Health and sustainable development

Krishna D Rao

Increase of government spending on health from around 1% to under 2% of GDP in the 12th Five Year Plan can create an affordable health system by pursuing two independent strategies to achieve universal health care —strengthening the public health system, and building a government sponsored health insurance system.

The 12th Five Year Plan and its promise of increased government spending on health from around 1% to under 2% of GDP is seen by many that the government might at last be serious about the nation’s health. Yet, as recent debates on the Health Plan indicate, it is not clear where these additional funds should be invested. Indeed, the government appears to be pursuing two independent strategies to achieve universal health care—strengthening the public health system, and building a government sponsored health insurance system. Given the levels of government spending of health, both strategies cannot be adequately funded. Nor do these two paths necessarily complement each other. There is a pressing need for a national strategy that harmonises these competing paths and enables the efficient use of our country’s scarce health resources.

The idea of universal health care is not new in India. The Bhore Committee report (1946) inspired the creation of a vast network of government funded and staffed clinics and hospitals through which all Indians could have access to affordable health services. That this system failed to deliver on its promise is well known—it was underfunded, under supplied and under staffed.

In the past decade, there has been a renewed effort to rejuvenate the public sector health system, particularly at the primary care level. This effort was signaled by the launch of the National Rural Health Mission (NRHM) in 2005, which till date, has invested around R43,700 crore in strengthening the public system. With the eminent launch of the National Urban Health Mission, substantially more government funding can be expected to flow into health. More recently, the High Level Expert Group (HLEG) commissioned by the Planning Commission recommended that the government spend upto 3% of GDP on strengthening the public sector health system.

In parallel, central and state governments have been systematically building a health insurance system. The growth of government health insurance has brought ‘new’ funds into the health sector. The Rajiv Aarogyasri Scheme (RAS) which debuted in 2007 in Andhra Pradesh, spawned similar schemes in several other states (Tamil Nadu, Karnataka, Maharashtra, and Gujarat (planning). The central government too has rolled out the Rashtriya Swasthya Bima Yojana (RSBY) in 2008, which has been rapidly scaled-up nationally. These schemes have much in common—they only cover hospital services for those below the poverty line, their benefit packages range from R30,000 (RSBY) to around R2 lakh (RAS) per family per year. Importantly, these schemes offer cashless hospital services at both empanelled government and private hospitals. A 2012 report by the World Bank (Government Sponsored Health Insurance in India—Are you covered?) estimated that by 2015, 50% of India’s population will be covered by government insurance schemes.

Independent routes

The pursuit of these two routes to universal health care—strengthening the public health system and government insurance—has largely been independent of each other. There has been little integration so far between them. For one, there is double payment for services at government hospitals—through insurance the government is paying public sector hospitals for services they should anyway provided. Second, the presence of government insurance has positioned public sector hospitals and private hospitals as competitors for insurance funds. While this can be seen as an opportunity for government hospitals to improve quality to attract more patients, in reality, this situation favours the private sector. Already, the majority of insurance funds flow to private hospitals. Moreover, the growth of private hospitals, in part fuelled by the substantial insurance funds available, has increased their demand for skilled human resources. This private sector demand will likely add to the growing migration of skilled staff from government to private hospitals. Finally, there is little harmony between state schemes and the RSBY. For instance, in states like Andhra Pradesh both the RSBY and RAS schemes are independently offered to the public. This raises obvious questions about wastefulness and efficiency.

Are both routes affordable?

The two routes to universal health care will independently consume substantial resources and there is little fiscal space in the health sector to afford both. Rejuvinating the public health system is expected to consume upto 3% GDP according to the HLEG report. The 2012 World Bank report estimated that government insurance schemes are expected to consume around 0.8% of GDP and this is expected to grow as coverage increases and the population grows older. In Andhra Pradesh, the RAS consumes around 20% of the state’s health budget. Clearly, there is little fiscal space to adequately pursue both routes.

Wither primary care?

Efforts to strengthen the public system through NRHM and the HLEG recommendations have focused on strengthening primary care services. The insurance route has exclusively focused on hospital services. For instance, in Andhra Pradesh, which has been operating its insurance scheme since 2008, the government spends about three times as much on hospital services as it does on primary care. One can expect similar crowding out of funds for primary care as government insurance coverage expands and demands more resources to operate.

India’s pursuit of the two routes to universal health care— strengthening the public health system and creating a government sponsored insurance system is like putting each foot in a different boat. The independent pursuit of these routes will lead to inefficient use of health resources and the further fragmenting of our health system. While government sponsored insurance has provided the poor with greater choice for hospital treatment, promoting it without adequate regulation, price control and concern for primary health care will rapidly create an unaffordable system without any progress towards universality, efficiency or improved quality. Making sure that the two boats are in harmony with each other requires government to build a national strategy that usefully integrates these two routes into the architecture of our health system.

The writer is senior health specialist, Public Health Foundation of India


By Dr.Krishna Rao, PHFI