Will Ayushman boost health spend?

India’s pathetic public health spends and inadequate health infrastructure continue to cause concerns, pushing most of us to depend on Out of Pocket Expense (OOPE) to get health services. Several estimates have shown that as much as two-thirds of Indians continue to meet their health expenses through OOPE. A majority of Indians do not have access to healthcare financing and pushing more people into expensive private healthcare without any health insurance or other means of financing automatically raises their OOPE.

Despite the implementation of various government schemes such as free drugs and diagnostics in government hospitals, OOPE has been rising. The 11th report of the Common Review Mission released by the Ministry of Health and Family Welfare also found instances of high OOPE in most of the states. The report mentioned high OOPE on drugs for chronic diseases such as diabetes and hypertension in Assam and Uttar Pradesh; on diagnostics and lab tests in Telangana and Uttar Pradesh and so on.

So, how bad is India’s public health spending? According to the National Health Profile 2018, India spends only 1.02% of its GDP (2015-16) as public expenditure on health. Per capita, public expenditure on health in nominal terms has gone up from Rs 621 in 2009-10 to Rs 1,112 in 2015-16. So while it has almost doubled during this period, it is still a paltry Rs 3 per person per day. Then, the Centre: State share in total public expenditure on health was 31:69 in 2015-16. The share of Centre in total public expenditure on health has been declining steadily over the years except in 2017-18.

It is true that health insurance in India is growing. Yet, it hasn’t taken off fully and several measures are needed to improve and expand insurance coverage. In India, health insurance pays for only inpatient hospitalisation and for treatment at hospitals. In this context, the conceptualisation and launch of the ambitious universal health coverage scheme, Ayushman Bharat, could be a game changer. The scheme was envisaged in this year’s Union Budget and its stakeholders claim it is the largest such scheme anywhere in the world. Remember, not even one in two Indians are covered under any health insurance plan as of now.

Ayushman Bharat CEO Indu Bhushan had said earlier the scheme would get launched by August 15 this year.

Ayushman Bharat envisages providing Rs 5 lakh health insurance cover to 40% of India at no cost, with the government footing the entire bill. It allows pre-existing illnesses, is portable and talks of several other benefits. The programme aims to provide free essential drugs and diagnostic services for illnesses that do not necessitate hospitalisation through 150,000 health and wellness centres, as well as an insurance cover of up to Rs 5 lakh per year per beneficiary family for hospitalisation.

The key challenge remains implementation of Ayushaman Bharat since each state must sign a MoU with the Centre and share the costs in a 40:60 ratio. Many states have existing health insurance schemes and some of these are reluctant to merge theirs with Ayushman Bharat. There are issues with insurance premium, models of implementation etc too. Earlier this month, brokerage Edelweiss said in a note to clients that charges for the procedures listed in the scheme are "extremely low and we believe corporate hospitals like Apollo and Max are likely to refrain from empanelment with this scheme." It listed out package rates for cesarean delivery, total knee and hip replacement, coronary artery bypass and cataract surgery under the government scheme to show industry average rates are significantly higher than what government proposes to offer. The government has earmarked Rs 10,000 crore to spend under Ayushman Bharat in the first year.

Meanwhile, the glaring differences in states and their healthcare infrastructure spends is worth noting. Several states are well below even the pitiful national average of per capita public health spending. Bihar, a state which languishes at the bottom of the table in most health and development parameters, spent not even a rupee and fifty paise per person on public health in 2015-16 (Rs 491 per person in the year).

Madhya Pradesh was a shade better, spending just about Rs 2 per person (Rs 716); third in the pecking order from the bottom was West Bengal which spent just over Rs 2 per person per day on public health (778 per person). Compare this with the tiny state of Mizoram, which spent the highest at Rs 5862 or a little over Rs 16 every day on public health and it is clear that even some north eastern states are far more focused on health than those at the bottom of the pyramid. Mizoram spent more than five times the national average per capita. Arunachal Pradesh was next at Rs 5,177 while among Union Territories, Andaman and Nicobar was at the top with Rs 6,201 or almost Rs 17 a day.

It is worth noting that Kerala continues to top vital health indicators, staying ahead on literacy, sex ratio, infant and maternal mortality rates. And Bihar, Jharkhand and Uttar Pradesh continue to lounge at the bottom of the pyramid as far as these vital health indicators are concerned.

To improve national health statistics, states which are lagging need to put in place much better monitoring systems besides allocating a far bigger budget for healthcare.