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Resource centre on India's rural distress
 
 

Montek Singh Ahluwalia, Deputy chairman of the Planning Commission interviewed by Live Mint
-Live Mint

The deputy chairman of the Planning Commission, in an interview, spoke about the challenges of pushing public health reforms

India is likely to finalize a draft Plan document next week to introduce universal health coverage in India. Montek Singh Ahluwalia, deputy chairman of the Planning Commission, spoke in an interview about the challenges of pushing public health reforms with limited resources at hand. 
Edited excerpts:

* Will the government be able to push through sweeping healthcare reforms?

I don’t think the short-term problems of the economy should have any effect on the forward movement of health reforms. Steps are being taken to revive the economy and I am sure we will succeed. Meanwhile, we should keep our eyes on the medium term objective of developing a viable strategy for health sector reforms. One thing is clear, we have to spend more money on public health facilities and we will.

But money is not the only issue. We also have to use it well, and that means restructuring and reform of the public health system and also better regulation of health in general. However, health is a state subject and reforms will only take place depending on what the state governments want. Our job is to sensitize them and also support them in the 12th plan (2012-17). We do plan to do that.

* Will you be able to achieve the spending target of 2.5% of GDP on healthcare?

We had said in the approach to the 12th plan that we should aim at that figure by the end of the 12th plan. But remember, the figure refers to plan and non-plan expenditure of the Centre and the states. The Planning Commission only decides central plan expenditure.

We discuss state plan expenditure but it is the states that decide, and non-plan expenditure, which is much larger than plan expenditure, is entirely outside our ambit. However, as an aspirational target, this is what the Centre and the states together should aim at.

* What concerns you the most about India’s health sector?

Unlike other sectors, this is not a sector which can be left to market forces, even for those who have money. This is because information asymmetry is very high and incentives are not aligned.
 
Commercial health service providers do not have an incentive to take preventive steps—they make money if a patient goes for high end treatment, not if he or she takes preventive steps to avoid it. Lack of regulation is a major problem and there is a great deal of evidence of irrational prescriptions, and also substandard facilities.

Second, we have a very large population which simply cannot afford private care, so there has to be a large expansion in public sector health. At least 80% of the population needs to have access to good healthcare funding by the public sector. This could be through direct provision of services by public facilities, as is inevitably needed in rural areas. It could involve some PPP (public-private partnership) as some state governments are doing. It could be through a health insurance system such as Rashtriya Swasthya Bima Yojana (a government-run national health insurance scheme for the poor), where the government pays the premium. I am sure states will make different choices and we should give them flexibility.

Third, trained personnel are as important as money and we have huge shortages of doctors as well as nurses. Unless we expand supply, not much can be done by simply building facilities.
 
The 12th five-year plan attempts to put together a strategy which should lead to large scale expansion of public health sector in rural and urban slum areas. But it will take time.

* How will the government fund these reforms?

Public spending has to be funded by general budgetary resources. Our resources are limited and we have to recognize these limits. However, over time, as the economy grows, the amount we can spend on health will increase. We should remember, however, that the Central government is only one player. State governments spend twice as much as the Centre and their expenditure must also increase.

In fact, constitutionally, health is a state subject. Education is a concurrent subject so the Centre can legislate and the state has to follow which is what happened with the Right to Education Act. Healthcare, however, is entirely in the domain of the states. We cannot force a particular system on the states.

* There has been a heated debate regarding the role of insurance in India’s healthcare reforms. Will the government insure health or assure it?

There are well known problems with the insurance approach. Since it is based on a fee for service system, there is a very strong incentive for service providers to give unnecessary treatment and claim reimbursement, which ultimately leads to higher premium costs. How to tackle this is a major problem, but there are ways in which it can be done.

The Rashtriya Swasthya Bima Yojana is an insurance scheme where the Centre and state governments together bear the full premium. It now covers almost 200 million people, which is truly impressive. It gives them the option of approaching any hospital which is part of the scheme and this flexibility is greatly valued. However, there are all the usual problems, including unnecessary operations. We have to tackle these problems.

The international experience suggests that a fee for service system leads to constantly rising costs, especially if there is no contribution by the insured. There are two alternatives to an insurance system. One is a pure public sector based health service delivery system where the government funds public sector hospitals and clinics as it does now. Here, the big problem is how to ensure quality of delivery and performance.

At the other end, there is what is called an integrated care system, i.e. a linked system of primary, secondary and tertiary care providers who operate as part of a network. In our situation, this would be dominantly a public sector network but private providers could be contracted in. In such a system an individual would register with a network and the network would manage the health care of the individual moving him from primary to secondary and tertiary care, but only on the basis of referrals from lower level units.

Theoretically, the network should be reimbursed on the basis of each entrant registered with it. The network manager has the incentive to make healthcare cost effective by improving primary care, ensuring preventive action and utilizing higher order care only if necessary. However, moving to such an integrated network, even of pure public sector service providers, involves a totally different way of managing the system and also its budgetary processes. It will take time to work out how to do this and it is the states that have to make the choice

How we choose between these various options is difficult to say at present. Personally, we should focus on what is essential in any case— strengthening the public sector health system and increasing the supply of trained personnel. We should also allow states to experiment. It is not necessary for all states to have the same system. States at different per capita incomes may choose different systems.

* What are the challenges in reining in the largely unregulated private healthcare providers?

We need to have much better regulation of all service providers both public and private. At present, neither is effectively regulated. Enforcing regulation is not easy. There will be complaints from the private sector of harassment and even corruption. The public sector hospitals will have their own problems.

For example, if norms exist and if a hospital is full are they allowed to turn away patients? At present, they accommodate as many patients as they can, sometime getting patients to share a bed, and sometimes putting patients on the floor. These are problems but they cannot justify inaction. We need to clear from regulatory practice elsewhere. It will take time but health reform is not a five-year or a 10-year practice. We must remember that the US is still struggling with it.