Exposing the mirage of ‘Modicare’, foregrounding need for

Public health provisioning and Public policy innovations as alternative

-by Jan Swasthya Abhiyan on Implications of Union Budget 2018-19

Tall claims, but short of funds

The Union Budget 2018-19 makes tall claims, with no clear roadmap for the health sector which is sensitive to the needs of the poor and the vulnerable population of India.

The allocations for Ministry of Health and Family Welfare (MoHFW) (including for AYUSH) have increased from Rs. 50,281 crore in 2017-18 (BE) to Rs. 56,226 crore in 2018-19 (BE). However, from 2017-18 (RE) the increase is much lower, a mere Rs. 1374 crore, or just about 2.5 percent. This is a decline in real terms if we account for inflation, and Union Budget allocations for the health sector have stagnated at 0.3 percent of Gross Domestic Product (GDP). Considering National Health Policy (NHP) 2017 target of 2.5 percent of GDP as health expenditure by the Government (both Centre and States) by 2025, with central allocations stagnating at the current 0.3 percent of GDP, it would not be possible to achieve the target by 2025.

The ‘Modicare’ mirage

The announcement of National Health Protection Scheme (NHPS) touted as “world’s largest government funded healthcare programme” (termed ‘Modicare’ by sections of media) with 50 crore prospective beneficiaries is accompanied by allocation of just Rs. 2000 crores. Some key points related to this scheme:

  • This is not a new scheme, in fact it was announced in the 2016 budget- the only difference being that the sum assured was 1 lakh which has been raised to Rs 5 lakhs cover as proposed now. In last two years it could not be operationalized- and last year even 50% of its funds could not be spent.
  • The reason for failure of this scheme until now is that many large states already have established health insurance schemes in place and for over 95% of requirements the existing ceiling of Rs 1.5 lakhs is quite adequate. So increase in coverage under the new scheme offers hardly any advantages to the people being covered. The reason for increasing coverage is to satisfy a totally different set of actors – see next point.
  • Raising of the sum assured to 5 lakhs was not a key barrier that existing schemes were facing. In most circumstances Rs 1.5 lakh was quite adequate. If there are some conditions which need more, disease specific exceptions could be made. These rates for reimbursement were however still too low for participation of corporate hospital chains. The increase to Rs 5 lakhs has been done mainly to address this demand of the corporate sector. The other key stakeholder seeking a slice of this pie is commercial insurance companies.
  • The new scheme is old wine in a new bottle. Over half the target beneficiaries proposed to be covered under the NHPS already stand covered today by existing government supported schemes. What would indeed have been a step forward is if it covered out-patient treatment as well – but that is lacking.
  • This scheme does not address the problems associated with existing RSBYof which it is an expanded version. RSBY has not been successful in reducing the healthcare costs for the poor. Many States have in fact opted out of RSBY in favour of state-run schemes, and some States are trying out the trust-based model. A recent comprehensive review on various studies related to RSBY (Prinja, 2017) revealed that in majority of studies (8 out of 14) there was increase in Out of Pocket Expenditure related to RSBY, while only 2 of 14 studies showed reduction in expenditure. NSS data on RSBY shows that enrolment is quite low – only 57% of eligible are enrolled. And less than 12% of the eligible persons got their hospitalisation covered through RSBY.
  • “This will be the world’s largest government funded health care programme.” This line has been repeated by the Prime Minister himself. Even in India, is not the National Health Mission with a 30,000 crore budget covering entire 130 crore population, a much larger scheme? Why is health care being equated with health insurance and not public health services?


Key public programmes underfunded

The allocations for maternal and child health in the budget are covered under the Reproductive and Child Health (RCH) component NHM. In 2018-19 (BE) the budget for RCH has declined by 33 percent from 2017-18 (RE). Along with this we must note that the allocation for Pradhan Mantri Matru Vandana Yojana (PMMVY), which was earlier called the Maternity Benefit Scheme, has also decreased by eight percent over 2017-18 (RE). Thus, overall there is a reduction in allocations for schemes/programmes devoted to maternal and child health.

The announcement of allocation of Rs. 1200 crore for the Health and Wellness Centres (HWCs) is a step towards strengthening primary healthcare. However, an announcement for establishment of HWCs was made in the last year’s Union Budget also, but till date there have been no examples of these centres getting established anywhere in the country while the government has invited contribution from the private sector in the establishment of HWCs, not positive for India where out of pocket (OOP) expenses are already high. Current allocations will pay for only about 10,000 HWCs- less than 7% of required

Although there has been an announcement for establishment of 24 new Medical Colleges by upgrading District Hospitals, the allocation for this particular sub-head under NHM has decreased from Rs. 3300 crore in 2017-18 (RE) to Rs. 2888 crore in 2018-19 (BE), a decline of about 12 percent.

Gradually the public health system is being weakened by drying up resources towards government schemes such as the National Health Mission. There is a visible failure in addressing the critical issues of health system strengthening such as access to generic medicines and diagnostics, freeze on recruitments in health sector, and contractualisation of health workforce. The Union Budget 2018-19, thus, continues to neglect the public health system and instead increasingly focuses on enhancing the role of private sector in healthcare. Moving towards an insurance-based model of healthcare at the expense of strengthening public provisioning would lead to disastrous results for a country like India where a large section of population who is poor and vulnerable depends on public provisioning of healthcare.


Jan Swasthya Abhiyan urges the government to follow recommendations for increasing the budget to at least 2.5% of GDP as envisaged in the National Health Policy, accompanied by strengthening the public provisioning of healthcare to address needs of the common people, and not the private sector whose exploitative practices are widely known and recently stand further exposed. A range of public policy innovations such as public systems to ensure adequate supply of free medicines, upgrading of PHCs and CHCs, community accountability of public health services, strengthened primary health care in rural and urban areas linked with District health systems, and establishment of Right to Health Care now need to come onto the agenda, if we are to ensure Health and Health care for the entire people of this country.