I am TIM Jr., Taimur Ali khan's grandson ! Please listen to my story !

Tim has had a good day's sleep and he has just woken up. Its 7.30 PM. He gets out of his bedroom, which is at under ground level and climbs up the stairs, to reach the second level, where he will have some water to take a bath, and a vacuumed water less toilet to relieve himself. His famous grandfather Taimur Ali Khan had opened his eyes in the same building, they lived in a beautiful apartment some floors above. There was a garden where he used to play and a balcony, where he had a swing. When Tim Jr., as he is called, was born, they had shifted in an under ground apartment, because carbon-dioxide in the atmosphere was so much that it was impossible to live in a house above the ground. During his great grand father Saif Ali Khan's days, this phenomenon was called global warming. The apartment that he lives in, is two small rooms, and is oxygen conditioned. It is impossible to live without Oxygen Conditioners these days, which is fixed on underground apartment vents, takes in the carbon-dioxide from the air, in, converts it into the oxygen, and throws it into the room. His great grand father used to park his car, where his apartment is located today. In those days, parking was underground and people lived in the floors above. 

Due to global warming, the temperatures started rising, during his great grand father's time. The extent of ultra-violet rays is so much, that it is impossible to come out during the day. That is the reason all the activities required for life, happen during the night. After his dinner, which is the first meal of the day, Tim will go to his office. He is the head of a production house that his great grand father had established. He will be shooting for the whole night. His movie is based on the real story of a poor woman, who had a sick daughter, suffering from flu, needed to be taken to a doctor, had got out of the home, without an anti-ultraviolet attire, and as a result, suffered from skin cancer. Due to microbial resistance, flues are sometimes fatal in nature for the kids, there are no effective medicines. Tim Jr, creates socially responsible cinema.  

Tim walks out of his house, to get to his studio. People use solar battery driven cars, which are very small in number. Cars or bicycles are used to commute in Mumbai. There was a time when there was heavy traffic in the city. But due to a major water crisis, that happened during his father's time, many people moved out of Mumbai City. As a result of a drought, there was no water to drink in Mumbai. Now-a-days, people do rain water harvesting, and use the upper floors in the buildings for water storage. Rains are scanty, and everyone has to carry his own drinking water everywhere. There have been major fights among the workers because of water.

During Tim's grand father's time farmers used chemical fertilizers. As a result the ocean waters in many places like Mumbai, have become toxic, because of high level of phosphorus and nitrogen flowing into the oceans. Fishes and other animals have died. There are no fishes in Mumbai now, which used to be a staple diet at one point of time. The bottom of the sea is also full of plastic and polythene. Fruits, vegetables and grains are also in short supply. Although, plants can handle UV better, but agriculture has come down. As Tim walks, he wonders... Why did the generation of my grand father cut so many trees, when they could not plant as many? Why did they not think of me and my generation? If trees were there, my life would have been much more easier. He takes a sigh, and enters his office.

The heroine of TIM's film is five feet and three inches tall, who is his great grand uncle Ranbir Kapoor's grand daughter. It has been very difficult to find a hero for her, who matches her height. She is very very tall. The average height of males is about five feet and those of the women is about 4.7 feet. Many young people came for an audition and finally they could cast a hero, who was about five feet and two inches. Whenever, Tim has looked at the family photographs, he marvels at the fact that everyone in her family had been so good-looking. People in those days used to be tall and handsome. His great grand uncle Ranbir Kapoor had been about six feet tall. The population of the world is just one third of what it was hundred years ago

TIM's great grand father was wise enough to buy his grand father an apartment in Switzerland, in the woods. There are very few areas in the world, left, where there is fresh air and water. How much TIM dreams of that tiny, little house, that he had gone to when he was a kid. It was a long journey through the sea, after many days of travel they had reached there. People no more travel by air these days. The oil reserves of the world have almost died down. Whatever has been remaining has been conserved by most countries for defense purposes. The mode of transportation is solar operated ships. 

This is 2118. Tim is a twenty year old young boy. Hundred years ago, people used to say, Save the earth - when they should have said, save your grand children. Tim sometimes wonders, why the generation of his great grand father could not have been a little less selfish, a little less stupid. Why?

Disclaimer - The thoughts expressed in this post are that of the author, and all references of those dead and alive are purely incidental. These dismal thoughts came after reading this article - 

https://www.theguardian.com/environment/2015/jan/15/rate-of-environmental-degradation-puts-life-on-earth-at-risk-say-scientists

What should be done to make Ayushman Bharat Successful?

Prime Minister Narendra Modi on September 23 launched the Pradhan Mantri Jan Arogya Yojana (PMJAY)-Ayushman Bharat and termed it a "game-changer initiative to serve the poor". The scheme aims to provide a coverage of Rs. 5 lakhs per family, annually and will benefit 10 crore families. Five states have already opted out of the scheme - Delhi, Kerala, Odisha, Punjab and Telangana. The financing of the scheme is by 1% cess, which is expected to collect an amount of Rs.11000 crore to the exchequer. If even 10% of the sum insured is claimed it will produce a bill of Rs. 50000 crore to the government. The government will have to resort to a reliable source of finance to make PMJAY successful.

It is not clear so far, which insurance company will be an insurance provider for PMJAY. Health insurance should be kept in public domain and a new company for health insurance (by merging the health insurance division of the three insurance providers in the public sector) should be created, in public domain. This company can create various insurance products, for different kinds of payers. Scale economies will generate low cost products, which would enable people to bear the cost of insurance largely. Poor and marginalized population in that case can also pay a part of the premium.  

In July, 2018, Niti Aayog issued a document called 'National Health Stack' as a first step towards 'Ayushman Bharat'. 'The National Health Stack (NHS) is a visionary digital framework usable by centre and state across public and private sectors. Through this platform, digital health records for all citizens by the year 2022 will be stored in a database'. Through this platform, national health electronic registries, a coverage and claims platform, a federated personal health records framework, and a national health analytics platform will be made possible. A strong and resilient digital backbone to the health system will bring transparency, and will enable the process of shifting from illness-focused to wellness-oriented approach and to ensure cost-effective healthcare. With the help of this kind of data, specific customized solutions can be developed for the people at local level. Technological innovations like telemedicine, gene mapping, large scale diagnostic labs etc. will enable health systems in the country to leapfrog to a more vibrant and sustainable health care delivery system. A large population is to be served, but it also gives opportunity in terms of scale economies, as per person cost of technology is bare minimum.

Effectiveness of primary healthcare centers is the key to the success of Ayushman Bharat. Gate-Keeping in  healthcare system is a mechanism of care referral where a general practitioner is the first point of contact in the patient's care path and thus controls the patient's entry into the health care system. In case of our country the gatekeepers will be physicians or nurses in the PHCs and CHCs. Referrals from these centers to an empanelled PMJAY hospital, will be the starting point of the chain in this scheme. Ability of tertiary care hospitals in public and private sector, to take the patients who have PMJAY card, and providing them a cashless treatment would complete the process. Studies have shown that patients get referred to the private sector hospital, as government hospitals are over crowded and there is lack of trust at user's level.

There are significant infrastructural gaps in India, as far as health care delivery is concerned. There is a normative gap of 3469 community health centers for a population of .1 million, 5887 primary health centers for every 30000 people and 27430 subcenters for every 5000 people.  Even if these facilities exist they are not fully equipped. There is a gap in the number of doctors, nurses, paramedics, and frontline health workers required to run this system as well. Because of this gap at the lower levels, a referral system cannot be created and thus the burden is shifted to tertiary level hospitals and medical colleges in the district. 

Private hospitals are not comfortable with the cost of care estimated under PMJAY. A delegation of private players had given a representation at Niti-Aayog in this regard. They find the rate too low. However, there are reportedly 9000 private hospitals empanelled with PMJAY. Putting too much of money in insurance, considering wide gaps in government infrastructure will transfer committed funds to private sector every year. Capital Expenditure on health will get a boost in the private sector, but it will also give rise to cost of care, drugs, and diagnostics. Very strict regulations and constant negotiations with the private sector to bring down the cost, will make this public private machinery work, otherwise it will give rise to various un-ethical practices. Privatization of a basic service like healthcare, brings up unique inequities, like it is in US, those who can pay have a better access to health. Forcing private sector to prioritize the poor is a sound maxim, but government will have to generate economies with which it would work. 

The last initiative would be improving the management of hospitals. Government Hospitals are very poorly managed, and the reason often cited is the over crowdedness of the hospitals. Military hospitals in India are equally loaded, a doctor sitting in OPD, in a military hospital usually entertains, the same number of patients, OTs, wards and other services are also equally demanded for. The difference is in the management. Military hospitals are managed efficiently, SOPs are followed, and monitoring and regulation is very strict. The same can be done for government hospitals too. 

Climate Change - Planting trees, Is it so difficult to understand?

Yesterday's newspaper had a picture, an aerial shot of Agra-Jaipur highway, with a bold headline; 'There is not a single tree on this highway for about 10 kms'. When the highway got converted from two lane to four lane, about 1700 trees had to be cut. In principle, about 3400 trees needed to be planted, but the company which undertook highway construction merely did a formality and planted some trees over a small stretch of the road. The rest of the highway is barren.

You travel to any metro city in India these days, overladen concrete jungles brings back the memories of a prominent road in the city once laden with trees ..... 'Ajmer road was once beautiful, trees on both sides, Neem, Banyan, Gulmohar, Sheesham... ', MG Road had so many trees, Bangalore's claim of being a 'garden city' is lost now', 'Full grown trees from Camac street have been cut now, Kolkata as it is an overcrowded and polluted city', the conversations go on. We discuss about trees giving way to highways, metro train, buildings and so on. What we do not understand is that this simple change that we encounter around us leads to a horrifying global phenomenon - which is known as climate change.

Emission of green house gases causes global warming, which in turn brings climate change. Tree take away C02 and thus are most effective in saving us from global warming. There are other methods too but they are far more complex. At Paris climate agreement done two years ago, the world pledged to keep global warming well below 2 degrees centigrade hotter than pre-industrial times. In simple words we get back to the kind of climate we had some 300 years ago.

In any realistic scenario emissions cannot be cut fast enough to keep the stock of green house gases in the atmosphere low so as to curtail the rise in temperature. In fact, the development of India, China and Africa in the next 20 years is likely to increase the stock of these gases. In that case we have to find ways to suck CO2 out of the air. How do we do that? Carbon can be sucked directly from the air, using chemical filters and stored. Or minerals could be ground up and sowed over land or sea, natural weathering process will bind them to CO2, to form carbonate rocks. These were the fancy ideas that I read about in one of the recent issues of Economist. I am not sure whether I have understood them clearly or not, I am not sure whether it will work or not.

A simpler option is to plant more trees, because they are natural carbon suckers. If you find a tree being cut in your vicinity, be prepared for a more terrible summer the next year. If you can't prevent it, plant one in its place. Plant a tree when you buy a new car, a new AC, construct a new house, or board an aircraft to make your travel quicker and comfortable. As a human kind, we have to plant forests for our survival. Its a question of survival now. Plant or perish!

Comfortable life has a trade off with climate change. Next time you crib about extreme whether, just look around and see if you have a space where you can plant a tree. Its not that difficult a point to understand.

A stitch in time, saves nine….

As promised, my last post on the topic is here - 

The total expenditure that the government has budgeted for the Financial Year 2018-19 is Rs. 24,42,213 crore and the allocation for health is Rs. 54,600 crore. The budget for National Health Mission has been reduced from 30,801.56 crore to Rs. 30,129.61 crore. 

The allocation for the Department of Health Research for 2018-19 was raised to Rs 1,800.00 crore from the last budget's allocation of Rs 1,500.00 crore, an increase of Rs 300 crore. Under the flexible pool for non-communicable diseases, injury and trauma, an allocation of Rs 1,004.67 crore has been made. Rs 1,200 crore have been committed to construct 1.5 lakh health and wellness centres, that will increase the accessibility of the health systems and will bring health closer to the homes of people. Rs. 2000 crore have been channeled through RSBY to National Health Protection Scheme and an additional Rs 600 crore to provide nutritional support to all tuberculosis patients at the rate of Rs 500 per 10-month cycle till the duration of the treatment.

As the structure is in the country, most of the allocations made for Health in the budget go to NHM followed by Department of Health and Family Welfare, National AIDS control Society, Department of AYUSH and then Department of Health Research. If we look at the break up of allocations in the budget vis-à-vis the actual expenditure made for 2015-16, the figures look like this –

Budget Allocations	Budgeted Amount – 2015-16 (Rs. Crores)	Actual Expenditure 2015-16 (Rs. Crores)	Budgeted Amount 2016-17
National Health Mission	18295	18295	19000
Department of Health and Family welfare	6254	7504	9100
National AIDS Control Society	1008	900	1050
Department of Ayush	600	657	750
Department of Health Research	1397	1615	1700

One of the biggest challenges about increasing health expenditures in India has been a low ratio of budgeted to actual expenditure. Departments and schemes are not able to exhaust funds allocated to them. To be able to achieve SDG goals, health expenditure in India is to be increased, and there is a lot of international pressure also regarding that. Before the budget, we were thus at a situation where government departments were not able to spend funds allocated to them, in simple understanding, while they knew where to spend the money because the money was allocated under various schemes, they did not have the willingness to do that. India’s continuous dismal performance on healthcare, with low government healthcare spending and high disease burden, results in extremely sad outcomes. According to World Bank data, 62.4% of total health expenditure in the country was out of pocket (OOP) as of 2014, compared to a global average of a little over 18%.

Rather than going into the details of this grave situation where there is huge out of pocket expenditure made by people in India, and government departments not being able to spend the money allocated to them and finding out reasons for that, a simple solution to increase expenditure in health care was thought about. Allocate the money to the private sector, give it right in the hands of the people, there would be a better performance on expenditure. It has been assumed that resultantly the health indicators devised on SGD Goal -3, index would improve, and the nation will become a healthier nation. An increase of 1% in the special ‘health’ cess that the tax payer has been paying has been increased to achieve that.

The government has estimated the premium for NHPS at Rs 1,000-1,200 per family per year for a cover of up to Rs 500,000 for a family, for 10,000 crore families. That works out to be an annual increased expenditure of about Rs. 100,000,000 crores. The Union government said it would provide 60 per cent funds, and the state governments were expected to pool in the remaining 40 per cent.

There were some other possible solutions to the problem, but they were tougher solutions. But before we look at the solutions, let us try and look at the possible problems with the implementation of the NHPS in the coming year.

The finance minister said he will be able to meet the funding requirement through the 1 percent increase in education and health cess on income tax, which was imposed to garner an additional Rs 11,000 crore, and the newly re-imposed long term capital gains tax, which is expected to bring another Rs 20,000 crore to the government’s coffers. The government estimates the premium outgo to cost anywhere between Rs 11,000-12,000 crore. However, the allocation made in the budget was just Rs 2,000 crore, which seemed a paltry sum for a scheme of this size as of now.

Earlier we have seen that RSBY (Rashtriya Swashya Beema Yojna), aimed to cover Below Poverty Line (BPL) households, funding private insurance for inpatient coverage of Rs30,000 for five members per household, has been riddled with problems. Research reports have shown that the scheme had failed in both its primary objectives. It had misfired in targeting, covering only 12.7% of households among the poorest quintile at the national level. And while the scheme increased the number of admissions, it failed to significantly impact OOP expenditure or reduce health-related poverty for the former.

Why the outcome has been poor? At both the central and state levels, governments have lacked the capacity to regulate RSBY effectively. RSBY provides, Insurers find it more profitable to insure households less than five members, which is mandated or issue the registration cards halfway through the year. Effective targeting has also not been a priority. Doctors and hospitals, recommend unnecessary procedures to claim reimbursements.

Healthcare lies at a confluence of inelastic demand, political sensitivity, economic consequences, and ethical governance that makes the state’s role crucial. Alongside an increase in the quantum of funding, there is a need to improve the policy design and quality of spending to ensure closer alignment with health outcomes. Every rupee spent on health has an opportunity cost in a developing economy, because there are many sectors such as education, infrastructure, which also claim the same resources.

What are the health outcomes we want to achieve? It is not rocket science to figure that out. We want every citizen of India physically and mentally healthy. We want every citizen of India to have access to health and not merely an access to cure. Thus, health outcomes are achieved not just by curative care but by many other factors too. Curative care providers, worldwide, have a strong lobby and great negotiating powers, though.

The other factors that are responsible for health outcomes are, healthy environment, adequate nutrition, gender equality, low stress in society, road safety, absence of extreme poverty conditions, and healthy lifestyle. All these factors fall under preventive care. Hospitals and insurance cover do not cover any of these.

Health expenditure comprises of revenue and capital expenditures. Traditionally, capital expenditure on healthcare is low. It was on an average about 10% of the total health expenditures in the last ten years. Studies have shown that a large part of growing revenue expenditure goes is one head – Salaries.

There are significant infrastructural gaps in India, as far as health care delivery is concerned. There is a normative gap of 3469 community health centers for a population of .1 million, 5887 primary health centers for every 30000 people and 27430 subcenters for every 5000 people. Even if these facilities exist they are not fully equipped. There is a gap in the number of doctors, nurses, paramedics, and frontline health workers required to run this system as well. Because of this gap at the lower levels a referral system cannot be created and thus the burden is shifted to tertiary level hospitals and medical colleges in the district. Capital expenditure needs to increase to fulfill these gaps.

A study done by Somnath Rudra, in Thanjavur district, through a medical-geographical approach to assess the health status in the district reveals that the most prevalent diseases reported are acute diarrhea, worm infection, ear discharge, scabies, dental problem, eye vision defect, night blindness, anemia, leprosy and filaria. Thanjavur is primarily a rural, betel nut growing district. It was found that most of these diseases are because of poor sewage and drainage facilities resulting in stagnation of sewage water and unhygienic living condition. Dental problems are due to betel nut chewing habit, prevalent amongst people. In this district construction of a proper drainage and provision of clean drinking water will solve a large part of the problem. Betel nut chewing habit would require behavior change. Malnutrition is responsible for some other conditions. Lifestyle diseases like diabetes, hypertension, cardio vascular diseases require lifestyle changes. Curative care provided where preventive care is required is a very very costly solution. There is also a zero sum game between preventive and curative care, as both claim the same resources.  

Each district in India is unique in terms of health challenges that it may face. When the problem is specific, a blanket solution cannot be invented for the problem. A more serious effort is to be made to do research on the disease profiling at the districts, possible reasons for the prevalent diseases must be found and documented and then the solutions have to be evolved. Hospitals, doctors and nurses, alone cannot solve the problem.

Public health official cadre at the district level should be created, they should do extensive research and collect data on a continuous basis. Epidemiology is the branch of medicine which deals with the incidence, distribution, and possible control of diseases and other factors relating to health. District epidemiological reports should be prepared on an annual basis and based on that district health interventions should be designed.

Putting too much of money in insurance, considering wide gaps in government infrastructure will transfer committed funds (Rs. 1200 crores in this budget) to private sector every year. Capital Expenditure on health will get a boost in the private sector, but it will also give rise to cost of care, drugs, and diagnostics. Very strict regulations will have to be enforced to make this public private machinery work, otherwise it will give rise to various un-ethical practices. Privatization of a basic service like healthcare, may bring up unique inequities, like those that we have in US, those who can pay will have a better access to health. 

In India, we do not have a universal health coverage and thus we do not have a model either, we must construct one. That gives us a unique opportunity too. We can learn from the rest of the world, from the fallacies of different models, make use of technological developments, and leapfrog to a better and more sustainable health care delivery system.

Even before we construct enough infrastructure, we have an ability to develop a robust HEALTH MIS, a data base that contains health related information of all the citizens of the country based on a unique identity number and district epidemiological reports. Tamil Nadu has made efforts in that direction. With the help of this kind of data, we develop specific customized solutions based on preventive care along with curative care. We can then make use of technological innovations like telemedicine, gene mapping, largescale diagnostic labs etc. to leapfrog to a more vibrant health care delivery system. A large population is to be served, but it also gives opportunity in terms of scale economies, as per person cost of technology is bare minimum.

The nation should have publicly operated, not for profit health insurance model for all the citizens in the country. (FM announced that the three government general insurance companies will be merged and later as part of disinvestment initiative be listed on stock exchange) Health insurance should be kept in public domain and a new company for health insurance should be created, in the public domain. This company can create various insurance products, for different kinds of payers. Scale economies will generate low cost products, let people bear the cost of insurance largely. Poor and marginalized population should also pay a part of the premium. For profit insurance models, the one that we have in US, generally gives rise to middlemen and agency costs. It increases, drugs, diagnostics and treatment costs. Distributing freebies in a developing economy, merely increases fiscal deficit and crowds out private investment resulting in slow economic growth. It doesn’t help the poor either, because it pushes them back to the subsistence sector. At least a part of the premium should be paid by the poor family too. We need to create capacities to pay rather than distributing freebies.

The last initiative would be improving the management of hospitals. Government Hospitals are very poorly managed, and the reason often cited is the over crowdedness of the hospitals. Military hospitals in India are equally loaded, a doctor sitting in OPD, in a military hospital usually entertains, the same number of patients, OTs, wards and other services are also equally demanded for. The difference is in the management. Military hospitals are managed efficiently, SOPs are followed, and monitoring and regulation is very strict. The same can be done for government hospitals too.

To conclude, my health financing solution would be -

• Government should increase capital expenditure and create infrastructure from the tax payer’s funds.
• Government should increase its expenditure in preventive and promotive methods, as curative care would tackle just one part of the problem and preventive care solution are much more sustainable and cost effective.
• Health Insurance should be publicly provided and should be made a not for profit sector.
• Privatization of healthcare is not desirable. Private investment has a greater capital cost.
• Cost effective free drugs and diagnostic models be developed.
• Management of government hospitals should be improved. We should get back to the good old days of government hospitals.
• Make judicious use of technology to leapfrog to advanced care models. First step should be to have a robust MIS.
• Let the citizens pay their taxes and enjoy an equitable, universal basic health for all.

Public spending in any sector, should be outcome oriented. Every rupee spent has a greater accountability because it is a tax payer’s money. We are extremely happy to hear an announcement of an increased expenditure of Rs. 50000 crores in healthcare. We are also happy that like everywhere else, health should become an election agenda. We should argue and debate thus – on wherewithal’s, and whereto’s.

A Stitch in Time Saves Nine………………………. Medically too. 😊

Theoretical underpinnings of a blanket insurance policy for all. Wherewithal's?

The Finance Minister gave a commitment to spend 50000 crore on healthcare in the budget. Government Health spending in India has always been one of the lowest in the world at 1.1% of GDP. A commitment towards increasing this health spending first was reflected in the Health Policy 2017 document and later in the Budget 2018. An increase in public expenditure on health is imminent because of two reasons – One, that lakhs of people every year are pushed back to poverty because of huge out of pocket health spending. Studies have shown that they fall into a debt trap, sell their assets, to seek health and thus from a welfare state perspective, it is essential for state to make public expenditure, so that an affordable access to health services is ensured to all. That is also termed as ‘Universal Health Coverage’. Two, for a developing country, human capital is the most critical link to growth, and thus health is something that needs utmost attention as a developing country needs a healthy work force. The basic aim of health care is to keep people healthy, treating the sick at affordable prices and protecting households against catastrophic expenditures and resultant financial ruin due to medical bills.

Let us try and understand the different types of Healthcare Management Models are available in the world –

The first is the ‘Beveridge Model’, given by William Beveridge, who designed British Health System. Under this model, healthcare is provided to all the citizens by government and is financed through taxes. Most of the hospitals are owned by the government and a large part of the healthcare work force be it doctors, nurses or paramedics, work for the government. There are also private doctors, but they collect their fee from the government, when they provide their services. Government is a sole buyer of the service in Britain, can control what doctors can do and charge, and thus per capita health system cost is maintained at a minimum. In Britain, you never get a doctor bill. That is the reason Princess Kate delivers her baby in the same hospital as other common people and avails the same services. Britain, Spain, Norway, Sweden, Finland, New Zealand and Cuba have adopted this model. Cuba’s model is the purest Beveridge as it is the model of complete government control.

The second Model is the ‘Bismarck Model’. It was invented by Chancellor Otto Van Bismarck, during the process of unification of Germany in the 19^th Century. This model covers everyone in the country under a health insurance plan, where the insurer does not make a profit. Thus, it is a model based on ‘not for profit’ insurance. The insurers are called ‘sickness funds’, financed jointly by employers and employees. Germany has about 240 different funds, and this is a multi-payer model. Tight regulation gives government much of the cost control. Apart from Germany, Japan, Belgium, Netherlands, France and Switzerland follow this model.

The third model is the ‘National Health Insurance Model’. It has elements of both Beveridge and Bismarck. It uses private sector providers that come under a government run insurance program. Every citizen must pay for this insurance program, and every citizen is covered under it. There is no financial motive to deny claims, and no profit, thus it is a cheap and administratively simple model. National Health Insurance Plan, controls costs by getting the sole power of supplying patients to hospitals on one hand, and on the other, attain immense negotiating powers to keep medicine and diagnostic costs from pharma companies and diagnostic service providers to the minimum. Canada, Taiwan and South Korea have adopted this model successfully. The joke is that Canadian drug costs are so low that American stores forge and buy pills from them north of the border.

The fourth model is the ‘Out of Pocket Expenditure’ model, where state does not provide much assistance and medical bills are largely paid out of pocket by the people. In this kind of a system the rich get medical care and the poor get sick and die in the absence of it. This kind of model is prevalent in Africa, India, Rural China and South America.

As far as United States is concerned they have a hybrid model. They have separate systems for separate classes of people. Their Health Insurance Model is a for profit health insurance model. For the veterans, it is Beveridge, for the workforce it is Bismarck, and for the 15% of people with no health insurance, it is out of pocket. Americans, it is said, have messed up their healthcare system. In Baltimore, just 100 yards away from Johns Hopkins Hospital, which is perhaps one of the best hospitals in the world, I saw a sick person lying on the street.

The coinage of the term ‘Modi care’ comes from ‘Obama Care’. I will make a comparison between the two when I have understood ‘Modi Care’ better.

For now, it looks like a hurried exercise to develop a hybrid model. We have free diagnostics and drug distribution schemes, running in some states in India. We have RSBY, and other schemes which are insurance schemes for the poor. We have government hospitals and dispensaries, providing healthcare at low cost and we have corporate hospitals and private clinics, that charge exorbitant amount of money for providing healthcare. We still have a majority of the population paying out of pocket for healthcare.

What are the wherewithal’s of Modicare? Many health economists in the country have said that it is a very difficult fiscal arithmetic to make. Meryll Lynch, has made a calculation that Modicare will cost the government a minimum of $20 billion.

Wait for my next post.

A highly promising Budget.................... !!

Budget 2018 had brought forth rather unusual pre-budget questions in the curious intellectual minds of the country. In the absence of a scenario of estimating policy fallouts largely from indirect tax levies, for the first time the focus shifted to direct tax levies, and a prospective, policy implication of corporate tax levies or income tax levies.  The whole debate about low GDP to investment ratio, ease of doing business, cost of doing business going up by 2-3 % versus infrastructure development, farm sector reforms, job creation with the help of increased government spending, poverty eradication, health and education, the rich becoming richer, and the poor remaining poor because of economic reform; was to be continued in the context of budgetary announcements. Winter slowly walking out of the door, and the Sun shining more brightly over the country, made for an adequate budget season, and a perfect setting for a Nehru Jacket Clad Finance Minister’s budget speech.

It was going to be a reformist, or a populist budget was a no brainer at all. Thus, for those of us who claim to be economists, the more interesting part was going to be allocations. We had full confidence that the Finance Minister would be able to do the necessary jugulary of numbers and will balance tax receipts with new populist allocations, while at the same time keep a check on fiscal deficit. Which sectors will receive allocations in the wake of an imminent populist budget, was what we were looking for in the budget speech.

This was a budget focused on farm sector and healthcare, as it turned out to be.

The budget allocations to health sector, in the form of National Health Protection Scheme, providing a health insurance cover of ₹5 lakh per family and termed as ‘biggest scheme of health assurance’, in the world, to address the current healthcare needs, and establishment of tertiary care hospitals and medical colleges, to fulfill the future healthcare needs; is indeed more than welcome. Out of pocket expenditures on healthcare will be financed by National Health Protection Scheme. It does bring in the ease of living. The implementation plan of this scheme would be soon out partly, in the budget fine-print, and later in the announcements made by the ministry. However, it looks like the scheme at present is likely to benefit private sector more than the government sector in health care. Unoccupied beds in private hospitals and nursing homes will come under the affordability of larger population, as government hospitals are already crowded and overburdened as a result of this scheme. The government is then, putting an increased expenditure on healthcare amounting to 50000 crores and transferring a large part of it to the private sector in the short run. An increased 1% increase in the health cess is what the common taxpayer must pay for that. The devil is in the detail. Empanelment of private hospitals under this scheme, and the coverage would be a critical implementation question. What caught my eye was a Fortis Hospital stock going down on the stock market, while Apollo Hospitals going significantly up.

Nevertheless, the out of pocket expenditure (OoPE) on health by households is as high as 62% which adversely affects the poorer sections and widens inequalities. As per National Health Accounts 2014-15, the government healthcare providers accounted for around 23% of the Current Health Expenditure while the share of private hospitals and clinics was higher at 31%. Expenditure on diagnostics (including medicines and diagnostic tests) by households was about 10% of the total OoPE during 2013-14.

Earlier, in the economic survey, there was a mention of National Nutrition Mission, with a target to reduce malnutrition and low birth weight by 2% each year. The government has budgeted ₹9,046 crore for the mission for a period of three years. All the states and districts will be covered in a phased manner; to begin with the worst affected 315 districts will be targeted this financial year. The core idea behind the mission is to converge all the existing programs on a single platform. Farm sector reforms will increase disposable income in the rural areas and is likely to bring up consumption. Rise in minimum support price for Kharif crop by 1.5 times, should bring up farm incomes. However, a robust implementation plan which is to be prepared by NITI Aayog, would be very critical to realize effects.

We have been arguing for long about increasing allocations to preventive care, and step towards allocations made to nutrition is welcome. If we look at the nutritional deficiencies of people in the country, we find that about 80% of the population in India is low on vitamin and protein intake. Indian diet is largely carbohydrate rich diet. Advent of commodity exchanges, and futures trading in farm produce on these exchanges, increased the price of pulses and cereals. Much of agricultural sector inflation is artificial in nature, because of artificial ways of creating demand. In that kind of a system the middle-men benefit rather than the farmer. In a nutrition starved country, the demand-supply mechanism of price determination in the agriculture sector should not let the prices rise. We just hope that NITI Aayog considers this simple logic before determining the implementation plan for the MSP.

Nutritionists around the world have argued that the food grown locally is the best food to be consumed for health. Before transportation and cold storage facilities, we largely consumed local food. The diversity in food pattern and cuisines in the various regions of the country is a testimonial to that. Modern science contributed to capturing hunger, by helping in creating efficient food supply chains, to make food available in places where there was less production or drought. But it also killed local staple food patterns and gave place to something like ‘junk food’ in our diet. Taking on Nutrition on a mission mode, should also consider doing extensive research on developing staple diet based on local produce, so that food options like Ragi, Millets, Groundnut, sesame, Jawar, Bajra and locally grown fruits and vegetables remain a part of our diet and remain cost effective, because a lesser amount of money is to be spent on supply chain.

A good amount of allocation has been made to infrastructure development for the farm sector. Nutritional diversity, stress on locally grown food should be considered as major factors to make prudent allocations to infrastructure and that would be good for health too. NITI Aayog will arrange for an institutional mechanism for practices of price and demand forecasting. Can NITI Aayog develop such an infrastructure that the prices of pulses and basic cereals reduce in-spite of an increase in MSP? Would that be a difficult balancing act to make? The delivery of the promises made in the budget would be challenging.

Proposed increased expenditures on hospitals and wellness centers in primary and tertiary will definitely create jobs in the healthcare sector, but largely on the clinical side. Public Health Management cadre jobs will perhaps produce far bigger impact on health, in the long run. A zero sum game between preventive and curative expenditure is a fact that has been proven by research. A long term sustainable health system in the country should be based on preventive health, was articulated very well in the Health Policy 2017. The road map to increased expenditures in healthcare should take care of that. Some funds could be allocated to know how many doctors and nurses currently working in the hospitals have a knowledge of public health?

A little bit on other parts of the budget – marginal decrease in corporate tax, offset by an increase in capital gains tax – if it inspires corporates to make investments in productive assets rather than financial assets, will do something to create jobs. Increased investment by government in infrastructure, roads, railways, and housing should not be criticized because if jobs are created by increased government expenditure, so be it. An increase in disposable incomes in the rural areas will give a boost to consumption spending and will resultantly increase the rate of growth, is a good theoretical premise, how it unfolds practically is yet to be seen.

Overall, I wish to congratulate the FM for not going very far from the reforms, even while working with-in the compulsions of having to prepare a populist budget this time. The key to this budget would be implementation efficiency. Promises, should help in infusing confidence, we do not know. However, we let the FM score a few marks on the intention though.

The stock market till now, looks as confusing as most of the people in the country would be.