MARGIN SPEAK
United Kingdom 83%). The out-of-pocket
Dissecting ‘Modicare’
Anand Teltumbde
N
arendra Modi has been good at
launching fantastic schemes,
most of them being just the
renaming or rehashing of the existing
ones but pedalled as novel, and confi-
dently communicated to the masses as
such. There are as many as 23 such
legacy schemes of the United Progre-
ssive Alliance that have been rebranded
by the National Democratic Alliance
under him as its own. It may be admitted
to his credit that these schemes under-
went substantial reconfiguration and
scaling. While the government may be
complimented for professionally modi-
fying them, their expansion smacks of
the Bharatiya Janata Party’s hyperbole
and also its zeal to further its neo-
liberal agenda to benefit private capital
at the expense of public resources. The
latest of such rebranded schemes is the
Ayushman Bharat–National Health Pro-
tection Scheme (AB–NHPS), called by his
minions as “Modicare.”
The existing Rashtriya Swasthya Bima
Yojana was launched on 1 April 2008 by
the Ministry of Labour and Employment
(being administered and implemented
by the Ministry of Health and Family
Welfare since 2015) to provide health
insurance coverage for below poverty line
(BPL) families through a decentralised
implementation structure at the state
level. It provided for total insurance
cover of `30,000 per family per annum,
with cashless attendance to all covered
ailments and transportation costs within
an overall limit of `1,000. The insurance
cost was to be borne by union and state
governments in the ratio of 75: 25. It had
won plaudits from the World Bank,
the United Nations, and the Interna-
tional Labour Organization as one of the
world’s best health insurance schemes. If
this modestly formulated scheme failed
in implementation (Ghosh and Datta
Gupta 2017), then the far more ambitious
AB–NHPS that targets 100 million families
12
with an insurance cover of `5 lakh each,
and a higher share of contribution from
the states (60: 40) without any commen-
surate infrastructural support naturally
creates scepticism.
India’s Healthcare
The public health expenditure in India
(total of union and state governments),
despite recent increases in allocations,
has been little over 1% of the gross
domestic product (GDP). It is abysmally
low as compared to the world average of
6% and even to our neighbouring coun-
tries like Maldives (9.4%), Sri Lanka
(1.6%), Bhutan (2.5%) and Thailand
(2.9%). The National Health Policy (NHP),
2017 aspires to increase it to 2.5% of the
GDP by 2025, but the fact remains that
India has not even met its 2010 target of
2%. India’s total health expenditure,
which is 3.89% of the GDP is among the
lowest in the world as seen from Table 1.
Table 1: Total Health Expenditure as Percentage
of GDP for Select Countries
Country
Afghanistan
Brazil
China
Ethiopia
Honduras
India
Myanmar
Nepal
Russian Federation
South Africa
Sudan
World
Source: World Health Organization’s Global Health
Expenditure Database (2015).
It is even lower than the average for
sub-Saharan (5.35%), low-income coun-
tries (6.02%) and far below that of high-
income countries (12.38%). Out of the
total expenditure, about one-third (30%)
is contributed by the public sector, which
is also far lower than that of other deve-
loping countries (Brazil 46%, China
56%, Indonesia 39%) and developed
countries (United States 48%, and
OCTOBER 20, 2018
(OOP) expenditures—the payments made
directly by individuals at the point of
services that are not covered under any
financial protection scheme—dominate
to the extent of 95%, the balance 5%
being insurance. Table 2 provides distri-
bution of the OOP expenditure.
Table 2: Major Heads for Out-of-Pocket Expenditure
Head Percentage
Medicine 52
Private hospitals 22
Medical and diagnostic labs 10
Patient transportation and emergency rescue 6
Private clinic 5
Government hospitals 3
Others 3
Source: “Household Health Expenditure in India (2013–14),“
December 2016, Ministry of Health and Family Welfare.
This OOP expenditure is typically
financed by household revenues (71%),
followed by state government (13%),
union government (5%), other funds
(7%) and local body funds (1%). About
86% of the rural population and 82% of
the urban population are not covered
under any scheme of health expenditure
support. Due to this high OOP healthcare
expenditure, about 7% of the population
is pushed below the povery line thresh-
old every year.
%
Modicare and the Poor
10.30
8.91 It is in this context that Modicare will be
5.32 implemented. The scheme seeks to pro-
4.05 vide coverage for hospitalisation at the
7.59 secondary (provided at district hospi-
3.89 tals) and tertiary (provided at special-
4.95
ised hospitals like All India Institutes
6.15
of Medical Sciences, Apollo, etc), levels
5.56
8.20 of healthcare. The need of the poor,
6.31 however, is to get cost-free access to
9.90 basic health services. The High-Level
Expert Group set up by the Planning
Commission (2011) had recommended
that the focus of healthcare provision in
the country should be towards provi-
ding primary healthcare. It had rightly
obser ved that focus on prevention and
early management of health problems can
reduce the need for complicated specia-
list care provided at the tertiary level. As
such, the priority of the government
should have been to create a robust net-
work of primary health centres (PHCs)
vol lIiI no 42 EPW Economic & Political Weekly

with reasonable infrastructure in terms
of beds, doctors, nursing staff and medi-
cines, and an effective delivery model.
In the absence of this, the poor have to
go to private doctors and purchase costly
medicines as prescribed by them. In
urban areas, general practitioners (GPs)
who provided healthcare at a nominal
cost in the neighbourhood are vanishing
fast and are being replaced by special-
ists (MDs) who charge multiples of what a
GP would charge for consultation (which
invariably included medicine). In rural
areas, even where there are PHCs, there
are no doctors to run them. Due to the lack
of infrastructure, both at the PHC as well
as in the village, to professionally and per-
sonally engage them, the qualified doctors
are not ready to work in rural areas. The
skewed distribution of doctors in rural and
urban areas indicates this basic malady.
The private sector consists of 58% of the
hospitals in the country, 29% of beds in
hospitals, and 81% of doctors (Thayyil and
Jeeja 2013). According to the National
Family Health Survey–3, the private medi-
cal sector remains the primary source of
healthcare for 70% of the households in
urban areas and 63% of the households in
rural areas. A study conducted by the IMS
Institute for Healthcare Informatics in
2013, across 12 states in over 14,000
households indicated a steady increase in
the usage of private healthcare facilities
over the last 25 years for both outpatient
and inpatient services, across rural and
urban areas (Kannan 2013). Some studies
observed that healthcare providers in the
private sector tended to extract more
money by making patients stay for longer
durations and conduct more diagnostic
tests compared to their public counter-
parts (Basu et al 2012). The thrust of
Modicare on hospitalisation does not
address the needs of the poor whose OOP
expenditure is mostly spent on buying
medicines, private hospitals and diagnos-
tic tests and not on hospitalisation. Such
schemes covered only 4% of illnesses,
and yet consumed a quarter of the state’s
health budget (Sengupta 2018).
Intent versus Actions
The NHP does speak of establishing
1.5 lakh “health and wellness centres” as
the foundation of India’s health system,
Economic & Political Weekly EPW OCTOBER 20, 2018
which is certainly laudable as it will bring
healthcare closer to people. They do
address real health issues of people. But,
it was allocated just `1,200 crore in the
budget and expected contributions of the
private sector through corporate social
responsibility (CSR) and philanthropic
institutions in adopting these centres. This
is the much-touted model of public–
private partnership that lies behind most
of Modi’s public schemes. The NHP may
thus be counting on private initiatives as
it is not at all reflected in Modi’s budget
allocations. The allocation of `52,800 crore
for health in 2018–19 was merely 5% hig-
her than the revised estimate of `50,079.6
crore in 2017–18. It is estimated that to
meet the NHP objectives, the governments,
both central and state, should increase
their total allocation towards health to
`8 lakh crore, up from the current `2 lakh
crore by 2025, which means the central
government health budget alone should
increase at least 20% year-on-year for the
next seven to eight years. There is no evi-
dence of that happening yet.
The same could be said of the AB–NHPS.
It is faulted by many public health
experts for its underestimation of res-
ources. According to them, the actual
fund needed might be as high as `2.5–
`3 lakh crore. Many private hospitals,
including the Indian Medical Associa-
tion, problematised low package rates
for various procedures and interven-
tions. Even after conceding the volume
discounts, the insurance premium esti-
mated by Niti Aayog at `1,000– `1,200
per family appears too optimistic when
compared to Andhra Pradesh’s existing
Aarogya Raksha plan, which costs
`1,200 per individual for `2 lakh cover
for little more than 1,000 diseases. Even
if we were to take it to be valid the
scheme would entail `10,000– `12,000
crore every year as against the allocated
`3,333 crore. Even factoring in states’
contribution (40%), the allotted fund
adds up to only a portion of the required
amount. The other imponderable is its
assumption that it will subsume existing
health schemes of the states. Whether
the states will really forsake their politi-
cal branding of such a pro-people scheme
is a vital question that could be answered
only by the unfolding politics.
vol lIiI no 42
MARGIN SPEAK
Like any of Modi’s schemes, the AB–
NHPS may be a good concept but has
been launched without adequate prepa-
ration. The issues relating to funds may
be covered up by the government, but
how will it create doctors and hospital
beds? Modi’s own economic adviser,
Bibek Debroy, had sensibly admitted
that the scheme would take 20 years to
be fully rolled out (Iyer 2018). There
are other issues too—no protection
for outpatient department or medicine
expenditure, lack of public health infr-
astructure, workforce, quality, insur-
ance frauds, excessive diagnostics and
interventions by private sector, over-
charging, etc—which are hanging
without any certain answers. What is
certain, however, about the AB–NHPS
is that it will channel huge public
funds to the private coffers of the insur-
ance companies and private hospital
chains, with questionable gains to the
target population.
Anand Teltumbde (tanandraj@gmail.com) is a
writer and civil rights activist with the
Committee for the Protection of Democratic
Rights, Mumbai.
References
Basu, Sanjay, Jason Andrews, Sandeep Kishore, Rajesh
Panjabi and David Stuckler (2012): “Comparative
Performance of Private and Public Healthcare
Systems in Low- and Middle-income Countries:
A Systematic Review,” PLOS Medicine, Vol 9, No 6,
pp 1–14.
Ghosh, Soumitra and Nabanita Datta Gupta (2017):
“Targeting and Effects of Rashtriya Swasthya
Bima Yojana on Access to Care and Financial
Protection,” Economic & Political Weekly, Vol 52,
No 4, pp 61–70.
Iyer, Sriram (2018): “It May Be 20 Years before
Modicare Reaches All of India’s Poor,” 7 March,
https://qz.com/india/1222318/bibek-debroy-
says-modicare-is-likely-a-20-year-marathon/.
Kannan, Ramya (2013): “More People Opting for
Private Healthcare,” Hindu, 31 July.
Sengupta, Amit (2018): “Modicare: A Problem or A
Panacea?” Business Line, 30 March.
Thayyil, Jayakrishnan and Mathummal Cheru-
manalil Jeeja (2013): “Issues of Creating: A
New Cadre of Doctors for Rural India,” Interna-
tional Journal of Medicine and Public Health,
Vol 3, No 1, pp 8–11.
available at
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