By- T.Sundararaman


After many consecutive years, when the budget speeches of finance minister had little to say on health and provoked even less discussion on it, one was taken by surprise to find every commentary on the budget highlighting the new health scheme as one of the major takeaways. Many went so far as to say that being a pre-election year- the government had finally decided to invest in health. The Prime Minister came on air to claim this as the largest health assurance scheme ever proposed anywhere in the world. The Finance Minister’s press conference also highlights the new health schemes as one of the two major pro-poor measures of the budget. Even most opposition leaders gave it a cautious welcome, though almost all added that they were unsure whether the necessary funds were allocated.

But what is the reality? A cursory study of the budget leads to considerable disappointment.

Firstly if we compare with last years revised estimates, the increase in budgetary outlay is trivial , and in real terms probably stagnant.  On some key components, especially the National Health Mission there is a decline. The fact that last year the revised estimates for health were significantly higher than initial budgetary allocation, shows that the health department was not only able to spend the resources allocated to it, but needed more to keep essential operations going. Thus in its summary “Expenditure of Major Items”( pg 10 of budget papers) the Budgetary Estimates for 2017-18 is Rs 48,878 crores, the Revised Estimates are for 53,198 crores and the Budgetary Allocation for the current year is Rs 54 667 crores. Thus this year’s allocation is a 11.8% increase over last year’s allocation but only a 2.7% increase over the revised estimates!! In terms of public health expenditure as proportion of GDP, it has declined further.

Since the budget summary conflates administrative expenditure and some new entities of unknown provenance with the outlay on schemes that are meant to reach the population, the Outlay on Major Schemes in pg 16 of the document is a better guide. Four schemes are visible in this summary. The first and most important of these is the National Health Mission(NHM). Last year’s allocation was Rs 27,131 crores which had to be increased to Rs 31,292 crores in the revised estimates. This years budgetary allocation of Rs 30,634 crores is a 11.4% increase over the initial budgetary allocation and is a 2.1 % decline in over last years revised estimates. One of the big ideas of this budgetary speech and of the previous years budgetary speech as well is the concept of health and wellness centers. In this year’s speech the finance minister is even more explicit : “The National Health Policy, 2017 has envisioned Health and Wellness Centres as the foundation of India’s health system. These 1.5 lakh centres will bring health care system closer to the homes of people. These centres will provide comprehensive health care, including for non-communicable diseases and maternal and child health services.  These centres will also provide free essential drugs and diagnostic services. I am committing `1200 crore in this budget for this flagship programme.  I also invite contribution of private sector through CSR and philanthropic institutions in adopting these centres.”

Opening up health and wellness centers would indeed be a big step forward, and much more protective of health and health care than other approaches. This is a concept very similar to the way universal primary health care is provided in nations like United Kingdom, Thailand and Brazil whose universal health care is built around this approach. This has far more to contribute to achieving universal health coverage than any insurance scheme paying for hospitalization services. However a health and wellness center requires even by current government projections about Rs 17 lakhs to operationalize and 1200 crores would pay for about 10,000 of these – which would mean a coverage of about 3 to 5 crore population, which would be less than 7% of the target. One would have needed at least 15,000 crores to implement this, and better costed it would probably require in the region of Rs 30,000 crores. But the real surprise, the brazenness of the jumla, is that even this paltry Rs 1200 crores cannot be located in the budget details- and is possibly a part of the NHM scheme outlay. Since the scheme outlay stagnates, it means some essential expenditure of the previous year, would have to be diverted to pay for this scheme.

This has been a feature of past budgets also when new initiatives are announced ( like the dialysis scheme last year), but its funding has to be found within the NHM outlay, which however does not increase in a commensurate fashion.

The other important scheme that is visible as a major scheme is the AIDS control programme. Here too we see the same pattern. It was under funded last year at Rs 2000 crores, revised to Rs 2163 crores in the revised estimates and now sanction Rs 2100 crores which is less than the revised estimate of Rs 2163 crores. There were grave reports of stock outs of anti- HIV drugs in previous years. Such reductions in public health services, whether it takes the form of under-financing disease control programmes or public health systems strengthening place the nation at risk from different forms of public health emergencies. Insurance programmes will do little to avert or address such a risk, and the impact of such an emergency will be across all segments of the population and could even set back the nation’s economic progress.

The PMSSY (Pradhan Mantri Swasthya Suraksha Yojana), a misleading name, since it pays for building new AIIMS like institutions, also faces a budget cut as compared to last years allocations, though its aspirations have been expanded even further.

But coming to the insurance programme.  In contrast to the full blast projection of the great benefits of the scheme, here are a few quick reality-check facts:

  1. The scheme was in fact announced in the 2016 budget- the only difference being that the sum assured was raised from 30,000 to 1.5 lakh instead of Rs 5 lakhs cover as proposed now. In two years since it could not be operationalized- and last year even 50% of its funds could not be spent. One simple reason for this is that many large states already have much better designed insurance schemes in place and for over 95% of requirements this ceiling is quite adequate. Even now this problem remains.
  2. The finance secretary Mr Hasmukh Adhia agrees in a post budget interview that it would still take 6 more months to finalize the scheme and then perhaps a few more months to contract insurance agencies and providers and therefore in his view it is uncertain whether the scheme would be fully implemented this year. This sum according to him is therefore a token amount. We may add that it is uncertain that it will be implemented before the next elections, though it will no doubt give the ruling party a huge electoral talking point. This promise of 5 lakhs rupees of treatment cost being met by government for each family is a spin that can be quite convincing if most media channels choose to amplify this uncritically.
  3. The financial requirement for this scheme if we go by experience of the premiums paid in the successful state run schemes would be not less than Rs 3000 per household- which would mean an outlay of close to Rs 30,000 crores. The current 2000 crores is less than what state governments are spending on similar schemes for each of their respective states. There is of course the possibility that the central government may give a small top-up to what the states are spending and then include these state schemes- but it is unlikely that these states would agree.
  4. A large number of studies and the National Sample Surveys have now shown that the existing government health insurance schemes which already claim to cover close to 400 million people, are failing to provide financial protection.  Catastrophic health expenditures remain at more or less the same levels, with and without government funded insurance coverage. Even on improving access to hospitalization care the jury is out. .
  5. There are widespread reports of profiteering by private hospitals with increase in irrational and unnecessary care. These are well known world-wide, and referred to as ‘moral hazards’ in medical insurance industry and in academic literature.  But in the Indian context where there is very little regulation of private sector and weak governance, these problems become much more pervasive and intense.
  6. A wide welcome by some of the leading corporate healthcare chain leaders notably Trehan and Devi Shetty should leave us more reflective. The raising of the sum assured from Rs 1.5 lakhs 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 like burns or some complex cancers which need more, disease specific exceptions could be made. These rates or reimbursement were however still too low for participation of elite corporate hospital chains. Currently in most states only one in five private hospitals gets empanelled and the rest are rejected on some technical grounds, usually related to quality. These are part of informal ways of controlling the expenditure and rationing care. Those private hospitals that get empanelled would no doubt have a market advantage over those who do not. Hitherto, the large corporate chains were unwilling to participate because reimbursement rates were too low. The increase to Rs 5 lakhs cover has addressed this complaint of the corporate sector.  If with corporate influence reimbursement rates are now negotiated upwards and quality standards tipped in favor of corporate providers,   the advantages that affordable private care providers had so far would be lost. This would help corporate consolidation of the market.



So to sum it up, the national health protection scheme is just a scheme being re-announced; the funds allocated for it would not be enough to get the scheme going on scale; that this scheme would be overlapping or even interfering with well-established state schemes; and that though it could potentially provide vide financial protection or improved access, recent experience with similar schemes indicate that these benefits are elusive; and there are enough reasons to believe that this scheme would bring a significant increase in profits for private healthcare industry which is perhaps the intention of the scheme, and finally it could help corporate healthcare providers consolidate, at the cost of more affordable smaller providers and enterprises.


But there is one more jumla element in this health budget that is probably the biggest and most dangerous. (the word jumla would probably make it into the next Oxford Dictionary edition). In the budget speech the finance minister states “This will be the world’s largest government funded health care programme.” Since then, this line has been the very emphatically articulated and repeated by the Prime Minister himself and broadcast from all television channels. Repeated often enough it can get accepted as the truth. But let us take a step back. World’s largest government funded healthcare programme? Really? How so? Is not, for example, the National Health Mission with a 30,000 crore budget covering a 120 crore population, a much larger scheme?? Are not even earlier programmes like the reproductive and child health care also very large healthcare programmes reaching more beneficiaries and with much more funds. What is the large public health system if not a government programme for healthcare? (Even within insurance programmes this projection would not be true. China’s comprehensive health insurance programme cover an even larger population (though very ineffectively!!).  And almost all industrialized nations with the sole exception of the United States having comprehensive universal health care schemes or national health insurance programmes with 100% coverage?)


By projecting the ‘sum assured’ of an insurance coverage as if it is the sum allocated under the scheme to each household, and packaging this promise as “Modicare” a powerful electoral strategy is being forged. Would it work? As an electoral jumla at least?  We do not know. Perhaps it might. But the more lasting effect and perhaps the intention of this particular jumla is that it attempts to create a popular discourse where health insurance schemes are perceived as the only healthcare schemes – and attention is taken away from the central task of the government which is to provide equitable and affordable healthcare to all its citizens. The USA is the only country where such an equation is made. Accepting this discourse unquestioningly and decrying only lack of funding for Modicare, and making it an implementation issue could be a trap – since Modicare as it stands now  is more geared to taking care of corporate healthcare industry interests in the name of the poor, than the health needs of the poor.