Home / News / India /  Why India needs more mohalla clinics

Both rural and urban households spend twice as much on outpatient or non-hospitalisation healthcare costs as they do on hospitalisations, data from a new National Sample Survey report shows.

India has one of the world’s highest proportions of out-of-pocket health expenditure, and the expense per hospitalisation can be catastrophically high, especially for the poor. One case of hospitalisation alone can on average cost roughly the same as the average Indian’s consumption expenditure for the year.

However, with the rate of hospitalisation in India currently at 2.9% (meaning that around 3 out of every 100 people need hospitalisation, excluding childbirth, during a calendar year) these spending shocks are rarer compared to routine ailments. In the case of medical care that doesn’t require hospitalisation the expense recurs frequently. In the 15 days preceding the survey, 8% of people reported having had an ailment.

Medicines contribute the highest share of medical expenditure for out-patient treatment, as well as for in-patient treatment in public hospitals and rural private hospitals. In urban private hospitals, the cost is frequently designated as an overall “package component" which cannot be split into individual components, and this now accounts for the highest share of inpatient expenses in private urban hospitals. The package component typically involves the cost of a set of procedures (including some medicines and surgical costs) for a specific illness.

Although successive governments have announced schemes for free medicines, there is no national scheme for free medicines yet. Only guidelines for states to set up their own schemes have been announced.

The high burden of outpatient health expenditure hits the poorest hard in both rural and urban areas. In rural India, the share of outpatient expenses in total medical expenditure has been falling since 2004-05, but it has risen since 2009-10 in urban India.

While these trends hold true across the country, there is wide variation among states in the degree of dependence on private versus public healthcare, and the relative share of non-hospitalisation costs in the total basket of expenditure. In general poorer people report lower levels of ailments and hospitalisations, implying that India’s most marginalised groups are still far from accessing required levels of healthcare, and skewing the numbers downwards. But despite consuming less healthcare, those in the poorest states don’t get cheaper healthcare; treatment costs are higher in many poorer states than in richer states.

The Ayushman Bharat scheme of the central government has so far been focused on expanding insurance coverage to help tackle health shocks. Evidence from a study prior to the scheme’s launch led by Shamika Ravi, director of research at Brookings India showed that the availability of public health insurance has not had a significant impact on out of pocket expenditure in India. However, it has significantly raised probability of people seeking hospital care, says Ravi, a former member of the PM’s Economic Advisory Council, who has advised the government on healthcare.

But even for hospitalisations, the Ayushman Bharat scheme is not all-encompassing. For one, the insurance element is means-tested (applicable only to the poor). This is not the case in several other states, including Delhi, where any Delhi resident who cannot get a procedure done within 30 days at a government hospital can get cashless treatment for over 1100 procedures at an empanelled private hospital with no insurance intermediary.

And then there is the heavy burden of illness that does not require hospitalisation. In Delhi, this has been the much more public face of its health reforms. “For medical treatment that does not require hospitalisation, we have set up over 300 mohalla clinics where 212 lab tests, diagnostics and medicines are all provided free of cost," says Jasmine Shah, vice-chairperson of the Delhi Dialogue and Development Commission, a think-tank that helps the Delhi government frame policies.

For Ayushman Bharat, the insurance scheme has received the most attention, but “the second component of it (much slower and low profile, and arguably more challenging to implement) is the creation of 150,000 Health and Wellness Centres across the country," says Ravi. The union health ministry claims that 1.7 crore people received free diagnostics and medicines in these centres over the last year. This is four times as many people claimed benefits under the insurance portion.

The national conversation on health spending in the last year has largely focused on insurance against catastrophic illness. But it appears that less discussed small illnesses are adding up to catastrophic costs for most Indians, and this needs urgent attention.

Rukmini S. is a Chennai-based journalist.

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