Abstract
The current budgetary allocation of ₹20 billion under the Pradhan Mantri Jan Arogya Yojana (PMJAY) is grossly inadequate. Our paper estimates that in the current fiscal year, the scheme will require an allocation of at least ₹420.73 billion to be able to give any meaningful coverage to 0.1 billion targetted families. This paper argues that such an expensive tertiary sector- led medical care coverage model is not the correct approach to ensure Universal Health Care (UHC) in India. A majority of illnesses are treatable at the primary level and an unbalanced promotion of the tertiary sector while neglecting primary healthcare will cause a delay in treatments, resulting in more complex and expensive medical interventions. What India urgently needs is to develop a comprehensive primary healthcare system.
Introduction
In the launch of Pradhan Mantri Jan Arogya Yojana (PMJAY), the initiative was projected as a game changer in public sector healthcare services for the poor. It attempts to give an insurance coverage for medical costs for hospitalisation up to ₹500 thousand per family in a year to benefit 0.1 billion poor families, or over 0.5 billion people. While giving it the tag of ‘largest government-funded healthcare programme’ in the world in its inauguration, it was pointed out that the 0.5 billion beneficiaries under this scheme outstrip the populations of the USA, Mexico and Canada taken together. But can India really implement the ‘largest government-funded healthcare programme’, while its government spending on health is one of the lowest in the world? According to the WHO data, India ranks 183rd in terms of government health expenditure as a percentage of its GDP and 159th in terms of per capita government health expenditure in 2015, out of total 193 countries in the world. 1 Let us have a close look whether the budgetary allocations in this scheme are adequate to fulfil its promises.
Grossly Inadequate Budget
In this current 2018–2019 fiscal year, ₹20 billion has been earmarked in the central government budget for expenditure towards a health insurance scheme which is basically the total premium paid by the government to health insurance agencies (or trusts). Conservatively assuming there are no administrative costs or insurance overheads, health insurance agencies (or trusts) have only this ₹20 billion to pay the service providers for cashless hospitalisation services they will provide to 0.1 billion beneficiary families. We have used the latest health survey data—National Sample Survey (NSS 2014)—to assess whether this fund is adequate to cover hospitalisation costs. Table 1 shows the total number of hospitalisations, outpatient department (OPD) treatments and their out-of-pocket expenditures (OOPEs) in the country in a year; we can have rough estimates for 0.1 billion families from these aggregates. Calculating from that aggregated data, out of 0.1 billion families there would be roughly 23 million hospitalisations in a year which means health insurance agencies have only ₹870 to pay per hospitalisation on average from ₹20 billion government funds. The average OOPE (excluding transport and other non-medical expenditures) per hospitalisation works out to around ₹15,244. At these going rates, 0.1 billion families under PMJAY with 23 million hospitalisations in a year will need ₹350.61 billion if they are to get cashless hospital services. These are four-year-old expenditure estimates; even considering a minimal 5 per cent annual inflation, it would be ₹420.73 billion at today’s value. The actual financial requirements of PMJAY can be even higher if pre-hospitalisation or post-discharge expenditures, some transportation costs and so on are to be provided and administrative cost or insurance overhead (which is always a substantial amount) is considered. 2 If hospitalisation rates increase due to the government’s promotion of inpatient care through insurance coverage, or new individuals currently out-of-health coverage now seek access to hospitals, we will be looking at medical claims much higher than ₹420.73 billion in a year under PMJAY.
Estimated Yearly Hospitalisation and OPD Treatments (Incidence and Costs)—All India Aggregates, 2014
The NITI Aayog has assured that eventually ₹100 billion will be allocated for the scheme. 3 That too is only a fraction of the amount required to give comprehensive coverage to 0.1 billion targetted families. The assessment of budgetary requirements has clearly not been done in a scientific manner; otherwise there would not be such a wide gap between allocation and requirement. In fact, no country has ever achieved such goals that PMJAY has set for itself with such little public spending. This scheme is expected to fail in living up to its promises. As the money from this scheme dries up and insurance agencies default on claims, service providers will start restricting the services/procedures available under PMJAY, charge money from patients or refuse services, as experience of other similar publicly financed health insurance schemes in India suggests (Ghosh, 2014; Ghosh & Gupta, 2017).
An Inefficient Healthcare Model
The more important issue, however, is not the lack of funds in this scheme but whether India should at all push for a healthcare model that is essentially tertiary care-based, technocentric and hence expensive.
No Protection from OPD Expenditures
The majority of cases anywhere in the world are treated in the OPD and people spend more money in it rather than in hospitalisations. From Table 1, we see that yearly in India there are 2.3127 billion OPD cases (that is, 97.6 per cent of all cases) resulting in an OOPE of ₹1484.33 billion (that is, 63 per cent of all OOPEs on medical care). Hospitalisations account for only 2.4 per cent of treated cases and PMJAY is restricted to only cover that much.
What India essentially needs is a strong revamping of its primary healthcare system. In countries like the UK or Canada which provides Universal Health Care (UHC) to its citizens, such a social health insurance model has been built on the back of a robust public primary and secondary healthcare (Macinko, Starfield, & Shi, 2003). Even when the first level care is typically provided by the private general practitioners within the primary/secondary care, their participation is strictly controlled by the rules and regulations of the state. All institutions participating in primary/secondary care are bound by these regulations. The role of tertiary care is to provide specialised treatment and intensive care for patients with diseases at an advanced stage (or when complications arise) and they are referred from the primary/secondary care. Over time in both these countries, the hospitalisation rate, per capita inpatient treatment/admission days have gradually declined over time. One of the factors for this decline being the gradual strengthening of primary care as reflected in the OECD data over time. 4 India on the other hand has never been able to develop a strong primary healthcare system which has been its goal since independence and reiterated even in the latest National Health Policy, 2017 (Government of India [GoI], 2017).
The Indian government’s effort to strengthen a primary healthcare system must therefore be based on historical experience, clarity of vision and a sound financial policy. While efforts to rebuild the public infrastructure are critical, private practitioners—individual practising doctors or small institutions—can be enrolled in a roster at a predetermined payment from government. The payments may be based on the morbidity risk of the population they will serve for which they will provide cashless medical care services to all people in a designated area. Regulations, such as enrolled doctors cannot accept any fee-for-service, will be a necessary check against potential misuse of government funds. Such a predetermined payment directly to service providers—instead of paying to insurance agencies—which will cut out the proverbial ‘middle man’, will make the service providers directly accountable to governments and will yet act as a social health insurance model.
A cursory look at the Union government’s budget of the last two fiscal years shows us how primary care in India is being neglected.
Undermining Primary Care
The National Rural Health Mission (NRHM) which is the biggest component of rural primary healthcare infrastructure witnessed a ₹13.51 billion reduction (at constant prices) in the allocation of funds in this year’s central budget ( Table 2 ). In the last several years, the share of funds allocated to the NRHM has been rapidly falling, from 52.5 per cent of the total central health budget in 2015–2016 to 44.5 per cent in this current fiscal year. A lagging rural primary healthcare infrastructure—20 per cent shortfall of health sub-centres, along with 22 per cent and 30 per cent shortage of Primary Healthcare Centre (PHC) and Community Healthcare Centres (CHCs) according to Rural Health Statistics 2016—cannot be overcome with such inadequate funds.
Continuing neglect and deterioration of primary healthcare that is already fragile cannot improve the health of a population, even if a good coverage of tertiary care is provided. First of all, it undermines preventive care—which a comprehensive primary healthcare can provide—and focusses only on curative care (Keleher, 2001). Second, weak primary care delays treatment, resulting in more complex and expensive medical interventions as well as the deterioration of health if the patient is unable to get access. Along with investments in primary healthcare infrastructure, financial burden on the poor for tertiary care can be best handled by investing in building quality government hospitals rather than going through the insurance model which will end up fuelling corporate sector profits. The present model of developing government tertiary healthcare is very skewed—urban/city-based institutions are enjoying greater priority (for example, the Pradhan Mantri Swasthya Suraksha Yojana) while funds for upgrading district hospitals were reduced by 14.5 per cent in real terms in the current 2018–2019 fiscal year, compared to last year ( Table 2 ).
Union Health Budget by Major Components, FY 2017–2018 and 2018–2019
Within NRHM, allocations under reproductive and child healthcare and for communicable diseases were cut by 32 per cent and 28 per cent, respectively, in real terms compared to last year. Health systems strengthening under the NRHM saw an increased allocation of ₹13.56 billion in nominal terms, the component that will probably finance ₹12 billion to ‘upgrade’ 150,000 PHCs into ‘health and wellness centres’ (that is, ₹80,000 per centre) as mentioned in the Budget Speech which is too meagre an amount to undertake any meaningful upgradation ( Table 3 ).
Major Components of NRHM in Union Health Budget, FY 2017–2018 and 2018–2019
Non-Universal: A Faulty Application of Insurance Logic
For strengthening of primary care, through revamping public infrastructure and incorporating individual/small practitioners into the system for a social health insurance scheme, government budgets need to increase manifold. Direct taxation or compulsory contributory payments are two possible options for raising funds. For that, universalising would be the best bet for the following reasons.
Any insurance works on the principle of hedging a financial risk with regular small payments over a period of time for the eventuality when that risk actualises. We then do not need to spend a huge sum of money. Additionally, a universal social health insurance (financed by progressive taxation or contribution) distributes the risk of health expenditure in the eventuality of an illness across the rich—who can pay more—and the poor—who are less able to pay. By limiting any health insurance only for the poor, the government puts a limit on raising the money from richer population for strengthening its own institutions. Only if access is made universal, the substantial amount of OOPEs that both the rich and the poor pay for medical care can be channelised efficiently through direct taxation or universal social insurance. This would certainly lead to a better outcome for both sections of the population over time.
Conclusion
Clearly PMJAY is a scheme which is not only insignificant in terms of its budgetary allocations, but it is also not the right approach that the healthcare system in India needs today. Such an unbalanced promotion of tertiary care by the government might also increase healthcare costs. This can be disastrous for sections for whom the primary need is for comprehensive primary healthcare and where, any further aggravation of the imbalance of investment in the primary, secondary and tertiary healthcare can only add to their deprivation/burden. Any health policy aiming to further the prospect of UHC in India needs to take care of these issues and not ignore them any further.
Declaration of Conflicting Interests
The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.
Funding
The authors received no financial support for the research, authorship and/or publication of this article.