Human Development

IGC Panel Discussion: Does Ayushman Bharat address the issues of healthcare delivery in Bihar?

  • Blog Post Date 01 February, 2019
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Shivani Chowdhry

University of Texas at Dallas

chowdhryshivani@gmail.com

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Kumar Das

International Growth Centre

kumar.das@theigc.org

A year ago, as part of the Union Budget 2018-19 speech, the government announced a new National Health Protection Scheme called Ayushman Bharat. In a panel discussion held at Patna, Bihar in December 2018, Sanjay Kumar (Principal Secretary, Health Department, Government of Bihar), Sisir Debnath & Tarun Jain (Indian School of Business, Hyderabad), Anup Malani & Kiran Pandey (University of Chicago), Chandrakant Lahariya (public health specialist), and D. Narayana (Gulati Institute of Public Finance), deliberated on key issues around Ayushman Bharat in the context of healthcare delivery in Bihar.

 

The India Programme of the International Growth Centre (IGC), in collaboration with the Department of Finance, Government of Bihar, and the Centre for Economic Policy and Public Finance (CEPPF) at the Asian Development Research Institute (ADRI), organised a panel discussion on “Does Ayushman Bharat Yojana1 (ABY) address the issues of healthcare delivery in Bihar?” in Patna in December 2018.

 

The session chair, Sanjay Kumar (Principal Secretary, Department of Health, Government of Bihar) set the stage by giving an overview of healthcare spending and coverage in Bihar. While the government tends to largely focus on primary and secondary healthcare rather than tertiary services, non-communicable diseases (NCDs) are now accounting for over 50% of deaths in Bihar. It is challenging to design a healthcare system in a state like Bihar where 88% of the population is in rural areas with only 2% of doctors. There is a huge human resources constraint on the development of tertiary services. Although Bihar’s per capita health spending is one-third of the national average, life expectancy is similar to that of the rest of the country – making the case for increasing spending. It is hoped that ABY, under which 10.8 million families are eligible for cashless hospital-based treatment, will fundamentally change the scenario of tertiary care services in the state. 

Sisir Debnath (India School of Business), the moderator of the discussion, remarked that economist Kenneth Arrow had said in the 1960s that healthcare is not like other markets and needs special treatment. This is why we see a lot of policy interventions in the sector, but a common problem is the poor implementation of well-designed programmes. 

Andhra’s Aarogyasri: What can we learn from it? 

 

Tarun Jain (Indian School of Business) shared insights from his extensive study of the health insurance programme of Andhra Pradesh called Aarogyasri2, which was started in 2007 and covers over 80% of the state’s population. It is a successful scheme with high participation rates: by 2015, 663 government and private hospitals were empanelled, and 3.3 million procedures had been performed. The designers of AYB have explicitly referenced Aarogyasri and its successes in coming up with the salient aspects of AYB. 

In the context of Aarogyasri, he explained that there are three key actors – patients, hospitals, and government. Patients have a choice of hospitals under health insurance schemes; they are aware of quality of care, and are willing to travel. Despite government reimbursing hospitals for procedures, they incur costs related to accessing care such as travel and stay. Hospitals need to decide whether or not to participate in the scheme, keeping profitability in mind, and conditional on profitability, they need to decide what quality of care to provide. If there are more competitors in a market, hospitals tend to provide higher quality of care. Finally, the government needs to decide reimbursement rates for procedures. 

The key lessons that can be drawn from Aarogyasri are: (i) Quality of care and distance to health facility matter to patients; uninformed patients are willing to trade off quality for convenience but not informed ones. (ii) The cost of care is much higher for urban hospitals vis-à-vis rural ones, implying that single reimbursement rates are not efficient. 

Finally, he made the case for enhancing financial outlays and making health insurance schemes universal by highlighting that the per procedure cost worked out to be only Rs. 20,000 for Aarogyasri. This would reduce identification errors in deciding who is eligible, and create a larger market for the private players to enter. Besides, an inclusive scheme has more implicit monitoring built in as the non-poor, more empowered beneficiaries are likely to make a noise when something is wrong with the operations. 

Rastriya Swasthya Bima Yojana vs. Ayushman Bharat Yojana 

 

Based on his research on Rastriya Swasthya Bima Yojana3 (RSBY) – the largest public health insurance scheme that India has had since 2013 – Prof. Anup Malani discussed the differences between RSBY and AYB and how applicable the lessons from RSBY are to AYB. 

He highlighted some of the findings from the evaluation of RSBY in Karnataka which was done to understand the short- and long-term effects of the health insurance programme on uptake and utilisation rates, impact on households’ health, and impact on their finances.  

The study, a large scale randomised controlled trial (RCT) involving about 55,000 households, was conducted in two districts of Karnataka – Mysore and Gulbarga. Households were randomised in three different ‘treatment’ groups: one group had access to free insurance, the second group was given the right to buy RSBY insurance by paying the same premium that the government does, and the third group was given the right to buy the RSBY insurance along with an unconditional cash transfer equal to the premium. A ‘control group’ was also used for comparison. There was a remarkable uptake even when RSBY was offered for purchase. However, it is seen that the utilisation rate was low across all three treatment groups. One reason behind low utilisation rates is that it is not as if individuals don’t have access to secondary care in the absence of RSBY – they do have access to public hospitals which may be an adequate safety net. Also, even without insurance they do have a method to finance healthcare as there are informal insurance markets and informal credit markets in villages so people can get access to healthcare. Thus, there was no significant increase in successful use of RSBY card among Above Poverty Line (APL) populations. The only group that showed an improvement in utilisation was actually the group that was asked to pay for RSBY, which shows people are more likely to value products that they purchase.

Clearly, if there is no big utilisation effect there will not be a big health effect too and this was another finding – no significant improvement was seen in health outcomes after 12-18 months. Another interesting finding was that people changed their asset allocations from liquid to illiquid assets that offer a higher return, in response to having health insurance. So, the findings might not show significant improvement in utilisation and health outcomes, but the programme has had a financial impact. 

Universal health coverage and Ayushman Bharat Yojana

Chandrakant Lahariya described the concept of universal health coverage (UHC), which India has committed to through its National Health Policy. UHC means that all people – individuals and communities – must have access to good quality health services which are also affordable to them. He explained how ABY provides a paradigm shift wherein providers are separated from payers. However, he also noted that ABY is a Rs. 100 billion scheme and OOP expenditure on health in India is Rs. 3,000 billion (2013-14). 

There are two components of ABY. The first, Pradhan Mantri Jan Arogya Yojana aims to reduce the financial burden on poor and vulnerable groups arising out of catastrophic hospitalisation episodes. The second component of Health and Wellness Centres (HWCs) aims to strengthen primary healthcare to tackle 80-90% of the total health needs of the population and nearly two-thirds of total OOP expenditure on health. Yet, this latter component is getting less priority and attention. He cautioned that demonstrating coverage is always important but not enough. He cited the example of China that has 90% coverage but catastrophic spending4 of 18%, whereas India has low coverage of 20-22% coverage and still has less catastrophic spending (17%) than China. 

In the context of Bihar, he emphasised the ‘political economy perspective’. He stated that any new initiatives in Bihar should cater not only to current but also to future health needs. Based on past learnings, he remarked that when the state took leadership in 2005-06 for Muskaan Abhiyan in Bihar, full immunisation increased and the gains were sustained over time. Access to quality primary healthcare is essential, and HWCs provide a foundation for impact and success of ABY. States need to take initiative along with encouraging innovation and community engagement, and empowering local institutions. 

Is supply-side healthcare ready to take on the challenge?

D. Narayana presented the supply-side challenges for access to quality care under ABY. He showed that most of the hospitals that are empanelled under the scheme in Bihar are public hospitals. There are hardly any private hospitals, except in Patna and Muzaffarpur, which means there is little hospital choice available to patients as of now.

He also showed that while the Infant Mortality Rate (IMR) of Bihar has declined from 58% (2007) to 38% (2016), the Neonatal Mortality Rate (NMR) as a percent of IMR has increased from 53.9% (2007) to 71% (2016). This shows that there are problems with the quality of care that is provided. He further argued that expanding healthcare coverage does not necessarily result in better health outcomes. Using the National Rural Health Mission (NHRM) as an example, D. Narayana stated that there has been no improvement in population coverage in Bihar during 2004-2014. Bihar has one sub-centre for a population of 10,000, whereas the norm is one sub-centre per population of 5,000. Referring to the increase in institutional care due to Janani Suraksha Yojana5 he quoted a recent Lancet article: “Many of the births in the programme occurred in primary care centers that did not have sufficiently skilled staff to address maternal and new-born complications.” (Kruk et al. 2018). Hence, the coverage did not result in improved maternal health or newborn survival. 

Additionally, the package rates under the ABY scheme do not give enough flexibility to states to change those rates. Recently, private healthcare providers in Kerala held a press conference and stated that with these rates, they will not be able to participate in this scheme. Given this, the situation in Bihar is not going to be any different, and there is no guarantee that the rates are going to be periodically increased. Under these constraints, there is no alternative but to improve the quality of the public health system. Therefore, more money needs to be spent on HWCs. 

Providing healthcare services effectively: Lessons from other countries 

Kiran Raj Pandey explained that healthcare delivery in any part of the world is a two-part problem: financing, and service delivery. He stated that community-centred, public-owned primary healthcare facilities in Sri Lanka led them to achieve health outcomes that are at the top of middle-income countries. Thailand, which spends only 4% of its GDP (gross domestic product) on health, has health outcomes as good as any other middle-income country. In Thailand, 86% of health expenditure is borne by the government and 14% by the private sector. However, it took the country 30 years to build primary healthcare systems. 

Costa Rica started UHC in 1961 even before UHC became fashionable. Their primary focus was on building community-centred healthcare systems, and one of their policy innovations was decoupling their health system from the Ministry of Health and integrating it into their social security scheme. This ensured that the funding cycle was predictable as the funds that came in the form of social security were always there even in the dark days of the 1980s, when neo-liberalism and the contraction of the State was taking place across Latin America. 

He contended that drawing lessons from other health insurance programmes from other countries will help the Government of Bihar in implementing ABY effectively and reducing wasteful spending. 

Concluding remarks 

A key takeaway noted by Sisir Debnath from the discussion was that health and healthcare are two different things – healthcare is just an input into the production that goes to create health. There are many other inputs as well which include sanitation, wellness and fitness and so on, and that calls for a holistic approach. Mr Sanjay Kumar said that given that there are less than 600 empanelled hospitals under ABY in Bihar, of which about 540 are public health facilities, this will be an opportunity for strengthening infrastructure and creating different incentives for employees in public hospitals. The Government of Bihar has taken a decision that 70% of funds will go towards strengthening facility infrastructure and the remaining for incentivising employees in public hospitals. The increase in NMR points towards the urgent need for having a facility-based system in the state. He also highlighted that the sustainability of any programme creates different questions at different times and making decisions on an ad-hoc basis does not work well in the case of health systems. 

The event commemorated 10 years of the Centre for Economic Policy and Public Finance (CEPPF).

Notes:

    1. Government of India introduced the Ayushman Bharat Yojana (National Health Protection Mission) in 2018 – a collaboration between the central and state governments designed to pay for tertiary healthcare for nearly 100 million families across the country.
    2. Aarogyasri is a cashless health insurance programme for BPL households in Andhra Pradesh (and Telangana since the state’s formation in 2014). The programme covers medical bills up to Rs. 200,000 for the treatment of serious ailments such as cancer, kidney failure, heart and neurosurgical disease that require hospitalisation.
    3. Rashtriya Swasthya Bima Yojana was launched in 2008 by the Government of India to provide health insurance coverage for Below Poverty Line (BPL) families. The objective was to provide protection to BPL households from financial liabilities arising out of health shocks that involve hospitalisation. It provided total cover of Rs. 30,000 per family (5 members) annually for tertiary care expenses. The programme was administered by states though 75% of the funding came from the central government.
    4. Catastrophic spending means spending of 10% or more of household expenditure on health.
    5. Janani Suraksha Yojana (JSY) is a safe motherhood intervention launched in 2005 under the National Rural Health Mission (NHM) which is being implemented with the objective of reducing maternal and infant mortality by promoting institutional delivery among pregnant women.
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