No short-cuts to health: New insurance plan is welcome, but worries remain

Perhaps the most eye-catching announcement in the Union Budget for 2018-19, presented in Parliament by Finance Minister Arun Jaitley last week, was a new publicly-supported medical insurance scheme for the 500 million most economically vulnerable Indians, or 100 million families. These families will be covered for catastrophic medical events up to Rs 500,000 by government medical insurance, and will be able to get treatment for such events in any hospital. The finance minister described this as a first step to universal health coverage, which was a promise in the 2014 general election manifesto of the ruling Bharatiya Janata Party. The intent behind this scheme must be welcomed. Almost two-thirds of medical expenses in India are, according to the Insurance Regulatory and Development Authority, paid for directly by the patients or their families. This is a dangerously high proportion — and it is the biggest contributor to the return below the poverty line of families that have managed to pull themselves above it. It is very necessary to reduce the amount of private spending on health care, particularly out-of-pocket spending, and increase public spending.

But it is far from certain that a model with public costs underwriting private provision is the best way to go about this. In such a system, controlling the costs of particular procedures and ensuring that patients are not over-treated or subjected to unnecessary, invasive operations are very important. It is far from clear whether the kind of overarching regulatory structure that could protect the system from these dangers is being planned — or even whether it is possible, given the lack of state and regulatory capacity in India. Existing medical regulation, such as the Medical Council of India, has not been particularly inspiring in terms of its record of openness, efficiency, or even probity.

It is also worth noting that the costs of this scheme are unknown. There is definitely no bulge in the health care allocations in the recently presented Union Budget that would account for the implementation of this scheme — the health provision has only been increased by less than Rs 15 billion. This does not seem enough. Estimates of the actual costs of the scheme vary widely. Some analysts suggest it might cost as much as Rs 500 billion; the government insists that Rs 100 billion should be enough, and that states will share the burden. More details of the structure and financing of the government’s plan are awaited.

At a time when the finances are particularly tight, it is understandable if the government wants to both keep its promises on health care and also reduce its initial outlay as much as possible. But a genuine public health programme can never be cheap. Nor is a private provision-based plan likely to be anything but ruinous in the medium- to long-term. Hopefully, in the course of the open discussion on how this new health coverage for 40 per cent of India’s population will be designed and implemented, the government will accept that there is no alternative to spending money on good public hospitals, doctors, and medical regulation.