Government to assure, not insure, health

NAC wants Rashtriya Swasthya Bima Yojna to be absorbed into new policy for universal health coverage

The National Advisory Council (NAC), which sets the policy agenda for the Congress party led United Progressive Alliance (UPA) government, wants the Rashtriya Swasthya Bima Yojna (RSBY) insurance scheme to be absorbed into the new policy for universal health coverage (UHC), taking the latter closer to realization.

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This is part of the government’s bid to move away from insuring citizens’ health to assuring it by investing in  preventive care, said a health ministry official. The move comes as the Planning Commission has been pushing  for the expansion of RSBY despite the health ministry’s opposition.

Universal health coverage is set to be pitched as one of the UPA government’s key welfare initiatives in the  manner of the Mahatma Gandhi National Rural Employment Scheme, credited with helping the UPA return to  power in 2009.

According to the terms of reference for the newly formed working group on universal health coverage, the  council is going to “examine the available evidence on the functioning of RSBY and outline an approach to  merging of RSBY with UHC.” Mint has reviewed a copy of the document.

Over the next four months, the working group will work closely with the health ministry and the Planning  Commission to iron out the details and recommend an approach for piloting the universal health coverage policy at district level. The issues that still remain to be ironed out, after several rounds of consultations, include the role of insurance, differential user fees and managed healthcare network approach.

“The working group has been constituted and terms of reference have been finalized,” said another senior official close to the development. “There is a procedure to be followed and the consultations should get completed in four months.”

Experts are concerned that the expansion of RSBY, a national health insurance scheme for the poor run by the labour ministry, would escalate healthcare costs without improving quality of service.

“The insurance-based model is not appropriate for India as there is no incentive for disease prevention. Instead it encourages over treatment and, as seen in America, medical costs spiral when someone else pays for medical treatment,” said Abhay Bang, member of the high-level expert group or HLEG on universal health coverage. “We suggested health assurance when focus is on disease prevention, promoting good health and providing health coverage for the sick.”

However, funding the universal health coverage policy remains the biggest challenge. With the government going back on its pledge to allocate 2.5% of gross domestic product (GDP) to health, it’s up to the working group to get state governments to double their health expenditure. At least three senior government officials have confirmed that the final plan allocates only 1.58% of GDP.

“Even at 2%, India’s spending will be amongst the lowest in the world,” said Amit Sengupta, public health activist belonging to the Jan Swasthya Abhiyan (public health campaign). “The nation has to decide whether investment in health is a priority or not. Countries poorer than India spend more money on health.”

Where will the cash-strapped government find the Rs.1.8 lakh crore it needs to improve access to health for Indian citizens? Amid economic uncertainty, the government is banking on general taxation to carve out a centrally sponsored scheme to fund the free-medicine policy.

According to a Planning Commission report on UHC, as of now only 22% of the country’s 1. 2 billion have access to public healthcare. And nearly 40% of those hospitalized borrow to pay hospital expenses. If not urgently addressed, this number is likely to reach 52% by 2017, according to the National Sample Survey Organization(NSSO).

At 1.06% of GDP, the government’s current financial commitment to the health sector is among the lowest in the world. Further, given the current economic scenario, the apex planning body has cut back the allocation to the healthcare sector from the earlier figure of 2.5% (promised in the approach paper) to 1.58% of GDP.

Experts maintain that India is making a mistake and should learn from overseas models, especially Mexico, which continued to invest in health during economic crises. “The economic slowdown should not be an alibi for cutting back on health spending or even to draw back from the originally projected 2.5% of GDP,” said Srinath Reddy, chairperson of the HLEG group.

Deputy planning commission chairperson Montek Singh Ahluwalia is however optimistic that universal health coverage is achievable.

“We will provide the money through a centrally sponsored scheme for free drugs,” he said. “The bigger trouble is running the system (of drug procurement). Government hospitals are meant to be giving out free drugs to begin with. As of now, they just aren’t doing it. There is a lot of resistance to the idea of purchasing generic drugs (without branded packaging). But we are absolutely certain free medicine is central to achieving universal access to health.” He added that India will be able to raise healthcare funding to the tune of 2% of GDP by 2016.

With limited financial resources, the government is looking at a simple solution— providing free medicines.

In the 12th five-year plan (2012-17), the government will promote the right to health by providing 348 essential life-saving drugs free of cost along with a basic safety net of health services known as the essential health package (EHP) to every Indian citizen.

As per the plan document, the government has adopted a two-pronged approach to improve access to medicines. First, by dispensing free medicines from public hospitals and second by opening Jan Aushadhi or people’s drug stores, where low-cost, generic versions of branded drugs will be easily available.

The Indian government has, on paper at least, taken the first step to reduce the country’s reliance on neighbourhood private chemists by opening fair-price shops known as Jan Aushadhi stores for selling generic medicines.

Over the next five years, the government aims to provide generic medicines at 160,000 sub-centres, 23,000 primary health centres, 5,000 community health centres and 640 district hospitals.

“A lot can be accomplished even with limited resources. If the government decides to strengthen government hospitals, give NLEM (National List of Essential Medicines) drugs through them and put in place a robust regulatory mechanism, these targets are achievable,” said Srinath Reddy, chair of the expert group on universal health coverage. “If the government focuses on creating healthcare delivery pathways for the first three years of the plan period, depending on the economic situation, the plan can be scaled up and public health spending can be further increased,”

Free medicines

At the heart of re-engineering the health sector in India and distributing free drugs is the much-celebrated Tamil Nadu Medical Services Corp. Ltd (TNMSC) model of centralized drug procurement.

TNMSC’s computerized management system has been recommended by the Planning Commission to other states as a model for the supply of free drugs via government-run hospitals.

The key to TNMSC’s success is its tendering process, followed by a bank-style passbook system and 25 warehouses across the state to store the drugs. The tender for about 250 drugs is floated at the beginning of each year. Once the supplier is decided on the basis of technical and price bids, the quality of drug supplies is tested randomly.

“The transparency of the tender process was possible because the powers of finalizing the tender were delegated to a strong bureaucratic board —no tender goes to the political system or single individual for finalization,” a Tamil Nadu health department official said on condition of anonymity. “Liberal financial provisions for drugs when compared to other states has helped in prompt settlement of bills and maintaining nearly three months stock in the warehouses,” he said.

“The introduction of passbook system was conceptual innovation which has stood the test of time and helped to avoid wastage,” he added. “The setting up of warehouses and their computerization nearly 15 years ago was quite radical and has helped in the overall implementation of the policy. I think other states can succeed only if these conditions are met.”

The streamlining of drug procurement through the TNMSC model has reduced costs by about 30% in states such as Rajasthan and Andhra Pradesh where the model has been replicated.

Drug procurement in most states is currently scattered, with each hospital sourcing its own drugs. The Planning Commission’s health chapter states that providing centrally procured, free drugs “is an area which provides the speediest scope for improved service delivery in return for allocation of sufficient resources. States would be encouraged to plan and partially fund universal access to essential drugs and diagnostic services in all government hospitals. Government may also contract-in private chemists for which drug supply would be linked to centralized procurement at state level to ensure uniform drug quality and cost minimization by removing intermediaries.”

The Central government will sign memoranda of understanding (MoUs) with state governments to encourage them to adopt the TNMSC model.

Meanwhile, the plan document will be finalized by 15 September. The document will go to the National Development Council after a final nod from NAC chairperson Sonia Gandhi.

Experts say that for India, universal health coverage has become a question of when instead of remaining an if.

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