BackIndia needs a multi-payer system
For most developing economies, a single public healthcare financing system is unlikely to effectively cover the entire population
Premium
The 2017 Union budget presented some major reforms crucial to the advancement of the health sector. The increase in allocation for the National Health Mission by 20% is unquestionably a commendable move to boost public health delivery in the country. It provides much needed relief from financial bottlenecks in health policies.
Moreover, conversion of 150,000 health sub-centres into health and wellness centres, the introduction of two new All India Institutes of Medical Sciences (AIIMS) in the states of Gujarat and Jharkhand, and the adding of 25,000 postgraduate seats in medicine reflect meritoriously on the government’s resolve to prioritize the health sector.
While these measures are a step in the right direction, they mean little for the immediate growth of the health sector. The budget notably missed out on drawing attention to the accessibility factor in the Indian health system. Decades of low spending on the health sector has resulted in massive out-of-pocket expenditure on health. The overall outlay still remains largely underfunded and there was no mention of any action plan for universal healthcare.
With the funds now well established for the health sector, it is prudent to assess effective financial models to optimize healthcare delivery and achieve universal health coverage in the country.
Relying on globally proven health practices to revolutionize one’s own is a popular phenomenon, with many countries analysing successful examples from other countries and tailoring them to suit their requirements. In this context, the productivity of multi-payer and single-payer health insurance systems in varying scenarios has long been a point of interest, more so in a geographically and economically diverse country as India.
India, with 17.84% of the world’s population, currently faces a unique situation in its disease demographics. Along with the traditional burden of communicable disease, the country is now also faced with the rising incidence of non-communicable diseases (NCDs). Every year, roughly 5.8 million Indians die from heart and lung diseases, stroke, cancer and diabetes. One in four Indians risks dying from an NCD before reaching 70. Despite this, India continues to be a small spender on healthcare. While efforts have been undertaken to strengthen the health system with varying degrees of success, a large part of the population is still left to fend for itself to meet healthcare expenses.
The total public expenditure on health in India was around Rs1 trillion in 2013-14. Of this, nearly 65% of expenditure was met out of states’ own resources. Health spending by other Central ministries such as labour, railways, post, etc. on their labour force adds up to about 10-12%. Revenue raised through healthcare services is mainly in the form of non-tax revenue such as fees, fines, and the like. The revenue realized through these sources adds up to about 2% of total public spending on healthcare.
Private out-of-pocket expenditure on health is dominant, with about 70% of all healthcare spending in the country, as private insurance is narrow and concentrated mostly in major urban areas.
The statistics clearly show the need for immediate healthcare reform, making it imperative to examine better options.
India currently follows a single-payer system, relying heavily on its taxation system. A single-payer system is primarily characterized by low administrative cost, progressively funded, effective distribution of wealth, a large and stable risk pool and a high degree of control over total health expenditure. A multi-payer system, on the other hand, compromises this control for better competition, heightened innovation and greater ability to meet the diverse preferences of beneficiaries.
The multi-payer system ticks all the right boxes as far as Indian healthcare requirements are concerned. For most developing economies, a single public healthcare financing system is unlikely to effectively cover the entire population given the significant fiscal resources required to sustainably execute such programmes.
Keeping in mind a huge disparity in terms of income, employment and geography in India, a multi-payer approach would be better suited. Although a single-payer system is simple, it requires substantial taxation to achieve. Developing countries clearly lack in this regard. Whereas, a multi-payer system primarily covers all and gets the same negotiating advantages of single-payer, while also conserving the interests of the private health insurance sector.
The multi-payer approach enables the government to formulate an overarching healthcare financing mechanism covering all the basic essential healthcare needs, including cost of medicines, out-/in-patient treatment, etc. Further, this can be augmented by enforcing practicable engagement of all the groups involved to achieve universal health coverage and, in turn, ease out-of-pocket expenditure on healthcare. With rising healthcare costs, a multi-payer system unquestionably fits the bill. Whether the government takes it into consideration is anyone’s guess.
Making adequate allocations in the budget towards healthcare—and at the same time devising policies to keep its productive workforce of as many as 12 million healthy—India would be in a better position to enable more efficient delivery of healthcare services.
Aman Gupta is country representative, Partnership to Fight Chronic Disease.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
