Modi’s Medicare And The Challenge Of Ground Realities

Shock and awe! The construct owes its genesis to a military strategy enunciated by Harlan Ullman and James Wade in 1996. The phraseology has since occupied political thinking across the globe.

Shock and awe is a tactic and a strategy with the Modi government. The announcement of the National Health Protection Scheme (NHPS) aka Modicare, in the last Budget of this government falls squarely in the shock and awe category. The scale of the ambition does trigger awe among aficionados — insuring 10 crore families for Rs 5 lakh would make it the largest public health scheme. Then there is the challenge of ground realities — the shocking state of systemic incapacity.

The need for better healthcare is validated by mind-numbing data on death and morbidity.

Every hour, over 130 children die before they reach the age of 5.

Just pneumonia and diarrhoea claim nearly 3,00,000 lives in a year. The chasm between need and access is exacerbated by the issue of affordability.

State Of Incapacity

India currently boasts of one doctor per 1,596 persons. As on 30 September 2017, India had 10,41,395 allopathic doctors registered with medical councils – that is, 10 lakh doctors for 133 crore people. The ratio worsens when you drill down.

• The population to government allopathic doctor ratio is 1:10,189 persons.
• The ratio is the worst in the poorest and most populated states – Bihar with 12 crore people has 40,043 registered allopathic doctors and Uttar Pradesh with over 20 crore people has 65,343 doctors.
• The mitigating factor, for the willing, is that there are over 7.71 lakh Ayush registered doctors – 54 percent of whom are practising Ayurveda and the rest homeopathy, Unani and Siddha medicine.
• To service the 130 crore-plus population — of which nearly 70 percent lives in over 5.9 lakh villages — there are 14,379 government hospitals with 6.34 lakh beds of which 11,054 hospitals and 2.09 lakh beds are in rural areas.
• This is backed by 1.55 lakh sub-centres, 25,650 Primary Health Centres and 5,624 Community Health Centres.

What about staffing? The 25,650 PHCs have a sanctioned strength of 33,968 doctors of which 8,286 or a fourth of the posts are vacant.

The CHCs require 22,496 surgeons, gynaecologists, physicians and paediatricians but only 11,910 posts are sanctioned and 4,156 are in position, leaving 8,105 posts vacant.

The saga continues for nursing staff, radiographers et al.

It is no surprise that the ailing rush to the private sector. The 71st survey of the National Sample Survey Office on Health in India reveals more than 70 percent of spells of ailment were treated in the private sector – even as 86 percent of rural population and 82 percent of urban population is not covered under any scheme of health expenditure support and depend on ‘household income/savings’ and every fourth household had to borrow to pay for cure.

The costs and consequences, it is estimated, push nearly 7 percent of the populace into poverty.

There is no disputing that there is a need. The issue is not why but how.

The C (Sea) Of Challenges

The NHPS faces challenges of coverage, consensus, conceptualisation, costs, and capacity.

Consider the first C — the scope of coverage as outlined by Budget 2018. Using Socio-Economic Census data, the NHPS promises to cover 10 crore families, that’s roughly 50 crore persons. The National Food Security Act covers 80 crore people — which means that 30 crore of those covered by the NFS will not qualify for NHPS.

The assumption that these 30 crore people who need coverage for food do not need healthcare coverage is problematic.

This is where the second C kicks in. Many states have schemes covering more than those below the poverty line.

• Maharashtra’s Mahatma Jyotiba Phule Jeevan Dayi Arogya Yojana offers Rs 1.5 lakh cover for 971 types of surgeries and 121 packages in 30 identified categories.
• Andhra Pradesh has NTR Vaidya Seva and Arogya Raksha.
• Tamil Nadu has the Chief Minister’s Comprehensive Health Insurance Scheme, which offers coverage of Rs 1 lakh per family for 1,016 types of procedures.
• Rajasthan’s Bamasha Swasthya Bima Yojana offers a Rs 3 lakh cover to 4.5 crore people for 1,715 illnesses.

States fear the cap of 10 crore families will result in many being left out of the net – an apprehension already expressed by Kerala. West Bengal Chief Minister Mamata Banerjee has asked “Why should the state spend on another programme when it already has its own?” and has ruled out the state’s participation. The enduring truth about the politics of policy is that entitlements once established cannot be wrenched. The challenge will be to craft the methodology and financing of inclusion.

That brings us to the third C – that is the cost. There is as yet no figure. The arithmetic of the gigantic enterprise is complex. Cost depends on conceptualisation – what is included and excluded and who delivers the treatment at what cost. For Average Joe, at India’s median age of 30, the Rs 5 lakh policy for a family of five would cost around Rs 20,000. When the government is the buyer of group insurance, scale kicks in which lowers the price of the premium.

The cost of health insurance for state governments is between Rs 350 and Rs 400 per family for per Rs 1 lakh coverage, depending on the insurer, for what is called a menu of procedures. The Government of Rajasthan pays a premium of Rs 1,261 per family for the Rs 3 lakh coverage.

The figure rolling around in the ball-park for Rs 5 lakh coverage is Rs 2,500 per family – that is, Rs 25,000 crore for 10 crore families.

For instance, if just 1 percent of the 10 crore insured file claims for Rs 1 lakh, or 20 percent of Rs 5 lakh, the payout by insurance companies would be Rs 10,000 crore.

Relying on state-level data, say the claims ratio of Tamil Nadu, to arrive at a national number can be hazardous. What is true for Tamil Nadu cannot be true for Bihar or UP – in terms of the level of development and of state capacity.

The math of costs sits on a confluence of compulsions and conflicts that renders schemes vulnerable to being gamed. One useful data point available with the Insurance Regulatory and Development Authority of India (IRDAI) is incurred claims ratio or ICR – that is premium earned versus pay-outs made. IRDAI data shows payout for government-sponsored health insurance schemes shot up from 87 percent in 2012-13 to 122 percent in 2016-17.

Very simply, insurance companies paid out more than total premium collected.  

Then there is the spectre of future costs. Studies show the experience of low and middle-income countries with large public health insurance programmes — Indonesia, for instance, has 180-million-plus enrolled persons — has been mixed. Rising claims and costs have impacted not just the public exchequer but also the balance sheets of hospitals dependent on reimbursement from insurance providers. There are also lessons to be learned from states in India which did not join, pulled out or cut back on allocations for the Rashtriya Swasthya Bima Yojana.

Opportunity In The Challenge

The price of change and transformation in India comes stapled with the cost of that which is not done or yet to be done.

The NHPS comes embedded with an opportunity to fix the broken healthcare system. Aimed at front-loading affordability to deliver access to healthcare, it can be leveraged to drive investments to fashion a viable model for backward and forward linkages.

There is the issue of funds – India spends less on health than all its BRICS peers and even smaller economies.

But more vitally there is the issue of imagination. Every Union health minister in three decades has taken refuge — for the flailing health care system — behind the fact that health is a state subject. Why not leave it to the states? Imagine the central government as the incubator of many startups, providing seed capital through a national health mission – a common platform that empowers states to create and share best practices.

Why not allow states to design their own public-private partnership (PPP) models? They could provide land and use the Mahatma Gandhi National Rural Employment Guarantee Scheme to build physical infrastructure and source setting up of health resource centres and treatment to philanthropic, not-for-profit and private bodies. There is also the induction of data analytics and telemedicine technology. Why not ask Members of Parliament and Legislative Assemblies to assign 25 percent of their area development funds for setting up health centres? How about setting up the 1.5 lakh new wellness and health centres in PPP mode? Why not induct hospitals known for innovative and frugal systems to create a template?

Healthcare is not just about what is in the health policy but what is lacking in public policy. Critical for success is the integration of policies to deliver outcomes – in the delivery of potable water, in sanitation, in urbanisation, in the management of waste and pollution et al.

For decades India’s public policy initiatives have focussed on the consequences – leaving the cause for another day. For ‘Bharat’ to be ‘Ayushman’ it is necessary to invert this paradigm and begin addressing the cause.

(Shankkar Aiyar, political-economy analyst, is the author of Aadhaar: A Biometric History of India’s 12-Digit Revolution; and Accidental India. This article was first published in BloombergQuint. This is an opinion piece and the views expressed above are the author’s own. The Quint and the BloombergQuint neither endorse nor are responsible for them)