Why PMJAY not a model for universal insurance
The Financial Express
NITI Aayog believes believes the health system for New India will rest on reforms in two key areas—healthcare financing (64% of the healthcare spending by households in the country is out-of-pocket), and healthcare delivery (over 98% of the healthcare facilities in India employ 10 or fewer persons, dragging down the efficiency of delivery). NITI’s suggested roadmap includes shifting healthcare financing to insurance, and reducing fragmentation of both riskpools for better insurance coverage and health service provision by incentivising much-needed provider consolidation.
Government spending on health in India is just 1.13% of the GDP, compared to the overall healthcare spending of 4% of the GDP. It lags comparable economies on quite a few metrics of health system performance—its per capita health spending was less than a third of China’s, less than half of Sri Lanka’s, and lagged even Egypt and the Philippines. Its burden of disease, as measured by disability adjusted life years (DALY) per 100,000 population, stood at 34,000—China’s was 26,300, and Sri Lanka’s 24,000. The path forward, as the NITI report rightly notes, must focus on delivering on the unfinished public health agenda. India is in the midst of an epidemiological transition in which the morbidity burden is shifting away from infectious diseases, and towards non-communicable diseases (NCDs); hence, India must simultaneously strategise to deal with infectious and preventable diseases, and NCDs. Given this shift, medical care alone may not prove a sustainable strategy; a large part of the battle will be prevention—nutritional interventions, checking air and water pollution, etc, therefore, demand as much focus as sanitation and vaccination. As for guiding healthcare financing away from OOP to insurance, the high OOP expenditure itself can be leveraged—if the nature of financing by households is guided away from “point of service” (payments made directly to healthcare facilities) to risk pooling (insurance), it could create large pools of financing that would reduce economic barriers to healthcare (high individual costs) as well as reduce the poverty-push of the financial costs of illness. While it doesn’t explicitly pitch for a similar scheme for the non-poor or the middle-class, the NITI report says that Pradhan Mantri Jan Aarogya Yojana (PM-JAY) could be implemented with an eye on its potential to influence overall healthcare transformation in India beyond its current explicit mandate. Read with what the report says of the government’s role—“If central governments play an equalization role, it is very difficult to do so in the absence of a standard benefits package, which would set the minimum level of services that a country wants all members of society to have, as well as can afford”—’mandatory health insurance for all’ does seem to be the recommendation. While it may seem desirable, any expanded future health insurance coverage the government may plan must carefully study the on-ground shortcomings—from fraud to under-delivery—of the PM-JAY scheme.
Other proposals the NITI report makes include promoting the resolution of governance challenges in publicly-owned commercial insurance, and the Employees’ State Insurance (ESI). ESI’s record in providing better access to healthcare for beneficiaries is quite poor, and it poses a hurdle to formalisation of employment given how it erodes beneficiaries’ in-hand salaries. As has been argued by this paper before, given that there is little possibility of any effective reform, the best thing would be to perhaps junk it.