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India’s Healthcare Plans: Will They Take Off?

Thought Leadership // 23/08/2018
~3 min read

India’s Prime Minister Narendra Modi made two key announcements in his Independence Day speech, bolstering support for re-election next year.

He pledged to launch India’s first manned space mission by 2020 to make India the fourth country to do so, elevating the Indian’s pride in their country’s status.

He continued with an announcement to roll out a health insurance system from September, helping protect poor families from the cost of illness. Healthcare costs have wiped out meagre savings for many low-paid workers and plunged them into huge debt. This promise would appeal to Indians that have felt shame in the plight of their poor.

The contrast between these two announcements draws attention to the identity crisis of a country that is both one of the richest and yet one of the poorest in the world.

Details of the healthcare plan are still being finalised but seem to amount to a government-funded insurance scheme that will pay up to Rs 500,000 ($7,100) for up to 100m poverty-stricken families. It will enable the poor to access public and some private hospitals to get treatment and drugs. This is a great step towards India’s development as a nation.

In theory, under the Rashtriya Swasthya Bima Yojna Scheme (RSBY) introduced in 2007, treatment for people below the poverty line should, in any case, be free. Drugs, however, may have to be paid for. In practice, many of those supposedly covered have no idea what to do if they need medical help. They do not know where to go or how to claim. At a time when the stress of illness and the consequential loss of already meagre earnings is taking its toll, it is difficult for poor, often uneducated citizens, to familiarise themselves with cover and claims processes.

Declaring the government is planning to help the poor access to health care is a great statement of intent. The practicalities, however, as the RSBY demonstrated, will be fraught with difficulty.

There are three main problems faced:

  • The government’s plans seem to be setting a fixed price for medical procedures. Controlling medical costs is a science of its own and the actual cost of treatment is likely to be much higher and dependant on such factors as age, pre-existing conditions and location. Some hospitals have already said the prices indicated are inadequate. If government scheme prices are not adjusted at least by location, then even those eligible who live in larger towns would likely have difficulties in finding hospitals or clinics that would agree to treat them under the government rates.
  • Examples from around the world demonstrate the potential for both financial fraud (in the worst instances) and exaggeration (inadvertently or otherwise) is likely to be high when offering low-priced services to large numbers of people through overstretched and under-funded providers. One would either have to set up costly monitoring systems or rely on patients to monitor treatment and cost. Neither of these options currently seem feasible financially or practically so a ‘third way’ must be found. This is a difficult but not an impossible challenge and one would hope the government would look at lessons learned from other regions, most notably the Middle East.
  • There is the question of access to medical facilities. Many of India’s poorest inhabitants live in rural villages and must travel many hours – possibly on foot – to access any kind of medical facilities. To truly reach the most impoverished, infrastructure improvements are a necessity to ensure reasonable access to at least some primary care, hopefully with sufficient diagnostic capabilities. This is, however, something that India’s technology prowess can help with. For example, in Ghana, remote hospitals can receive vital supplies of drugs, blood and even organs using drones. It should, therefore, be possible for a country as rich and technologically advanced as India to be able to overcome this type of obstacle.

The major theme of these issues is communication. As RSBY demonstrates, it is vital to give people key information such as what is covered, how to access treatment and where local treatment facilities can be found. This information should be available both before and, again, at the point of need. Publicity on where to find the information is also hugely important and must be easily understood.

Prime Minister Modi’s plans are no doubt based on good intentions. Perhaps, however, it would have been better to take a step back and consider some other fundamentals. If the government really wants to make an impact on the poor in the country it may be better spending its money on infrastructure and underpinning this with microinsurance principles of cover and distribution.

Microinsurance has made great advances in getting insurance coverage to large swathes of the poorest communities in several countries. After a faltering start, microinsurance providers have found solutions on information and education, coverage, underwriting and claims and premium collection and claims payment, despite many of their policyholders not having a bank account. Learning how to adapt these solutions to India’s health proposal would be a good way forward.

Finally, a word of warning would be appropriate whenever a government considers undertaking such a laudable scheme to help it’s poorest.

The UK’s National Health Service was formed with the assumption that once people had been treated for their illnesses and babies were born into the new health system, the population would naturally become healthier and have less need for the NHS. We now know that is not true and from the NHS costing around 3.5% of GDP in 1950, the cost rose to around 7.6% in 2010. India should be finding a way to help it’s poorest access health treatment but it would be wise to do so with its eyes open and with expectations properly managed.

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