Content from the Brookings Institution India Center is now archived. After seven years of an impactful partnership, as of September 11, 2020, Brookings India is now the Centre for Social and Economic Progress, an independent public policy institution based in India.
This article is a part of India 2024: Policy Priorities for the New Government, a compendium of policy briefs from scholars at Brookings India, edited by Dhruva Jaishankar and Zehra Kazmi, which identifies & addresses some of the most pressing challenges that India is likely to face in the next five years.
India’s economy has grown at an impressive pace over the last few years, but overall, it still witnesses poor health outcomes. The wealth of a nation is its human capital and with poor health outcomes, India’s human capital will suffer. This has a direct consequence on the economic well-being of the nation. Affordable, quality health care is thus the need of the hour. India has recently adopted the Sustainable Development Goals (SDGs) under which it is obligated to meet objectives such as Universal Health Coverage. However, a concerted policy effort is needed to achieve this goal. This requires a focus on three main areas: health insurance at the tertiary care level; quality of health infrastructure at the primary level; and the accessibility and quality of medicines available in the country.
Scale Up Health Insurance
In September 2018, the government announced the National Health Protection Scheme (NHPS), also called Pradhan Mantri Jan Arogya Yojana (PMJAY) or Ayushmaan Bharat (AB). AB has twin objectives, the first of which is financial protection for healthcare of up to Rs 5 lakh per family per year (a total of 10.74 crore families are the target beneficiaries) and the second being to operationalise 1.53 lakh health and wellness centers to provide primary care. As the scheme adds more beneficiaries, there are important aspects that warrant closer attention.
On the demand side, for any insurance scheme to be successful, the pool of beneficiaries should be diverse and large enough to mitigate risks for the insurer. Also, the scheme will have limited impact if the number of beneficiaries remain small or if the target population end up not availing medical care. For this purpose, awareness campaigns should be mobilised so that greater information can reach poorer households who are the intended beneficiaries. Any reservations regarding seamless healthcare delivery should be allayed by providing a robust IT system which can ensure quick and assured treatment.
On the supply side, tertiary healthcare take-up critically depends on the quality and availability of empaneled hospitals. Hospitals take a profit-driven decision to become an empaneled hospital under PMJAY. In this regard, the reimbursement rates provided for various treatments have to be intelligently designed. Rates should be flexible to take into account the location of the hospital as costs can be less in rural areas but are much higher in the cities. This difference in costs should be reflected in reimbursement rates. The government already gives land free of cost or at very low rates to new hospitals being set up in backward areas to incentivise them to become empaneled. As on the demand side, a strong data infrastructure can be beneficial to ensure timely payments to the hospitals.
Improve Public Health Infrastructure
To provide free, effective, accountable and quality health care, India’s current health infrastructure relies on a network of primary care facilities which comprise of Sub-Centers (SCs), Primary Health Centers (PHC) and Community Health Center (CHC). Despite a good network of public health infrastructure, studies have shown that households still overwhelmingly depend on private providers for healthcare services. This has mainly been driven by the poor quality of infrastructure and care provided by India’s public healthcare system.
Various government policies have been designed to address maternal and child health, as well as preventable communicable and non-communicable diseases. But the ambitious plan of providing comprehensive health care under PMJAY needs to be guided by a formal assessment of the current state of health infrastructure in India. Despite overall high growth in the availability of sub-centers, India still faces critical shortages in supporting infrastructure and most of these facilities are in a dilapidated condition. Addressing this shortcoming will require at least four steps.
First, there is a need to expand primary healthcare infrastructure further to meet population demands. While some states have a surplus, others such as West Bengal, Bihar and Uttar Pradesh face acute shortages. Overall, India still needs 32,900 more SCs, 643 more PHCs, and 2,188 more CHCs to meet its basic health infrastructure requirements. Second, the Indian Public Health Standard (IPHS) norms must be met. At present, 93% of SCs and 87% of PHCs and CHCs fail to meet the basic standards based on the revised IHPS norms of 2012. This will require, among other things, improvements in waste disposal, hygienic conditions for labour rooms, ensuring antiseptic conditions for operation theatres and newborn care units, and the maintenance of adequate stocks of medicines. Third, existing facilities must be supplemented with supporting infrastructure & services, such as water, electricity, and road connections. This will also require frequent audits to ensure functioning. Finally, population norms must be revisited. The current population norms are based on an old National Health Policy dating back to 1983. With the growing burden of non-communicable diseases, these population norms should be revisited to ensure that the health infrastructure meets India’s modified disease burden.
Provide Affordable, Quality Medication
Indian households spend nearly half of their out-of-pocket expenditures on pharmacies, far outpacing expenditures in hospitals. The affordability, accessibility, and quality of medicines are three important dimensions which require urgent attention from policymakers. First, this will require creating a drug database for price comparisons among pharmacies, to direct consumers to the cheapest available options. This can benefit from the implementation of the Goods and Services Tax (GST), which tracks sales in individual pharmacies. Second, doctor prescriptions should be encouraged to focus more on generic medications, which would save consumers money. Third, a public database for substandard and spurious drugs needs to be created. Currently, no such database exists to inform consumers. Fourth, the hiring and training process for inspectors must be standardised, with a focus on local inspectors. Additionally, quality checks should be boosted at the manufacturing site to counter problems at the source. Finally, a centralised manufacturing licensing system is necessary. At present, Indian states are powerless to stop substandard drugs manufactured out-of-state. Centralising the licensing system can reduce the number of substandard drugs in the market and hold all states accountable to licensing approvals.