Falling short on most counts

Insurance-based schemes like Ayushman Bharat are no substitute for public provisioning of health Prime Minister Narendra Modi’s signature Ayushman Bharat programme, rolled out in September, has been touted by most in the mainstream media as nothing short of ‘revolutionary’, with some even calling it the ‘biggest health care programme in the world’. Is there truth in this claim? How does ‘Modicare’ square with, say Obamacare, ostensibly the inspiration behind the scheme? To put the question in a broader perspective, is insurance better than universal public health care? Let’s compare ‘Modicare’ with Obamacare. As against a coverage of roughly two crore adults (aged 18–64) under the latter, the former proposes to cover 10 crore families. So, from the look of it, Modicare indeed is a grand scheme. Comparison with Obamacare But, as they say, the proof of the pudding is in the eating. For Obamacare, the U.S. budgetary provision through an excise tax was $16.3 billion in the fiscal year 2015 (Rs. 97,800 crore if we convert it at a conservative exchange rate of Rs. 60 to one dollar). Accounting for the difference in medical costs between the two countries — in the U.S., it costs 200 times more — Obamacare’s budget is Rs. 489 crore. The grandness in Modicare is due to its scale as it aims to cover nearly 25 times as many beneficiaries. This means an expenditure of approximately Rs. 12,225 crore, more than six times the current allocation of Rs. 2,000 crore made in the current budget! And this is a conservative estimate because we have (a) taken an upper limit of the difference in medical costs; and (b) assumed the likelihood of illness of poor in both the countries to be the same. So, even with this ballpark estimate, Modicare is not even close to Obamacare. Moving beyond a hypothetical international comparison, if we look more concretely at Rashtriya Swastha Bima Yojana (RSBY), an existing domestic medical insurance scheme, the actual expenditure for Financial Year 2017-18 was only Rs. 470.52 crores, as opposed to the budgeted Rs. 1,000 crore. It covered around 3.63 crore families up to a maximum expenditure of Rs. 30,000 in health-care costs. The corresponding targets for Modicare are 10 crore families and a maximum coverage of Rs. 5 lakh. Since the coverage rises by about three times (10 crore/3.63 crore), and assuming that premium amount rises by half to account for the increase in the amount covered, Modicare would require an allocation of more than Rs. 26,000 crore, 13 times as high as the current allocation. The usual insurance logic tells us that an increase of the coverage limit doesn’t obviously lead to a proportionate increase in the insurance premium. So, we make a safe assumption that the premium increases by only half as much. Let’s now turn to a more fundamental question: is an insurance-based health-care system better than public provisioning of health? A central argument in favour of insurance-based system is that it is more efficient in terms of delivery and coverage with less financial burden on the government. Let us look at the implications of this. First, it is a well-established fact that out-of-pocket medical expenditure rises with a fall in expenditure on public provisioning. In India, where just 1% of GDP is allocated for public health, 65% of the health expenditure is out-of-pocket. In Sri Lanka, where the spending slightly higher at 1.59% of GDP, the expenditure is 38%. In Thailand, where 2.89% of the GDP is marked for health care, only 12% of health spending is out-of-pocket. Will the insurance scheme change the picture for India, considering that it will entail a further withdrawal of public provisioning in health? The experience of RSBY shows evidence to the contrary — there has been an increase in hospitalisation in private hospitals and, as a result, the expenditure not covered under the scheme has risen. Moreover, most insurance schemes do not cover out-patient visit costs, which are significantly higher for chronic illnesses. If there is public provisioning of such services, the burden of spending would not have fallen on the patients.

Source :  https://www.thehindu.com/todays-paper/tp-opinion/falling-short-on-most-counts/article25232108.ece

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