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Business News/ Opinion / Online-views/  Opinion | Ayushman Bharat: a critical perspective

Opinion | Ayushman Bharat: a critical perspective

National healthcare schemes often dilute the responsibility of the states and overlook the need for preventive measures

Photo: Hindustan TimesPremium
Photo: Hindustan Times

The Ayushman Bharat: National Health Protection Scheme (AB-NHPS) has a defined benefit cover of 5 lakh per family per year covering over 10 crore families. The ideation of the scheme needs to be lauded for addressing one of the primary issues of our healthcare system—the rising out-of-pocket expenditure. In 2011-12, more than 55 million Indians were pushed into poverty because of rising expenditure on healthcare. Several studies have shown that an increase in illness and consequent expenditure on drugs, diagnostics and care leads to the exacerbation of poverty in developing countries. Government data suggests that about 63% of the people have to pay for their own healthcare and hospitalization expenses as they aren’t covered under any health protection scheme. Hence, there is no doubt that the scheme is well-intentioned. However, its implementation in the current form could create an incentive problem in certain states, which could potentially reduce their health spending.

First, under the 7th schedule of the Indian Constitution, health is a state subject. This means that health as a motif, gains electoral importance primarily at the state level. The reason for this is simple. Apart from central institutions such as the All India Institute of Medical Sciences, a major chunk of the hospitals/ medical centres is state-owned and -operated. Therefore, the accountability of these also falls with the state. In such a scenario, a nationwide scheme of health insurance to supply healthcare facilities at the state level leads to a dilution of the state responsibility in the provisioning of the same.

Additionally, the states’ participation in the scheme mandates them to contribute funds for insurance, which naturally diverts funds allocated to building healthcare infrastructure within the state. This issue could be exacerbated by the provision of portable healthcare services in-built into the scheme. Portability of healthcare allows the beneficiaries to avail cashless benefits at any empanelled hospital across the country. This move, while increasing access, is also expected to cause pooling of patients in hospitals (and consequently states), where the health infrastructure is relatively well developed.

Currently, access to health services varies significantly across Indian states. At the national level, India only has 0.62 doctors for every 1,000 population, as opposed to the World Health Organization standard of 1 doctor per 1,000 population. However, at the state level, Karnataka, Tamil Nadu, Kerala, Punjab, Goa, and Delhi have more than 1 doctor for every 1,000 people. In fact, Tamil Nadu and Delhi have 1 doctor for every 253 and 334 persons respectively. Such a high density of doctors in these states puts them at par with countries such as Norway and Sweden in terms of access to healthcare. In comparison, Jharkhand, Haryana and Chhattisgarh have only 1 doctor for every 6,000 persons, which greatly reduces the accessibility of healthcare in these states.

The existing health infrastructure created by these states is an output of years of heightened health spending and investment in skill development. The high correlation between health spending and health performance has strong theoretical and empirical roots. According to a 2018 report by NITI Aayog which formulated an index of health, the 3 top-ranking states were Kerala, Punjab and Tamil Nadu. Unsurprisingly, these were also the 3 top spenders on health infrastructure from 2004-05 to 2015-16. In fact, equalization of health expenditure across states is desirable for achievement of sustained national health targets (see “Inter-state equalization of health expenditures in Indian union"by Govinda Rao and Mita Choudhury). Over the years, the disparity in per capita health expenditure across states has exhibited an increasing trend. The average per-capita health expenditure of the bottom three states was 122 in 2004-05, 130 less than the average per-capita expenditure of the top spenders. This gap has grown substantially in the last 10 years to reach 561 in 2014-15.

In this manner, the relatively better infrastructure for health in the top-performing states is expected to cause an influx of patients there. This can lead to two potential scenarios. In both the cases, the burden on the infrastructure in these states would increase. In the first case, this may negatively affect their service-providing capability. In the second, even if the states are able to develop infrastructure commensurate to demand, the expenditure would be borne by the lower-performing states. This is because the funds provided by state A (say, Bihar) for its residents to insure themselves, would be spent by the person at the healthcare facilities in state B (say, Delhi). This implies a transfer of wealth or policy premium from the states down in the ladder to the ones at the top. Eventually, it means that the states having better infrastructure would be able to improve their position and the cost of this exercise would be borne (in part) by the lower-performing states.

Both these scenarios could create a disincentive for the poorer states by reducing their responsibility towards investing in health infrastructure. They may become comfortable in disbursing fewer resources towards actual infrastructure development, and rely increasingly on the private sector as well as other states for providing healthcare facilities to their citizens. This would cause a diversion of resources from preventive measures of disease management which are the backbone of public health, towards curative measures which would not be efficient in the long run. Besides, the high level of positive externalities and the huge costs of preventive healthcare can only be borne by a Centre—state collusion.

The cerebration of AB-NHPS is commendable, but the implementation in its current form is possibly problematic. At the end of the day, given the state of primary healthcare in India, we need more schemes such as the Swacch Bharat Abhiyan to take care of the actual spread of diseases and not merely of their treatment.

Sumedha Shukla and Kannan Kumar are, respectively, research assistant and associate fellow at Pahle India Foundation.

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Published: 06 Nov 2018, 11:21 PM IST
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