The Gist of Yojana: May 2014

The Gist of Yojana: May 2014

FINANCING INDIA’S QUEST FOR UNIVERSAL HEALTH OVERAGE

UNIVERSAL HEALTH coverage (UHC), as aconcept, is about people having access to needed healthcare without suffering fi nancial hardship, thus, encompassing improvements in access, quality and fi nancial protection. UHC aims to achieve better health and development outcomes, prevent people from being impoverished due to health-related causes and give people the opportunity to lead healthier, more productive lives. UHC has also featured prominently in discussions around the post- MDG agenda as a possible goal for the post-2015 global development agenda.

In recent years, a large number of countries around the world have stepped up their activities aimed at achieving Universal Health Coverage for their people. In India too, UHC is now clearly on the policy agenda and there is increasing willingness of central as well as state governments to increase their outlays for the health sector. However, within this overall commitment to increase public health spending, there are diffi cult decisions to be
taken on allocating new resources between personal health care, catastrophic care and population-based public health interventions, when all of these are inadequately fi nanced at present.

The recently approved 12th Five Year Plan clearly lays out its long term objective of establishing a system of Universal Health Coverage (UHC) in the country (Planning Commission 2012). A signifi cant increase in public health expenditure, by about 1 per cent of GDP per year, is aimed to be achieved by the end of the 12th plan. Hitherto, India’s health sector has been challenged by overall low levels of public fi nancing, entrenched accountability issues in the public delivery system and the persistent dominance of out-of-pocket spending. However, several recent initiatives have been introduced by the central and state governments in India, aimed at addressing some of these challenges and to improve the availability of and access to health services, particularly for the poor and vulnerable groups in the country.

India’s Health Financing Context

India has long been a low spender on health care, and allocated approximately 4.1 per cent of GDP or US$40 per capita in 2008-09 to the health sector. In terms of India’s share in global health expenditure, the country with over 17 per cent of the world’s population manages with less than 1 per cent of the world’s total health expenditure. The share of health spending has also not kept pace with the country’s dynamic economic growth.

Public spending on health as a per cent of GDP has varied little over the last two decades, hovering at about 1 per cent.

In 2005, government (central, state and local) was the source of about one-fi fth of spending while out-of-pocket payments represent about 70 per cent - one of the highest percentages in the world. Though, no offi cial estimates are available for recent years, WHO estimates put the share of government expenditure at 30 per cent and that of out-of-pocket payments at about 60 per cent for 2011, a signifi cant improvement over 2005, but still very high for the country’s level of socio-economic development.

Health finance and delivery in India have developed along four main and mostly parallel lines. The fi rst, and the far largest, is out-of-pocket spending by households. Nearly all this spending is directed to fee-for-service private providers, but some are for user fees collected at public facilities. This method of fi nance places considerable fi nancial burden on poor households, and is seen as one of the important reasons for impoverishment in Indians.

The second is tax-fi nanced, direct public delivery which, in principle, is available for all of India’s population. Operated mainly by the states, the public delivery system, which includes the centrally sponsored activities funded under NRHM, runs facilities at primary, secondary as well as tertiary levels, and accounts for about 20 and 40 per cent of outpatient and inpatient utilization in the country respectively. Considerable inter-state variation exists, especially in inpatient utilization and there are signifi cant sub-national disparities across various dimensions of vulnerability.

The third segment consists of social insurance schemes for formal private sector workers and government employees. These schemes are generally mandatory and most are fi nanced through employee and employer contributions via a payroll tax, but also benafi t from partial government subsidies.

The fourth segment is voluntary private insurance (PHI) which emerged in the late 1980s but has grown rapidly in the 2000s. In 2004-05, PHI accounted for 1.6 per cent of total health expenditure, but reached an estimated 3 per cent by 2008-09.

Health Finance and Outcomes

India is signifi cantly below its global comparators in terms of public expenditure on health as a share of GDP among countries with similar levels of income (GDP per capita in current US dollars). At its current level of income, most countries exhibit higher public spending on health as a share of their GDP than India (World Bank, 2010). Large disparities in health outcomes are still evident across states and social groups and improvements have not been shared equally. Public subsidies for health have historically favored the better off segments of society. India’s quest for UHC must address these issues of adequacy, effectiveness, effi ciency and equity of public health spending.

Recent Programs

The bottom-up design for expansion of health coverage, starting with coverage of the rural and the poorest segments of the population fi rst, and the rapid scale-up of population coverage in a short period of time, are unique facets of India’s recent strides towards universal health coverage. Two prominent national programs in this respect have been the National Rural Health Mission (NRHM) of the Ministry of Health and Family Welfare (now rechristened as National Health Mission) and the Rashtriya Swasthya Bima Yojana (RSBY) of the Ministry of Labour and Employment. In addition, several state programs such as the Rajiv Aarogyasri scheme launched by the state government of Andhra Pradesh and similar programs such as the Vajpayee Arogyashri Scheme (Karnataka), Chief Minister’s Comprehensive Health Insurance Scheme (Tamil Nadu), Comprehensive Health Insurance Scheme (Kerala), Rajeev Jeevandayee (Maharashtra), Mukhyamantri Amritam (Gujarat), Megha Health Insurance scheme (Meghalaya), Mukhya Mantri Swasthya BimaYojana (Chhatisgarh), and RSBY Plus (Himachal Pradesh) are examples of state-government led efforts to expand access to tertiary, surgical care for their poor and vulnerable population groups.

They all aim at extending health coverage and improved fi nancial protection to the poor and other vulnerable groups in the country, are fully subsidized by the government and to the extent of their benefi ts packages, they are ‘cashless’ for their benefi ciaries, not requiring any contributions, upfront payments to providers or bearing a share of the costs of treatment.

Introduced in 2005, NRHM is the fl agship initiative of the Ministry of Health and Family Welfare (MOHFW), Government of India, aimed at expanding health coverage in the country. In a context where the country’s constitution lays out health as being a subject for state governments, NRHM supplements and strengthens the state-owned public health systems by providing additional resources with a focus on rural areas, primary care and public health programs. NRHM also leverages this fi nancial support to facilitate the creation of institutional mechanisms that enable some degree of fi nancial autonomy and a faster flow of funds. NRHM has led to several service delivery innovations and to signifi cant, though still inadequate, increases in central government investments in health, especially for public health interventions and primary care. In addition to significantly increased fi nancing, the fl exibility around hiring contractual staff, supply chain reforms, introduction of a cadre of grassroots workers paid entirely based on performance, innovative financial flow mechanisms and an overall increased emphasis on public health expenditure, distinguish NRHM from the situation prior to its existence.

One of the largest components in NRHM is the Janani Suraksha Yojana, which offers a conditional cash transfer to poor women for availing free institutional maternity services created under NRHM, and is currently utilized by over 10 million women each year. Over 22 million children stand fully immunized each year (NRHM 2012). However, it is also a fact that an overwhelming 80 per cent of ambulatory care and as much as 60 per cent of inpatient care continues to be obtained outside the public health system (NSSO 60th round data).

Since 2007, the new wave of Government Sponsored Health Insurance Schemes (GSHISs) such as RSBY and state programs inspired by Rajiv Aarogyasri in AP, has introduced a new set of arrangements to govern, allocate and manage the use of public resources for health, including an explicit (and delivered) package of services, greater accountability for delivering services, and a bottom-up design to reach universal coverage by fi rst
achieving coverage of the poor. GSHISs have been able to scale up rapidly. By 2010, about 240 million Indians were covered by GSHISs, about 19 per cent of the population. Accounting for private insurance and other forms of coverage, more than 300 million people, or more than 25 per cent of the population, had access to some form of health insurance in 2010.

In the light of current trends, and assuming continued political and fi nancial support from the government, insurance coverage is expected to reach more than 630 million persons, 50 per cent of the population by 2015.

Gazing into the Crystal Ball

The recent efforts towards UHC have high visibility and have also helped raise the political profi le of health in the country, which has led to additional fi nancing for programs aimed at providing access to affordable, quality healthcare for the most vulnerable groups in the country. Signifi cant central investments in NRHM and RSBY form part of the stated strategy of the plan, and a similar expectation is also made from the state level.

Summing Up

Preventive interventions and effective case management for non communicable diseases at the primary care level can contribute signifi cantly in reducing the need for hospitalization, thereby, simultaneously improving quality of life for the benefi ciaries and containing the costs of hospitalization programs. Also, lessons from the demand-side fi nancing schemes in aligning facility-level incentives for inpatient care can be used to introduce a performance-based remuneration system for public facilities providing primary care. If these programs can be coordinated in this manner for future expansion plans, their current confi guration could be a promising foundation for a reformed health fi nance and delivery system. The increased commitment to strengthen the magnitude of public health spending, and the initial lessons from the current generation of UHC programs, together augur well, with great potential to catapult forward India’s march towards Universal Health Coverage.

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