care, it is also disturbing that the entire strategy of this government for improving access to health care seems to be based on provision of insurance for a few rather than provision of universal and free health services. Such an approach will only benefit the private sector (insurance companies as well as health care providers) and there are serious doubts as to how effective it can be in reducing the burden of health expenditure on people.

The failure of successive governments in providing free health services has resulted in high burden of out of pocket expenditures (OoPE) on health in the country. Studies show that catastrophic expenditures in health is the topmost reason for pushing people into poverty, with estimates that 60 million people are pushed into poverty  each year due to high OoPE. In his speech, finance minister Arun Jaitley was accurate in his diagnosis when he said that “catastrophic health events are the single most important cause of unforeseen out-of-pocket expenditure which pushes lakhs of households below the poverty line every year. Serious illness of family members cause severe stress on the financial circumstances of poor and economically weak families, shaking the foundation of their economic security”. However, his response to this situation is not only woefully inadequate but also terribly misguided.

The major announcement related to the health budget in Jaitley’s speech today is that the government will launch a new health protection scheme which will provide health cover up to Rs. 1 lakh per family, covering one-third of the population.

Insurance lessons not learned

It is not clear whether this will be over and above the existing Rashtriya Swasthya Bima Yojana (RSBY) or how eligibility for the scheme will be determined. The RSBY – an existing insurance scheme targeted at people below the poverty, covering them for up to Rs. 30000 per household per year – started with the same objective of reducing out of pocket health expenditures. Most independent evaluations of the RSBY show that this scheme has neither managed to significantly reduce out of pocket expenditure nor has it increased access to healthcare for the poor. What it seems to have achieved, however, is to provide more opportunities for the private sector to make money out of poor people’s illness (for example increased hysterectomy under RSBY). Comprehensive analysis of the RSBY has not been possible because the government has been extremely cautious about releasing RSBY data (raising suspicions about what it shows) and therefore there is no clear idea about how much money has gone into the private sector through this scheme and how much is flowing back to the public sector.

Despite a decade of promoting insurance-based schemes such as the RSBY (and also state schemes such as Arogyasri in Andhra Pradesh) the data from the NSS shows increasing OoPE. Based on their analysis of NSS data for 2014, Sundararaman and Muraleedharan show  that only 13.1% of rural and 12% of urban residents are covered by government-funded insurance schemes (while official statistics claimed 25% coverage).

Further, for schemes which are meant to be targeted towards the poor, the data showed that the coverage was better amongst the richer. In rural (urban) areas the lowest quintile had only a 10.1% (7.7%) coverage as compared to 17% (15.1%) in the fifth quintile. Moreover, if we consider the effective coverage as being represented by the proportion of hospitalisation cases that receive part or full reimbursement for their expenses it is even lower, with only 1.2% of the hospitalisation cases of the rural population and 6.2% of the urban population having received even part reimbursement. Therefore, the evidence shows that despite efforts towards pushing for increased insurance coverage, neither have the poorest been reached out to nor has there been efficient financial protection. On the other hand, the increased access to public facilities for services such as institutional deliveries (which is where all the efforts of the public health system have been concentrated) shows that if there is access and if the services are available in the public sector, the poor will use them.

Needed, public provision 

Wide gaps exist in public provision of health care. For example, 27% of sanctioned doctors’ posts in primary health centres (PHCs), 10% of ANM (Auxillary Nurse Midwife) posts and 40% of male health worker posts are currently vacant. Even though there has been an increase in people accessing public health institutions, especially for delivery care, health care in the country is largely provided by the private sector. The NSS data shows that more than 70% of spells of ailment were treated in the private sector. This high dependence on the private sector has been mainly because of poor access to public health services and policies that allowed the unregulated growth of private provision of health care since the 1980s.

While this government’s main strategy to tackle health issues in the country seems to be to rely on health insurance, what is required, in fact, is greater investments into direct provision of health care. India is amongst the countries that spends the least on health care with a public spending of about 1% of GDP on health care compared to 3% in China and 8% in the UK. Successive governments and expert panels have recommended that at least 2.5% to 3% of GDP must be devoted to public expenditure on health.  Further, globally it is recognised that targeted health systems do not work and the focus must be on universal provision. The finance minister has failed to address both these issues, leaving little hope that this budget will contribute to improving people’s health.