Modicare needs a dose of pragmatism

The Union budget’s biggest highlight was the introduction of a universal healthcare scheme which is estimated to cover 50 crore beneficiaries or almost 40 per cent of the Indian population. The scheme is tipped by the finance minister to be the largest state driven healthcare initiative in the world when it hits the ground running.

While one must appreciate the Government’s thrust to address a primary concern for Indians, there must also be pragmatic optimism on the scheme, without its lapsing into an excess of euphoria. This piece tries to compare it with its American counterpart, Obamacare, and argues why certain provisions needs to be considered in detail.

Burden on taxpayer

The first thing that India needs to be aware of is the issue of individual mandate. The notion of telling young people with no health requirements to commit a certain sum of monthly income (else be penalised) would pose an additional burden on the taxpayer. Indians are well known for their inclination to be cautious in spending, hence the political impact of this would be significant as well. One of the issues that Obamacare had in America, was that many young people were reluctant to commit to an individual mandate on the healthcare system. This issue needs to be addressed head-on first. The way out is to look at a market-based model to leverage the prices down by using Statewide access and nationwide competition to drive down the prices.

Second, the finance minister was quoted as mentioning one healthcare player or multiple healthcare players across the country. It is important for India to not repeat the issues in Obamacare in lack of insurance continuity from State to State. There should be a concerted effort to remove the State barriers and have complete access across the country to multiple companies, and not just to one or two select firms. Not only will this help lower the premiums due to enhanced competition between nationwide players, it will also ensure that it solves the problem of having no insurance players in some States, as in the US with Obamacare.

It will also fit into the idea of ‘ease of living’ across State boundaries that the Prime Minister had eloquently articulated in his response to the budget speech.

Mobility within States has structural impediments especially if it’s subsidy-related. Unless this is sorted out, the efficacy of the programme would be a challenge for the Government, especially since migration is increasing.

Careful with subsidies

Third, the challenge of incorporating the subsidies into the healthcare system needs to be done with care. Effective incorporation would be based on a case-to-case basis but there are complexities in this, much like in Obamacare.

At the moment, in Obamacare, the amount of an enrollee’s subsidy depends not only on the person’s eligibility and income category, but also on changes in income over the course of the year, family size and residential requirements. These complexities make it an administrative nightmare for governments and that is something India needs to avoid. It would be important for India to look at the Scandinavian healthcare models in this regard, especially the ones in Sweden and Finland since they have been proposed by many experts in the field. It is imperative to focus on a seamless integration of subsidies in the broader healthcare ecosystem that suits India’s socio-economic environment.

Fourth, the amount of money required to finance such a massive scheme will surely overshoot the budgetary overlays in the coming year.The recurring costs for a healthcare programme of this scale needs to be addressed.

Are we looking at public-private partnerships to accelerate finance or is it completely billed by the state? If it’s completely billed by the state, how different is it from the political left’s policies?

A large part of the increase in Obamacare costs were accommodated by an increase in tax for the middle classes. In India’s case, due to extremely low tax compliance, that option would not be particularly viable. Other ways of acquiring and, more importantly, sustaining finance need to be worked out.

Paradigm shift

Fifth, the provision of universal healthcare in any country (more so in India) requires a systemic shift to market-based insurance models which many Indians are not used to, both from an individual as well as private sector point of view. From the insurers’ point of view, it’s a bonanza and there need to be regulatory controls to ensure they don’t go overboard.

Considering the state of medical corruption in India and the exorbitant costs in private healthcare, the Government needs to be wary about ensuring that the providers don’t take citizens for a ride. From the consumer’s point of view, this essentially is a change in socio-cultural mindsets and would need a lot of awareness-building for Indians to feel confident about the programme. There needs to be a comprehensive nationwide drive among the masses along the likes of Swachh Bharat to accelerate awareness regarding the insurance scheme.

Unless this is done, the usage and popularity of the scheme would be difficult to achieve and so will be the positive political results of the scheme’s implementation.

In retrospect, the idea of universal healthcare, while being lucrative, needs careful deliberation and policy acumen to deal with. There should be a consistent and visionary approach that suits the Indian health psyche and social structures. In this context, it is also important to learn from other models such as Obamacare to avoid pitfalls and focus on improving them in our plan. This would make Modicare much better.

The writer is an economist and columnist

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