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Affordable Healthcare

Across the world, a major area of concern with governments has been the challenge of making healthcare affordable. Interventions by governments to directly control cost of care have had limited success, as there will always be resistance by the private health sector if they find the pricing unviable. Rather, health insurance should be the way forward towards making healthcare affordable.

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However, problems of either low awareness or premiums being too high, can make insurance a non-starter. Interestingly, countries that have been successful in providing affordable healthcare to its citizens have been those who have successfully implemented universal health coverage - health insurance supported by the State, with private health insurance supplementing it. 


In India, we continue to grapple with providing affordable healthcare, which is further exacerbated by the poor availability and accessibility to health infrastructure. The present challenges that we face in our healthcare economy are-

  1. The high cost of care for the common man. More than 65% of healthcare expenditure is still out-of-pocket, with almost 60 million people in India in debt because of it. Though, over the last decade, diverse systems of public and private health insurance have been made available, their growth is still much below acceptable levels, with less than a third of our population covered. Even here, there is traction only where there is accessibility to good health infrastructure. 
  2. Health infrastructure is very skewed with availability and accessibility much better in the South and regional pockets in the West and North, and with poor availability and accessibility in the Eastern and Central parts of the country. The primary cause is the skewed distribution of medical schools, where more than 50% of medical colleges are located in six southern States, creating significant gaps in the availability of doctors and medical skills and with it the regional disparities in the development and accessibility of health infrastructure.


Over the past decade, Governments, at the Central and State levels, have been addressing the problem of affordability on several fronts. Around 20 State Governments have been providing different forms of health insurance coverage for their economically disadvantaged populations. Similarly, the Rashtriya Swasthya Bima Yojana (RSBY), a health insurance scheme of the Centre for the economically weaker sections across the country, has been implemented in around 15 States. More recently, the Centre and, in some cases, through the Ministry of Health and Family Welfare, has directly intervened through price controls on drugs, implants, stents etc. and has also actively encouraged usage and prescription of generics. Many of the health cover initiatives have had varying degrees of success, primarily due the lack of uniformity, weak implementation and monitoring by the government agencies, misuse by patients and hospitals, operational gaps, especially delays in reimbursements and also poor adoption of these Schemes by the better managed facilities. At the same time, direct price interventions, if unreasonable, will over time, discourage further private investment in this sector.  


Given this scenario, the recent launch by the Centre of the Ayushman Bharat (PM-JAY) initiative is a very interesting development and one that has the potential to move the effort to provide affordable care to a completely new level and also take a big leap towards universal health coverage. The PM-JAY is expected to provide health cover for around 50 crore beneficiaries from poor and vulnerable families. This immediately covers around 40 % of the population and the bulk of the economically weaker sections of our society. The annual coverage of up to 5 lakh rupees per family, for secondary and tertiary care hospitalization, is very reasonable. However, there are many challenges and issues that will need to be addressed, in parallel, if PM-JAY has to make the tremendous impact that is intentioned. The success of PM-JAY will depend significantly on its tight implementation and in ensuring that the operational gaps, mentioned earlier, are properly addressed and bridged. In addition, its success is predicated on the extent of interest shown by the private healthcare delivery sector, which provides around 60% of the total bed capacity in the country, and its willingness to adopt it. If the package and reimbursement rates are very low, or even loss making, the response from the private sector to enlist may be lukewarm. This will reduce the network of enlisted healthcare facilities that the insured will have access to and thereby weaken the effectiveness of this scheme. Also, the package and reimbursement rates need to consider the location of the hospital, such as urban or rural and, even within the urban segment, the tier level of the urban centre. If this is factored into the treatment packages rates and reimbursement rates, giving a reasonable return to the healthcare facility, there will be much more willingness of the private hospitals to enlist in this Scheme.


The success of PM-JAY will, equally, depend on the availability and ease of access to healthcare facilities. Therefore, if universal health coverage is to succeed in our country, the problem of the skewed distribution of the health infrastructure, across the country, will need to be addressed on priority, to improve its availability and accessibility. The present capacity is around 20 lakh beds in the country, which is still reasonable though not adequate, as this is around 1.5 beds for every 1,000 people. The public sector, including government and district hospitals have around 40% of these beds, with around 3 lakh of these in rural areas, but poorly maintained. Governments, at the State and Central levels, should first focus on revamping and reviving its entire network of hospitals of around 8 lakh beds, wherever required. This revamping can be done by themselves or with the support of the private sector. Another large segment of health infrastructure is teaching hospitals attached to medical schools, both in the private and public sectors. These teaching hospitals, especially in the private sector with around 2 lakh beds, can separately spearhead the PM-JAY initiative. Whereas private hospitals and nursing homes are typically bottom-line driven, teaching hospitals, attached to medical schools, are focused on clinical teaching rather than becoming operationally surplus. Teaching hospitals, across the country, are loss making and, in the private sector, get cross subsidized by academic fees. The PM-JAY scheme, if adopted by the teaching hospitals, can generate revenues to support the improvement of quality and care at these hospitals and also drive patient traffic to these hospitals. It is a win-win for all three stakeholders – affordable care for patients, self-sustainability of hospital operations and success of the Government’s initiative.

Finally, we need to create additional bed capacity of anywhere between 6 to 8 lakh beds to achieve a ratio of at least 2 beds per 1,000. Also, these beds need to be distributed across regions and locations that presently do not have them or have a deficit. This is the difficult part. This needs urgent  attention and should be planned carefully. Innovative public-private-partnerships, to jointly address this issue, may be a possible solution. 


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