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. 😊