The launch of publicly financed health insurance schemes (PFHIS) marked a new epoch on the Indian healthcare landscape, punctuating the tradition of publicly provided healthcare. Just prior to Independence, the Bhore Committee report laid out a three-tier framework of public healthcare delivery that would provide, albeit incrementally, universal health coverage. The recommendations were adopted by the newly-independent nation, and despite their token implementation, government hospitals remained the only consequential instruments of healthcare delivery. This changed as the PFHIS caught on, starting in the mid-2000s.
There are several reasons behind this. The global discourse on universal health coverage gained momentum after 2000, placing it on the political platter as something governments should compete on. Rather than slogging for decades to create new public infrastructure, the PFHIS allowed the government to scale up coverage by co-opting existing private hospitals and opening their doors to the indigent multitudes. Many PFHIS yielded significant political mileage, largely due to the rapid rollout and visible nature of the benefits and the lure of ‘high quality care in private hospitals.
It also introduced the highly marketable math of ‘health insurance coverage’ into the healthcare discourse, which was impossible to do with traditional public medicare. Today, the aggregate health insurance coverage figures are frequently cited by the Union and state governments to claim unprecedented success at healthcare expansion.
The problem is that such figures often mean very little, with few things have changed on the ground. This is because PFHIS doesn’t yield massive healthcare gains with few or no budgetary increases. For instance, take the Centre’s flagship Pradhan Mantri Jan Arogya Yojana (PMJAY). The program, which aims to cover hospital care otherwise amounting to lakhs of crores in out-of-pocket healthcare expenses, has failed to move past a few thousand crores in budgetary allocation. It implies funds are being spread abjectly thin with little consequence for the people’s health. Rather, it has posed new challenges arising out of moving the pivot from public to private hospitals, which possess distinct interests and idiosyncrasies. A private market in healthcare is replete with imperfections that lead to market failure.
It also introduced the highly marketable math of ‘health insurance coverage’ into the healthcare discourse, which was impossible to do with traditional public medicare. Today, the aggregate health insurance coverage figures are frequently cited by the Union and state governments to claim unprecedented success at healthcare expansion.
The problem is that such figures often mean very little, with few things have changed on the ground. This is because PFHIS doesn’t yield massive healthcare gains with few or no budgetary increases. For instance, take the Centre’s flagship Pradhan Mantri Jan Arogya Yojana (PMJAY). The program, which aims to cover hospital care otherwise amounting to lakhs of crores in out-of-pocket healthcare expenses, has failed to move past a few thousand crores in budgetary allocation. It implies funds are being spread abjectly thin with little consequence for the people’s health. Rather, it has posed new challenges arising out of moving the pivot from public to private hospitals, which possess distinct interests and idiosyncrasies. A private market in healthcare is replete with imperfections that lead to market failure.
It is intriguing, however, how government failure in healthcare is often understated. Much of the criticism of private healthcare is directed at its tendency to overcharge and over-provide services with a profit motive. But, the public sector’s tendency to under-provide care, and the resultant loss of utility to patients and the nation, are often significantly downplayed. Broadly, the greater the under-funding, the stronger the tendency to under-provide. Public healthcare has frequently been called out for its poor or non-existent accountability to patients and their care preferences. Here, private hospitals with their consumer orientation and responsiveness have been thought of as a solution.
