India’s weak health care is a legacy of limited attention to it after Independence, and the multiple priorities of a young nation. Health care has not been a vote-catching subject and the government spending is only 1.2% of GDP.(Getty Images/iStockphoto)
India’s weak health care is a legacy of limited attention to it after Independence, and the multiple priorities of a young nation. Health care has not been a vote-catching subject and the government spending is only 1.2% of GDP.(Getty Images/iStockphoto)

India is poised for deep structural health reforms

Covid-19 will act as a trigger. Aided by technocratic capability and new initiatives, public health will get a boost
By Parijat Ghosh and Vikram Chandrashekhar
UPDATED ON APR 21, 2020 06:49 PM IST

Despite a history of a weak health system, India was near an inflection point on health care reforms even before the outbreak of the coronavirus disease (Covid-19). We had both the income levels and building blocks that have been a precursor to game-changing reforms in several countries.

India’s weak health care is a legacy of limited attention to it after Independence, and the multiple priorities of a young nation. Health care has not been a vote-catching subject and the government spending is only 1.2% of GDP. Health insurance is fragmented and less than one-third of the population has coverage. Besides, access to health care is poor, fragmented, skewed to urban areas, and often of low quality.

This legacy burden could change rapidly with structural health systems reform, and those could be imminent. Once reforms start, the results could be dramatic over a 10-15 year period. As seen in over 20 other countries that have undertaken structural health reform, out-of-pocket medical expenditure will reduce to less than half of the pre-reform levels. And access to health care facilities will improve, resulting in more than a doubling of outpatient visits per capita.

Why do we believe that structural reforms are imminent? India’s per capita income and health expenditure are similar to those of other low-and-middle income countries when they initiated structural health care reforms.

More important, for sustainable change, we are seeing the emergence of a set of building blocks that were critical to initiate, accelerate and sustain large-scale reforms across 21 countries which we analysed. There are four building blocks.

First, the presence of “change triggers”, which are macroeconomic or political changes that provide an opportunity for large-scale reforms. These include economic shocks (as seen in Ghana, United Kingdom, and Rwanda); the emergence of a charismatic leader (Thailand and China); or a transition between political regimes (Colombia, Philippines and others). For India, the Covid-19 crisis is a once-in-a-century change trigger, and will make health care an important topic for voters.

The second is the emergence of technocratic capability. Strong pro-reform technocracy enabled change in Thailand, Indonesia, China, Mexico and Chile. Technocracy was developed either by skilled research institutes and academicians and/or led by state-specific experiments.

In India, going into this coronavirus crisis, we have had increasingly strong technocratic capabilities, with experience from several experiments that include schemes in Tamil Nadu, Kerala, Andhra Pradesh and Telangana. Kerala’s robust handling of both the Nipah and Covid-19 outbreaks demonstrate how stronger technocratic capabilities can drive outcomes. Technocratic capabilities have also been built up through private-sector innovation with digital insurance models and low-cost hospitals. Coming out of this crisis, we will have stronger institutional capacity across the board.

Third, large-scale reforms begin with a set of “lock-ins”. These are early initiatives that cannot be reversed without severe consequences much like universal insurance schemes such as the Jaminan Kesehatan Nasional in Indonesia or National Health Insurance in Taiwan. Over time, these become too big to fail and too popular to be dismantled. In India, visible reforms like Ayushman Bharat are effective “lock-ins” that are hard to roll back and provide a platform to build on.

Last, strong stewardship is critical for reform. In most countries, the government has played a pivotal role. In India too, the roles of Niti Aayog, the National Health Authority and state health agencies are evolving, which will likely add pressure on the system for efficiency and better outcomes.

The Covid-19 crisis and presence of these building blocks will provide a big impetus to public health. While India’s journey of reforms, like others, will be non-linear and uneven, there are a few areas that could emerge as priorities.

Insurance coverage will expand through schemes such as Ayushman Bharat, Employment State Insurance Scheme, state schemes, and private insurance. These funds will also need to be spent efficiently as demand ratchets up, driving the need for better purchasing and scheme designs. Providers will also feel the pressure to improve efficiency, particularly those paid through demand-side financing. Purchasers will be accountable for how pooled money is spent, thereby, driving increased use of claims data to alter provider behaviour.

Primary care will also be a larger priority. Increased incidence of non-communicable diseases — 55% in 2016 versus 31% in 1990 — will surface affordable ways for citizens to use outpatient care more regularly. These include the expansion of health and wellness centres, formalisation and aggregation of smaller private players and expansion of private primary health care chains through pooled purchasing agreements.

Governance and regulation will need to keep pace. Regulators will no longer be invisible as more of the population sees and feels the results of their actions. Instances of corruption and fraudulent claims will add pressures on regulatory bodies. This will be especially true in private insurance and public and private health care.

Finally, digital innovation will enable a lot of this reform, supported by Aadhaar and other data. Not all these early measures will succeed, not all reforms will “lock-in”, but the ones that succeed and gain momentum will set the country up for the next era of health care.

Parijat Ghosh is a partner and Vikram Chandrashekhar a principal with Bain & Company
The views expressed are personal
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