Defining a new pathway for enhanced healthcare - Hindustan Times

Defining a new pathway for enhanced healthcare

ByHindustan Times
Mar 19, 2022 06:50 PM IST

The article has been authored by Nachiket Mor, visiting scientist, The Banyan Academy of Leadership in Mental Health.

The challenges faced in the past by the Indian healthcare system pale in 

Defining a new pathway for enhanced healthcare. PREMIUM
Defining a new pathway for enhanced healthcare.

comparison with those brought on by the pandemic. That India consistently

 delivers solutions during crises, has long been well-proven.

However, when it comes to establishing a resilient, future-ready health

care regime, the current system reveals several lacunae.


The foundation of a strong and efficient healthcare system rests on the

quality of health outcomes, financial protection offered and

responsiveness to consumers, across the social strata. Unfortunately,

according to the most recent National Health Accounts Estimates for

India, while the total health expenditure in 2017-18 was 3.3% of Gross

Domestic Product (GDP), only 41% of this (or 1.35% of GDP) was met

by the government, with the rest coming from other sources. This was

the key factor behind the large quantum of out-of-pocket expenditure on

health by households, their impoverishment on account of these

expenditures, and the great extent of unmet need for healthcare. There

was also a high degree of variation in the per-person amounts being

spent by each state government on health, from a low of 556 by

Bihar, to a high of 9,450 by Arunachal Pradesh leading to a high

degree of inequality of access to this essential service across the country.


Globally it can be seen that government expenditures on health need to

be more than 70% to 75% of total health expenditures to deliver truly

high-quality healthcare services. Unfortunately, it ranges between 30%

to 50% in most Indian states with the states allocating only about 5% of

their annual budgets for this sector against a number of more than 15%

in a country like Thailand. A review of the November 2021 State of

State Finances report of the Parliamentary Research Service indicates

that this is because the government continues to prioritise investment

into sectors such as agriculture, roads, ports, and financial services,

where the private sector is perfectly capable of making these

investments or India is already a global leader (for example in road

density per square kilometre) instead of focusing on sectors such as

healthcare where, driven by market failures, there is a real need. With

this distorted investment pattern state governments risk impairing the

long-term growth potential of their economies both by distorting well-

functioning markets and neglecting the development of their human



Having said that, the government’s efforts to address the growing health

disparity in the country cannot be overlooked. For example, while the

Ayushman Bharat scheme which aims to improve access to affordable

and quality healthcare, at under 0.10% of GDP (or 3% of total health

expenditures), is currently far too underfunded to have any direct impact

even on its target population, its flagship National Digital Health

Mission has the potential to reform the entire architecture of the Indian

health system both in the public and private sectors. Even during the

ongoing pandemic while there were several missed opportunities to offer

good healthcare to the people who needed it, resulting in a very large

number of needless deaths, once it overcame the initial delays in getting

started, the government has created a global record in ensuring that

vaccinations proceeded at a fast pace. Over 60% of the very large

eligible population now stands fully vaccinated.


Our successes in vaccinations notwithstanding the pandemic has

highlighted the need to address the gaps in healthcare systems, not only

to ensure our resilience against any future outbreaks but also to deliver

consistently high standards of healthcare to the people, wherever they

are – in urban areas or remote villages. But before this can happen there

will need to be a substantial shift in several of our mental models,

starting with the sharp reduction of investments in well-functioning

markets and a focus on those sectors, such as health care, where is there

is strong evidence of serious market failures.


State governments will also need to shift their focus from only managing

the public sector to strongly governing the entire health system so that it

delivers the maximum benefit to the people in their respective states.

They would need to use the instruments of regulation and

incentivisation, as well as complement the actions of the existing

providers to ensure that there is full and equitable access to health care

services across their entire state. For the public sector specifically, there

is also a real concern that it may not be performing as efficiently and in

as responsive a way as it could do, even with the limited resources at its

disposal. It is also possible that for this reason in several states such as

Kerala, Himachal Pradesh, Goa, and the those in the Northeastern

Region, despite some very high government expenditures on health care,

universal health care remains a distant dream. Most countries with high

quality health systems have discovered that merely exhorting and

providing training to their staff will not energize the public sector.

Instead, there will have to a complete shift in the way health departments

are paid – from an automatic annual budget basis to one that is directly

linked to outputs and outcomes. Countries such as Thailand, Turkey, and

Vietnam have successfully implemented these payment approaches.


It is also unfortunate that while government funding has remained

between 30 to 50% of total health expenditures, even the share of the

commercial insurance market has remained close to 7% for many years.

Additionally, its current indemnity-insurance approach does not provide

any assurance of availability of health care or of good health outcomes

but risks setting off a serious inflationary spiral as it has done in the US.

To address these issues in a comprehensive manner several changes will

be needed. As has happened in many countries around the world,

insurers and providers will need to be permitted to either merge or to

enter into mutually exclusive partnerships, allowing them to offer

integrated healthcare plans to their members. In the meanwhile, the

government, instead of launching underfunded tax-financed purchasing

schemes, will need to offer government-designed and operated

contributory health care plans through the national and state health

authorities in order to compensate for both its own unwillingness to fund

health care adequately, and the lack of interest amongst commercial

insurance companies to expand access. It will also need to permit the

insurance regulator to sharply lower the minimum capital requirements

for new insurance companies which, currently, stands at Rs100 crore, a

number that is, shockingly, six times higher than in the European Union,

and is acting as a significant entry barrier.


Finally, even as the government begins work on the reform agenda, the

private sector, in its own commercial interests, would need to make an

effort to both expand access and to move competition, even in the

currently dominant out-of-pocket environment, away from a focus on

volumes to one that is based on value. Healthcare providers, both large

and small, would need also to start to see primary care not just as a

skeletal hospital outreach effort with poorly trained and equipped

outreach workers but, as has happened in many parts of the world,

including remote rural Alaska, Costa Rica, and Brazil, a full-service

offering which is able to competently resolve-not-refer most of the

patients that it encounters. They would also need to fully unlock the

power of complementary channels such as pharmacies and schools to

access and serve their patients just as countries such as South Africa,

Indonesia, Peru, and Portugal have done.

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