Finance Minister Arun Jaitley’s announcement of health insurance cover for 40% of Indians, especially poor families, was one of the major takeaways from the Union Budget 2018-2019 presented on Thursday. The minister hailed the National Health Protection Scheme – promising Rs 5 lakhs a year for each of the targeted 10 crore families, or 50 crore beneficiaries, for secondary and tertiary care hospitalisation – as “the world’s largest government-funded healthcare programme”.

Thursday’s announcement is not exactly new though. The scheme is a more ambitious version of a health insurance plan the Bharatiya Janata Party-led government had announced two years ago but never launched. In his 2016 Budget speech, Jaitley had promised a scheme that would provide health cover of up to Rs 1 lakh a year per family.

To be sure, India needs programmes to protect its poor from health emergencies that push lakhs of households below the poverty line every year. The National Health Protection Scheme – dubbed Modicare – promises 17 times the cover the government now offers under the Rashtriya Swasthya Bima Yojana, its flagship health insurance scheme since 2008. The existing scheme provides insurance up to Rs 30,000 per family per year – woefully inadequate at a time of escalating healthcare costs in India.

While the new insurance plan indicates the government’s seriousness about affordable healthcare for the poor, one question arises: where will the money come from? Former finance minister P Chidambaram raised this question in his statement about the Budget on Thursday.

Allocations to national health insurance schemes – referred to in Budget documents over the years as the Rashtriya Swasthya Bima Yojana, Rashtriya Swasthya Suraksha Yojana or National Health Protection Scheme – have gone up since 2016. On Thursday, the government allocated Rs 2,000 crores to the Rashtriya Swasthya Bima Yojana. But the amount is not enough to fund the government’s ambitious plan.

(BE: Budget estimate; RE: Revised estimate)
(BE: Budget estimate; RE: Revised estimate)

In such a scenario, part of the expense is expected to be met by a 4% health and education cess that will replace the existing 3% education cess. The government estimates this will raise an additional Rs 11,000 crores. Jaitley said this will fund programmes for the education and health of Below Poverty Line – those living on less than Rs 32 a day in villages and less than Rs 47 a day in urban areas – families and rural households.

Other health programmes

Among other healthcare initiatives, Jaitley announced the creation of health and wellness centres at the grassroots level at a cost of Rs 1,200 crores. These centres will essentially be upgraded primary health centres and sub-centres.

For senior citizens, the Budget raised the limit of deduction on health insurance premiums and general medical expenses from Rs 30,000 to Rs 50,000. The limit of deduction for medical expenditure for certain critical illnesses was raised from Rs 60,000 to Rs 1 lakh.

The Budget also allocated an additional Rs 600 crores for nutritional support to tuberculosis patients.

While these provisions are welcome, the Budget has done little to strengthen the larger public health system. Overall allocation to the department of health and family welfare rose by a meagre Rs 1,250 crores from the revised Budget estimate for 2017-2018. In last year’s Budget, the finance minister had not made any major healthcare announcements but still increased the allocation from the previous year by Rs 9,681 crores.

(BE: Budget estimate; RE: Revised estimate)
(BE: Budget estimate; RE: Revised estimate)

Funds for the National Health Mission remained have decreased at Rs 30,130 crores in comparison to Rs 30,800 crores in the revised estimates for 2017-2018.

The budget for the National Rural Health Mission fell slightly to Rs 24,280 crores from Rs 25,459 crores. Programmes under the Rural Health Mission, for immunisation and the control of communicable diseases, for instance, also fell.

Tall order

Among all the provisions in the Budget for the health sector, the insurance scheme for 10 crore families remained the subject of much debate and speculation all through Thursday.

Getting the ambitious National Health Protection Scheme off the ground will not be easy. The fact that the health insurance scheme announced in 2016 is yet to receive cabinet approval seems to point to this. As recently as December, the health ministry said the contours of that scheme were still being finalised.

What makes the 2018 version even more difficult to implement is the fact that it covers treatment at the secondary and tertiary level, which makes it all the more important for primary care at the health and wellness centres to be robust.

There are many other questions the government needs to address. If the scheme is only for hospitalisation, what is the cover for people availing of out-patient department services but still incurring massive medical bills? How much premium will one have to pay to get health insurance cover of Rs 5 lakhs?

Health policy specialists said the premium for the Rs 30,000 cover offered by the Rashtriya Swasthya Bima Yojana is around Rs 750 – which means the premium for coverage of Rs 5 lakhs will be a lot higher.

Then there is the risk that higher insurance benefits will raise the cost of healthcare overall. “Higher benefit package, although always good for beneficiaries, is usually fraught with moral hazard,” said Anup Karan, a health economist with the Indian Institute of Public Health, Public Health Foundation of India. “Price of healthcare will increase, which may be a problem for the uninsured.”

Larger insurance payouts may also lead to a rise in unethical practices with hospitals prescribing unnecessary procedures to avail of the benefits.

“Clear evidence is available that there is a range of malpraxis and moral hazards involved in private provision of care where the costs are reimbursed,” said Amit Sengupta, national convenor of the Jan Swasthya Abhiyan, a network of activists, academics, health professionals, civil society and non-government groups. “Mainly, these involve over-consumption – unnecessary procedures, for example the huge rise in hysterectomy operations, usually totally unnecessary.”

This leads to the subject of regulation. Former Union health secretary Sujatha Rao said, “It will certainly require a very huge effort by the ministries of health at the Centre and state levels to ensure appropriate regulatory systems are in place so that the providers [hospitals and doctors] do not enhance current costs and game the situation. An National Health Assurance Authority must be established to roll out this huge insurance programme with a programme to make adequate investments to build the health service delivery systems in the large swathes of north India where there is neither the public nor the private sector providing health service of reasonable quality.”

The government will have to learn from the shortcomings of the Rashtriya Swasthya Bima Yojana. Around 3.6 crore million families are enrolled under this scheme, which is only about 15% of poor families in the country. This is largely because of inaccurate lists of Below Poverty Line families and lack of awareness about the programme.

“Poor families do not know how to register, where to go, what services are covered and which hospitals are obliged to provide these services,” said Anup Karan. “We need very strong awareness generation to take full advantage of the scheme.”

The National Health Protection Scheme must, therefore, be more efficient in its outreach.

For the government's ambitious National Health Protection Scheme to work well, primary health centres in India must be strengthened. (Credit: Menaka Rao)
For the government's ambitious National Health Protection Scheme to work well, primary health centres in India must be strengthened. (Credit: Menaka Rao)

The government’s emphasis on insurance schemes and the lack of a deep commitment to strengthening India’s public health institutions and infrastructure also signals a larger role for private players in healthcare at the cost of the public health system.

“These schemes essentially involve actual provision of care in private facilities,” said Amit Sengupta. “They involve a transfer of public money to private facilities. Public facilities slide further back vis-a-vis a strengthened private sector. The government’s choice of not strengthening public facilities and instead promoting partnerships with private facilities is an ideological position against public services.”