Health Care Financing approaches in India have remained lopsided focusing on demand side interventions and purchasing from the private sector for acute illnesses requiring hospitalization. Policy dilemmas are: (a) how healthcare financing mechanisms can address the issue of supply side, (b) what institutional and administrative mechanisms should be instituted to strengthen the private sector engagement and (c) what should be the healthcare financing mechanisms to address primary care challenge.
India has adopted a health care financing (HCF) system that provides financial protection to a small percent of the population. The population groups that benefit from such protection are typically government employees, formal sector employees with regular jobs and adequate incomes (through ESIS), and the population that is the below-poverty threshold (through RSBY and other GHISs). A significant part of the population, particularly in low-income groups, continues to lack access to minimally adequate health services. Health care financing policies in India has tended to widen rather than reducing the gulf between privileged and underprivileged and between rural and urban populations.
As regards to HCF policies, the case of government health insurance implementation and health policy planning in India is of particular interest. It illustrates several dilemmas. One, the policies have created a significant dependence on the unregulated private sector. Indian health care delivery and financing patterns reflect major influences and preference towards private healthcare sector. The interaction and engagement with private sector happen through a decentralized administration from the centre to states level, and that too through a highly fragmented responsibility system. It is possible that the evolution of health care financing mechanisms in India will follow, for better or worse, the general experience of the countries having a high dependence on private sector along with the policy dilemmas imposed by aspects of Indian geography, socio-economic situation, and the political economy. Some of the predictable implications are the serious moral hazard from both provider side and consumer side. So the HCF dilemma we face is what should be the structure of institutional mechanism and administrative processes that should be instituted to strengthen the private sector engagement.
India adopts a sort of free-market system in health care. We have minimum regulations in health care that have promoted the concept of medical specialization rather than creating a network of primary care physicians. Primary care has taken the back seat. Given this, there does not exist appropriate mechanisms for ensuring early detection of health risks. We allow health risks to aggravate and then it fills the demand for specialists. There are no appropriate referrals because of the kind of incentives we have developed in the health sector. Providers through medical associations assume a dominant position. The professional barriers have been huge by not allowing alternative forms of health care provision.
The health care financing policies focus on developing demand side by promoting insurance and purchasing from the private sector. The approach has neglected policies to improve the supply side of health. The most parameters of health infrastructure such as doctor-population ratio, hospital-beds to population ratio, etc. remain quite unfavorable. What should be the appropriate policies that help in improving the supply of medical infrastructure, promote the development of medical resources in the right areas, change health care delivery methods? Inequitable distribution of services hampers achieving the health goal. Heavy dependence on the private sector for health care may also lead to weak public control if the process of engagement is not steered carefully.
With the advent of GHIS focusing on BPL population and covering only hospitalization needs, the system has gradually drifted towards emphasizing expensive, overspecialized care. The lack of investments in primary care and also on public health precludes a referral system and addressing health risks at an early stage. The issues of coordination of primary care and GHIS focusing on only hospitalization remain weak as the institutions and administrations in government handling the GHIS and general health remain administratively separated. Further, the lack of coordination between and within programmes compounds the issues.
India should find the real foundation of rationalization of HCF policy, particularly engaging with the private sector. India has far lesser health resources than other emerging nations, and we face a real risk of India becoming a place of unnecessary procedures, waste, costs and maldistribution of medical care provision. The consequences of this may be severe, particularly when unmet needs of a large segment of the population remain high.
It is perhaps time to initiate in-depth examination of anticipated implications of market-based health care financing approaches we follow today. The way HCF mechanisms are approached, with significant absence of the role of institutions in their implementation and increasingly over-engagement with the private sector and the design of health care provisioning with a weak and fragmented government control, we need to look into challenges seriously. Many countries have greater insights into experimentation, integration of primary care and learning on various HCF issues, and there is a repository of information, ideas and innovations available to us today. However, following any particular approach is always consequential, but never more so than in the case of examining options for HCF in India today.
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