Drishti Juneja
Healthcare is one of the most fundamental and crucial industries of the economy of any country, including ours. However, it is confronted by a huge problem. Its markets don’t offer an equitable and efficient distribution of resources. This inefficiency is a critical concern for public policy. The healthcare sector represents an example of “market failure” where allocation of resources is inefficient.
The National Health Policy (NHP) 2017 was put on the national agenda to address fundamental contextual shifts. The goal as per NHP 2017 is “the attainment of the highest possible level of health and well-being for all at all ages” and “universal access to good quality healthcare services without anyone having to face financial hardship as a consequence”.
Why is there an urgent need of Policy Intervention?
The mandate for change arose from specific drivers. While maternal and child mortality rates have declined, there is a growing burden on account of Non-Communicable Diseases (NCDs) along with the persistence of certain infectious diseases. Furthermore, the growing incidence of catastrophic expenditure due to health care costs is estimated to be one of the major contributors to poverty.
55 to 63 million Indians were pushed below the poverty line or deeper into poverty in a single year due to medical expenses. Before 2018, studies showed that 17-20% of Indian households were incurring Catastrophic Health Expenditure. Out Of Pocket Expenditure (OOPE) as a percentage of Total Health Expenditure was approximately 62.6% in 2014-15. This dependency on direct payments made the Indian system one of the most financially regressive in the world.
Government interventions are needed because of the issue of market failure in healthcare, primary reasons for which are information asymmetry, externalities, monopoly, inefficient resource allocation and so on. For instance, in healthcare, patients lack specialized knowledge to diagnose their condition or evaluate the quality of treatment even after receiving it, thus creating a ‘Principal-agent problem’.
Driving Towards Inclusive Health
To address these challenges, the government has intervened through different initiatives.
Ayushman Bharat
Ayushman Bharat is the flagship scheme to implement National Health Policy 2017. It aims to achieve Universal Health Coverage (UHC) and meet sustainable development goals (SDGs). It comprises of two interrelated components:
(a)Health and Wellness Centres (HWCs): These centres target Comprehensive Primary Health Care (CPHC) bringing healthcare closer to the people (includes maternal & child health, NCD screening, mental health, palliative care, dental, ENT and geriatric care)
(b) Pradhan Mantri Jan Arogya Yojana (PM-JAY): It is the largest health assurance scheme in the world which aims at providing a health cover of Rs. 5 lakhs per family per year for secondary and tertiary care hospitalization to over 12 crores poor and vulnerable families. It ensures cashless treatment at empanelled public & private hospitals therefore reducing the burden of out-of-pocket expenditure (OOPE). Over 9 crore hospital admissions have been authorized under the scheme with treatment worth 1.40 lakh crore.
To understand ground-level realities in public healthcare delivery, a field interaction with an ASHA worker reveals how ASHAs function as critical intermediaries who correct behavioral failures and generate positive externalities.
Their major role is to identify the eligible families, provide them information and accompany the beneficiaries to the Common Service Centre. The interaction provides strong evidence that ASHA workers help in reducing information asymmetry, generating positive externalities (vaccination, sanitation), preventing negative externalities (TB spread) and spreading awareness among masses.
PM Janaushadhi Scheme
This scheme aims to provide quality generic medicines at 50% to 90% less prices than their branded equivalents, reducing the medication costs. It thereby focuses on another key aspect of the policy—”Affordable Healthcare”.
A field-based price comparison was conducted to understand the price difference between branded and generic medicines. The analysis shows a drastic price difference. For example, the branded anti-cancer drug *Armotraz* (Anastrazole 1mg) costs Rs. 760/strip, while the generic equivalent costs Rs. 78—making it 90% cheaper. This suggests that branding, marketing expenditure and patents contribute to inflated medicine prices in the private market.
Mission Indradhanush
It addresses goals related to preventive healthcare, child mortality reduction and universal healthcare. It is launched to increase full immunization coverage (has strong positive externalities) among children (0-2 years) and pregnant women via campaigning and awareness.
Evaluation: Where do we stand?
The target of National Health Policy, 2017 was to increase life expectancy at birth to 70 years by 2025. India has achieved 70.7 years in 2019 and is projected to reach 72.48 by 2025. As per the official numbers, 1, 78,154 Ayushman Arogya Mandirs are operationalized as of 2023. Significant progress can be seen because of the Ayushman Bharat Programme which integrated Ayushman Arogya Mandir. Resource allocation towards maternal and child health services, including prenatal care, skilled birth attendance, and neonatal care programs have resulted in achieving our targets of decreasing maternal mortality rate, total fertility rate and infant mortality rate.
Despite improvement in healthcare, not everything appears to be on a brighter side. CAG report on Ayushman Bharat (2023) found certain irregularities like invalid mobile numbers used, more than 4000 registrations were linked to only 7 Aadhaar numbers. Concerns over the quality of infrastructure and supply chain mis-management often acts as a major hindrance in providing timely treatment. Other issues include limited empanelment of private hospitals and delayed reimbursements. For the Pradhan Mantri Janaushadi Scheme, quality perception issues and limited geographical spread (most stores concentrated in urban areas) must be addressed. As per Mission Indradhanush, issues like high dropouts, human resource shortage and Vaccine hesitancy & misinformation must be dealt with.
Way Forward
The government must proactively increase budget allocations from the current spending of 1.97% to the targeted range of 2.5% of GDP. Substantial investment is needed in developing a regular, well-trained, and motivated public healthcare workforce.
Private sector participation requires effective reform of professional councils and strict regulation of clinical establishments in order to ensure quality standards are met, prices are transparent, and patients are safe. A need for robust institutional governance, with minimum standards and coordinated roles among new and existing health institutions for greater accountability and transparency. Community monitoring and involvement of local bodies should be enhanced.
Therefore, to ensure inclusive and equitable healthcare, a comprehensive approach that combines government provision, regulatory reforms, and complementary non-market interventions is necessary.
About the Author
This article was written by Drishti Juneja, who is from Delhi. She has completed her Bachelor’s degree in Political Science from Sri Venkateswara College, University of Delhi, and is currently pursuing her postgraduate studies in Public Policy and Sustainable Development at TERI School of Advanced Studies (TERI-SAS).
Acknowledgement: This article was posted by Vatsala Sinha, Research Intern at IMPRI.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
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