Dr Ashwani Mahajan
In the budget for the fiscal year 2018-19, when Finance Minister Arun Jaitley announced that the government will bear up to Rs 5 lakh for the expenditure on the health of 500 million, that is 50 crore people, it sounded like a dream. In his budget speech, the finance minister announced ‘Ayushman Bharat’ scheme under which two types of health plans were announced. First, the establishment of Primary Health and Wellness Centres across the country and second, the National Health Security Scheme. Recently, the Central Government has issued a notification, in which the ‘Ayushman Bharat’ scheme has been enumerated.
It is well known that today, hospitals and dispensaries are in worst condition. In the last more than 3 decades, the central and state governments spending on health couldn’t increase proportionate to the rising health needs of the people. Though in many states, All India Institute of Medical Sciences (AIIMS) have been opened, but they are proving to be extremely insufficient compared to the rising burden of disease. Barring few, in all the remaining states, government health facilities are in very bad shape. In view of the huge increase in the burden of both infectious and non-infectious diseases and the lack of government facilities, there has been huge expansion of hospitals and nursing homes in the private sector. At the same time, clinics and poly clinics are also opened by doctors and experts for a large number of general and specialised treatment. That is, though it is difficult to get treatment in government hospitals at low or zero cost, but in the private sector, treatment and investigation facilities are available in abundance for a high price. These facilities are also fast expanding. But one of the major problems associated with them is that this treatment is expensive and this cost is increasing day by day. According to a report of National Sample Survey Organisation, the average cost of hospitalization in rural areas increased from Rs 5695 to Rs 14855 between 2004 and 2014, During the same period, it has increased from Rs. 8851 to 24456 rupees in urban areas.
A ray of hope for the poor
While for 1354 types of treatment costs, caps have been fixed under the ‘Ayushman Bharat’ scheme, on the other hand, an announcement has been made that the list of beneficiaries of ‘Ayushman Bharat’ scheme would be made on the basis of Social Economic Caste Census, 2011. On August 15, 2018, this plan will be duly rolled out all over the country. Significantly, the condition of the poor is getting worse due to the increase in the burden of diseases and the increased cost of treatment. In this regard, many government reports have stated that expenditure on health is one of the major reasons for the increase in poverty in the country. Anybody would be willing to do anything to get treatment for their nears and dears, even if he/she has to mortgage his/her property or sell it.
The impact of increasing health cost and reduction in government expenditure is that private spending on health is increasing. The total expenditure on health in India is less than 4.0 percent of GDP, while the government’s health expenditure is just less than 1.3 percent of GDP. That is, the expenditure of people on health (out of pocket expenditure) has reached 2.7 percent of GDP. To save poor from getting poorer it’s imperative to raise public (government) expenditure on health.
‘Ayushman Bharat ‘scheme, in which initially 10.74 crore households i.e. about 50 crore people have been included, is destined to be made universal ultimately. In the ‘Ayushman Bharat’ scheme, there is a provision for treatment of up to 5 lakh rupees under National Health Security Scheme for tertiary health facilities and apart from this, Primary Health and Wellness Centres would be developed for general health facilities for the masses. With the implementation of this plan not only will the treatment of the poor for even serious and deadly diseases would be possible, pauperisation of masses could be avoided, as they would no longer be forced to borrow and sell or mortgage their assets to fund treatment of their nears and dears.
How will this plan work?
Ayushman Bharat is being considered a highly ambitious scheme. Not only about 40 percent of the population will benefit from this scheme, the government will have to earmark huge expenditure for this scheme. It is worth noting that almost similar plan was envisaged in USA, by the then American President Barack Obama, which is known in the world as ‘Obama Care’. On the same pattern, this scheme is being termed as ‘Modi Care’ in the name of Prime Minister Narendra Modi.
NITI Aayog and other government think tanks are involved in preparing details of this scheme. At present, maximum charges of 1354 types of treatments have also been fixed by the government. There are some examples of this, which show that these charges are less than the ones charged by hospitals generally and even less than the ‘CGSS’ tariffs for treatment of present and retired government employees. For example, knee replacement will cost only rupees 80 thousand, which costs rupees 3.5 lakh in good hospitals at present. The total cost of stunting in the cardiovascular arteries which is 1.5 to 2 lacs at present will come down to 50 to 65 thousand rupees now. Similarly, the maximum limit has been fixed for the cost of different other treatments. If the claim is more than 120 percent of the premium amount, then the state governments will bear 50 percent of the amount and if it less than 120 percent of the premium, then they will not have to pay any additional amount.
In this regard, either claims for treatment would be paid through insurance companies or through Trusts constituted at the state level. In the Trusts, the Central Government will contribute an amount equivalent to premium amount and the claims will be paid from that trust. In this regard, the question arises which insurance companies would be entrusted this task and what will be the premiums for the sums assured? It is worth mentioning that recently the per family premium amount as suggested by the NITI Aayog at rupees 1082, has been rejected by the insurance companies and this premium is being calculated again. Government’s expenditure on the scheme will depend upon the agreed premium of insurance companies. As far as insurance companies are concerned, there are two types of insurance companies in the country, one public sector, Indian and second private sector (mainly MNC insurance companies). If private-MNCs companies are given this work, then there could be two kinds of threats, one low ratio of claim settlement in which case many needy people will be deprived of the benefit of this scheme. Secondly, these companies don’t have appetite for risk taking and as per their business model, they go for reinsurance, to reduce their risk. Due to lack of any reinsurance company in India, reinsurance premium would flow out of the country. Therefore, naturally it would be appropriate for the government to entrust the work to only Indian companies. Many advisers, including the NITI Aayog, advocate insurance from private companies. Their argument is that public sector insurance companies charge more premium, which can lead to increased cost of this scheme. But the big question is that if we entrust this task to private companies, then people will not be able to get the full benefit of this scheme, and nation would lose precious foreign exchange in the name of reinsurance by private companies.
(The author is Associate Professor, PGDAV College, University of Delhi)
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