Putting a Price on Health

When Naresh Chandra first heard about the Narendra Modi governments ambitious plan to roll out the Ayushman Bharat National Health Protection Mission, toured as the world’s biggest health insurance scheme, it sounded like the answer to his prayers. The 62-year-old Bareilly resident hasn’t been able to walk for some months now. He needs knee replacement surgery immediately, but he’s way down in the long queue of patients in government hospitals. Chandra cannot afford the surgery in a private hospital. The World Bank says rising expenditure on private healthcare is keeping millions of Indians in poverty. State-run health services have not kept pace with the population. Sixty percent of the 60,000-70,000 public/ private hospitals in the country have less than 30 beds and only some 3000 of them have 100 or more beds. India has just two million hospital beds, which is merely one per 625 people. The Ayushman Bharat scheme rather loftily promises to bridge this gap by ensuring healthcare for 100 million of India’s poorest families. The Union health ministry claims the scheme has been drafted after studying health schemes being run in states and by the Center. Funded by the central and state governments on a 60:40 ratio (Jammu and Kashmir, north-eastern and other hill states and Delhi will contribute 90 percent), the scheme aims to provide a ₹5 lakh health insurance cover free of cost to an estimated 500 million people.

Some 150,000 health and wellness center’s are envisaged, on a budgetary outlay of ₹1200 crore, to cater to minor ailments. The insurance will cover in-patient costs for 1350 diseases and medical procedures, including medicine expenses. Both private and state-run hospitals are expected to participate, with the money earned by government hospitals being used to strengthen their infrastructure. NITI Aayog member Vinod K. Paul, who helped draft the program, says, The government’s emphasis will be to develop a basic infrastructure while providing insurance to a large number of people. But it’s evidently not going to be easy. The government faces the huge challenge of keeping the treatment costs down while convincing private hospitals to participate in the scheme. Compounding the problem is the abysmal state-run health infrastructure and the demand-supply gap for qualified doctors, nurses and paramedics. Under the scheme, both private and state-run insurance companies will be given contracts after a state-wise bidding process. Insurance premiums will be fixed according to the number of eligible beneficiaries in each state. Bhaskar Nerukar, who heads the health administration team at Bharat Allianz, is upbeat. He says the company’s experience with similar state-run schemes in Gujarat, Mizoram and Uttarakhand have been positive. Kapil Mehta, founder and CEO of insurance brokerage firm Secure Now, feels Ayushman Bharat will spur major growth in the insurance sector. He adds a caveat, though. Treating so many people with the existing infrastructure will be a challenge, says Mehta, adding that the scheme’s success hinges on making the primary health infrastructure more robust and ensuring the participation of private hospitals as they cater to 80 percent of the healthcare needs.

There is another hurdle. Ayushman Bharat cannot be implemented without all the states coming on board. Thus far, only 24 states have signed the agreement. Of the remaining states, Odisha has opted out while the others have expressed reservations. Union health minister JP Nadda is nonetheless confident. MoUs have been signed with 24 states. We are confident all the [other] states will be linked with the scheme, he said, assuring adequate funding. In Delhi’s case, the biggest problem would be reaching a consensus with private healthcare providers on the rates approved for treatment. Girdhar J. Gyani, director general of the Association of Healthcare Providers, calls the rates fixed by the central government as presumptive and unrealistic. The government is under an illusion that treatment is possible at these rates, he says, cautioning that few private hospitals are likely to show interest. Ramneek Singh Bedi, former national vice-president of the Indian Medical Association (IMA), who runs a paediatrics hospital in Chandigarh, says Ayushman Bharat is likely to compromise the quality of healthcare to citizens. He, too, questions the rates stipulated for various procedures. The rate for delivery by caesarean section is just ₹9000, including a five-day stay in hospital, medicines, consumables, doctors, and nurses fees and food for the patient, he says. There’s no provision for emergency procedures or complications arising during childbirth. Cost studies by the IMA in Tamil Nadu, in contrast, put the cost of a caesarean procedure at over ₹57,000. T. Narsinga Reddy, IMA president for Telangana, says government hospital rates have been used to fix the treatment costs under the scheme. Bedi says the rates should be realistic and factor in expenses such as infrastructure, equipment, import duties on equipment and even water and electricity charges, which private hospitals pay at commercial rates.

Ayushman Bharat Mission CEO Indu Bhushan rejects the criticism. The government has decided the rates on the basis of a median. Every state has a different cost structure, which is why no particular rate for any disease can have fixed across the country. We have given flexibility to the states to make necessary changes, she says. IMA representatives, however, say the 10 percent flexibility allowed to states is inadequate. Gyani says some 2500 super-speciality hospitals across the country have already refused to participate in the program. Paul says the treatment costs have been fixed as per the existing rates under the Central Government Health Scheme (CGHS) and after discussions with a group of experts and some 60-70 hospitals. Private hospitals should proceed with these rates for one year, he suggests, following which the government could review them. Even if the government were to rationalise the costing, doctors say the insurance model proposed has pitfalls. The IMA’s Chandigarh president, Niraj Kumar, points out that a ₹5 lakh insurance cover to a family for a premium of just ₹1250 cannot work. The pay-outs record of existing government health schemes, such as CGHS and Aarogyasri (Telangana), aren’t encouraging either. CGHS payments to healthcare providers are routinely kept pending for over six months. In May, over ₹200 crore was pending to hospitals under Aarogyasri. Bedi says while the bigger private hospitals somehow tide over the delayed payments, the smaller (under 50 beds) hospitals face the brunt.

Oxfam Indias Shamaila Khalil argues that the Ayushman scheme will further weaken the state-run health infrastructure, forcing people to seek private treatment even for minor ailments. Some experts feel the ₹1200 crore budget for 150,000 health and wellness centers is grossly inadequate. Kumar and his colleagues at the IMA also fear an escalation in violence against doctors. There would be a huge gap in the expectations of poor patients and the services available, especially services that need to be outsourced, says Bedi. Since 2001, the Medicos Legal Action Group, a trust managed by doctors from across the country, has documented several hundred instances of patients’ relatives assaulting doctors on duty. IMA functionaries warn that, in its present form, the Ayushman Bharat scheme could serve as the proverbial last nail in the coffin for smaller and medium-scale private hospitals, which are already feeling the heat from skewed laws, such as the Clinical Establishments (Registration & Regulation) Act, 2010. The act was brought in to create a database of medical establishments in the country, but Kumar says it’s becoming a tool for harassing [smaller] hospitals. Although the IMA did sign a partnership agreement with the government in July, its national president, Ravi Wankhedkar, has said that the differences over [medical] package rates remain. Prime Minister Modi is stated to be keen to make Ayushman Bharat his big-ticket announcement this Independence Day. However, with some states yet to come on board and many private hospitals developing cold feet, a formal launch, say sources, may be deferred to October. – India Today