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LATEST NEWS UPDATES | Putting the ‘universal’ in healthcare -Lant Pritchett & Gulzar Natarajan

Putting the ‘universal’ in healthcare -Lant Pritchett & Gulzar Natarajan

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published Published on Mar 7, 2015   modified Modified on Mar 7, 2015
-The Indian Express

Universal health coverage (UHC) is at the heart of the government's healthcare agenda. The 12th Five Year Plan targets a long-term goal of UHC where "each individual would have assured access to a defined essential range of medicines and treatment at an affordable price, which would be entirely free for a large percentage of the population". But this year's reduced budgetary allocation raises troublesome questions about its ability to meet the UHC objective.

The goals for UHC are laudable: a combination of better health across the population, greater equity in access to health services and reduction of the vulnerability of households to financial ruin from health shocks. With nearly 80 per cent of health spending being out-of-pocket, health shocks are a major cause of poverty.

The Planning Commission estimated that health problems push 39 million people every year into poverty; 47 per cent and 31 per cent of hospital admissions in rural and urban India respectively are financed by loans and asset sales; and 30 per cent in rural India and 20 per cent in urban areas go untreated due to financial constraints.

But there are two entirely different meanings of "universal" in "universal health coverage". One is "universal" across all people - that every citizen has access to coverage. The other is "universal" across health conditions. A health insurance contract could be "universal" in that it reimbursed the insured for all medically effective treatments of all disease conditions.

In some important ways India already has, or is on the path to, UHC for specific preventive and promotive health activities. Childhood vaccinations, for instance, are, in policy if not in practice, already provided free of charge to all. But the unfortunate fiscal fact is that India may not be able to have anything like doubly universal health coverage - that all people can have all medically effective treatments for all diseases. The typical European country with doubly universal health coverage spends around $4,000 per person per year to do so - higher than the total Indian GDP per capita.

Indians currently spend about $120 per capita (PPP) on healthcare each year, of which only a quarter comes from the government. Mexico, whose Seguro Popular universal insurance scheme is regarded as a model for upper middle income countries, spends nearly $1,000 per capita, with half coming from the government. Even the Mexican levels of government spending would require 80 per cent of all Indian taxes to be devoted to health - leaving almost nothing for anything else - infrastructure, police, education, defence, etc.

One positive feature of the discussion on UHC is that it recognises that the private sector can play a big role in being the producer of healthcare services, and that the government needn't meet all healthcare demand through publicly owned and operated facilities. The political debate on UHC in most states is anchored around the popular stereotypes of cashless tertiary care through private and corporate hospitals being offered by insurance programmes like the Aarogyasri in Andhra Pradesh. The prospect of the poor being able to access expensive tertiary care, and that too at the same corporate facilities as the rich, is laced with deep social symbolism and populist appeal.

But programmes like Aarogyasri are a fiscal trap waiting to spring. They have not run into financial constraints yet because utilisation remains low. On the supply side, for tertiary services, private facilities can meet just a small share of the demand, despite their rapid expansion as incentivised by the programme. But, as their sharply increasing budgetary allocations show, it is only a matter of time before the fiscal threshold starts to bind. State governments would have no choice but to pare down fiscal support, thereby provoking a strong populist backlash. Already, these programmes have, by cornering the major share of state health budgets, exacerbated the weaknesses of public systems. Further, they will face populist demands for the ever-expanding coverage of medical conditions and treatment choices.

The perhaps paradoxical insight is that governments produce healthcare services and provide them in-kind, rather than finance services, because they are not committed to UHC but recognise the fiscal constraints. That is, when governments control the number of facilities and services to be offered, the fiscal commitment is limited and services are rationed. In contrast, if government promises to reimburse private providers for healthcare provided, the fiscal commitment is open-ended. Government facilities are a way of making the rationing implicit and hiding the lack of fiscal commitment to doubly universal health coverage.

Since India cannot afford doubly universal health coverage, there has to be an explicit discussion about how much of what type of universality should get priority. One approach is to make insurance with a near-universal list of conditions covered available for free to targeted citizens. This is the Rashtriya Swasthya Bima Yojana approach that has been emulated by several states and even the Centre. This approach limits the government's fiscal commitment by covering only some individuals. There are two difficulties with this approach. First, even in this situation, without careful control costs will explode, both through increased use and increased costs per use. Second, this creates better health coverage for the poor that the middle class, who cannot afford private insurance, too would demand.

The other approach is to achieve universal coverage of a limited number of conditions. Any UHC plan should, as envisaged in the high-level experts group report, combine public production and public provisioning of private services. It should assure a positive list of essential services for all citizens. This provisioning could be done through various channels like direct contracting with private providers, the insurance model or capitation-based approaches. However, the temptation to go with a nationwide model should be resisted. Local conditions should determine its design.

India needs prudent compromises to achieve its UHC goals - assured and affordable access for all Indians to a cost-effective positive list of assured healthcare services. First, the UHC objectives should acknowledge its fiscal and personnel constraints. It also needs to leverage all available resources, public and private, formal and informal. Finally, given the enormous diversity across states, it should avoid embracing one-size-fits-all models and allow enough flexibility for local design experimentation within an overarching national UHC plan.

Pritchett is professor of the practice of international development at the Kennedy School of Government at Harvard University. Natarajan is an IAS officer, batch of 1999.

The Indian Express, 5 March, 2015, http://indianexpress.com/article/opinion/columns/putting-the-universal-in-healthcare/


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