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14 February, 2018

High on promise

BRP Bhaskar

Finance Minister Arun Jaitley unveiled in this year’s Central budget an ambitious programme which, he claimed, is the world’s biggest health care project. Critics have found it high on promise and low on deliverables.

The programme, labelled the National Health Protection Scheme (NHPS), will cover 100 million poor families —or about 500 million people — with an allocation of Rs 500,000 per family, he said.

Essentially it is a medical insurance scheme of which the premium will be paid by the government. The Centre and the states are to share the cost on 60:40 basis.

According to the UN Development Programe, India has cut poverty by half since 1990 but nearly 300 million people in the country still live in extreme poverty. There is, therefore, a felt need for schemes to help the vulnerable sections of the society. 

Ruling party members dutifully welcomed Jaitley’s announcement in the Lok Sabha with thumping of desks. Many of them were probably unaware that they had cheered him at two previous budget sessions for making similar announcements. 

In the 2016 speech, he said the government would launch a new health protection scheme which would give medical cover of up to Rs 100,000 per family to one-third of the population. Although an allocation of Rs 15 billion was made for the programme, the actual spend was less than Rs 5 billion and the extent of cover per formally was only Rs 30,000.

Last year, Jaitley fixed the outlay for the programme at Rs 7.5 billion. This year it has been raised to Rs 20 billion. The experience of the last two years leaves no room to believe the new scheme will fare any better.

One of the measures proposed in the budget to raise resources for new projects is the levy of a 4% health and education cess in place of the present 3% education cess. This is estimated to yield additional revenue of Rs 110 billion. Yet the budgetary allocation for NHPS is only Rs 20 billion. This raises the question how serious the government is about this grand scheme.

According to Alok Kumar, an adviser to Niti Ayog, the Centre’s policy think tank, the NHPS will cost Rs 100 to 120 billion annually.

Mita Choudhary, an assistant professor of the National Institute of Public Finance and Policy, says the resource requirements will be much higher. In a paper, she points out that even if one assumes a conservative 2% premium on the insured sum, the scheme will cost about Rs 1,000 billion a year. Under the proposed cost sharing formula, the Centre will need to find Rs 600 billion for the scheme.

At present, the combined allocation for the Ministry of Health and Family Welfare and the Ministry of Ayush, which deals with systems other than modern medicine, is only Rs 550 billion.

Other health programmes in the budget have also been drawn up with no sense of realism. An example is the proposal to create 150,000 health and wellness centres. This is also a scheme which was first announced last year. 

The budgetary allocation for this scheme is Rs 12 billion. This works out to Rs 80,000 a year, or less than Rs 7,000 a month, for a centre. What kind of service can the centre provide with such a paltry amount?

Both the minister and Niti Ayog spokesmen dismiss questions about the low allocation of funds, and blandly assert that there is no money constraint.

Apparently all the schemes rolled out in the three budgets have come out of a proposal placed before the Prime Minister in 2016 by a committee of officials, including the Secretaries of the Ministries of Health and Ayush. It envisaged universal health cover, free of cost to 100 million deprived families and on payment basis to the rest of the population.

The committee estimated that the scheme, to be implemented through empanelled private and public health service providers, would cost about Rs 100 billion and suggested that the Centre and the states should bear the expenditure in the 60:40 ratio. 

Critics are of the view that the scheme has been introduced without making adequate financial provisions in the hope that it will yield electoral dividends when Modi goes to the people next year for a fresh mandate.

Studies have shown that the various insurance-based schemes run by the Centre and the state governments have not helped to reduce the out-of-pocket expenses incurred during hospitalisation. Against this background, some critics argue that NHPS will actually be more beneficial to private hospitals than to the poor.

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