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National Health Protection Scheme : Is it really efficient based on Expenditure by the Government?

By Gayatri Virmani


The government in its healthcare budget in 2018 announced the new scheme which is National Health Protection Scheme also known as “Modicare”. The aim of the scheme is to allocate Rs 5 lakh to each to 10 crore poor families, which in total creates 50 Crore beneficiaries as the assumption which is made by government is that 5 persons make one family. There are several issues regarding this scheme, one of the most important issues is NDA government’s expenditure on healthcare since mid-2014 to 2017. In order to see whether the government can achieve this target, the analysis needs to be done on healthcare expenditure from 2014 to 2017.

The Rashtriya Swasthya Bima Yojana was same as National Health Protection scheme, the scheme is only renamed as claimed by some people. However, the difference in both of the schemes is that RSBY provided 30000 per family per annum with a yearly enrollment fee of ’30 whereas, in NHPS, the fee is paid by the government through its tax revenues. The scheme does not enroll everyone which is a positive factor of this scheme in a way that the people who are already healthy cannot outnumber the people who are poor, so rich cannot outnumber the poor that way. Even though, the scheme is pro-poor it must be remembered that the poor will not prefer to get hospitalized as they will lose their wages and will not take any inpatient treatments.

Expenditure Data On Healthcare Since 2014

The healthcare spending in 2014 was $81.3Bn and in 2017 it is $160Bn. Expenditure on health by the public sector is 1.2 % of GDP. India’s total expenditure on health is 4.7 %. The aim of the government is to increase the expenditure by 1.15 to 2.5% by 2025. The out of pocket expenditure as recorded by reports is 62.42 in the public sector. It is important to note that the center is also putting money in the hands of the state to spend on the social sectors like healthcare through taxes which were increased from UPA’S budget which were 32 percent to 42 percent, which is the NDA’s budget.

Analysis Of The Data Of Healthcare Since 2014

The spending has doubled from 2014 to 2017 but spending on pharmaceuticals sales are still less in 2014 they were $12.3Bn and in 2017 they are only $16.7Bn. While noting that even states have to spend at the social sector, the states do not have spending capacity because of lack of human resources. When the country ’s healthcare system is improving, the out of expenses should reduce but in India, they have only reduced from 63.37 % to 62.4% in 2015. There is an acute shortage of government hospitals in India. “In India, there is one government allopathic doctor for every 10,189 people, one government hospital bed for every 2,046 people and one state-run hospital for every 90,343 people.” The Gorakhpur deaths around 2017, in which more than 1000 children were dead by encephalitis syndrome as the facilities provided by BRD college were not to the mark at all, the healthcare spending was really low, showing poor governmental infrastructure.

Critiquing: National Health Protection Scheme

Due to slow economic growth and lagging of tax under new tax regime, the finance is stretched and hence, the government cannot spend so much on health. The premium for new scheme ideally should be around Rs 1.2 lakh crore but the problem is that the total spending on healthcare is Rs 1.3 lakh crore, so allocation of money will be lesser than what is expected. There is a big silence on how the scheme will be financed, there is no roadmap which was announced in Budget by Arun Jaitley.Since there is hardly any spending by government on health, there will be poor infrastructure in terms of fewer doctors, fewer beds for patients, fewer nurses, in short lack of human resources and other amenities. There is a lack of coordination between the central and state government, which leads to inefficiency in spending the funds. Also there are problems with traditional insurance schemes, the doctor has more knowledge about the treatment than the patient does and the doctor might do more than what the treatment requires and also persons who are more prone to get ill, only they insure themselves rather than the persons who are relatively healthier which raises cost for everyone. Hence, the NHPS scheme just sounds good to hear but its implementation seems to be negligible.

Possible Solutions for the effectiveness of the scheme

There should not be rigidity in funds allocation in the health sector, it should be flexible to different policies within health, there should be an audit mechanism of funds and resources could be improved through cost-effectiveness. An alternative model from the United Kingdom can be looked; their scheme is called National Health Service. The scheme is devolved to local boards or units, which handle it. UK spends 9 percent of its GDP on the health sector. Every person is covered under NHS irrespective whether one more person is more prone to ill health and thus it helps maintain the costs. Under this scheme every person has to visit general practitioner first rather than a specialist, the only general practitioner will suggest if the patient needs to go to a specialist or not and hence, there is less reason to get exploited by the doctors. Also, the doctor is paid well by the government. “Each covered family is provided an NHS voucher, usually valid for one year at a time, for insurance coverage for all the specified health conditions which will be covered. Each family deposits this voucher with an accredited health care provider, as per its choice, and is entitled to treatment for the full range of covered health conditions for the voucher’s validity. At the end of the period, the family is provided with a fresh voucher, which the family may deposit with the same or a different accredited healthcare provider, in case they are not satisfied with the first.” From the state level, the Yeshaswini scheme which was launched in 2003 in Karnataka, consisted of three parties which are state, cooperative societies, and private hospitals. The state government finances the scheme, while membership is encouraged by cooperative societies and acts as a contact between beneficiaries and the service provider. The Rajiv Aarogyasri Scheme was introduced across three districts of Andhra Pradesh in 2007, in which the state government paid reimbursements for medicines for the patients. The package under the scheme covered all inpatient (special treatment) costs and this scheme was pro-poor. However, in order to take these alternative models, transparency is required between central government and state government in terms of fund allocation and tax collection needs to be efficient, which will reduce the amount of corruption eventually.

References :

Dinesh Unnikrishnan, ‘Budget 2018: Jaitley’s ‘Modicare’ health scheme music to the ears of 50 crore Indians, but it’s too good to be real’ <>  accessed 28 March 2018

K Srinath Reddy, ‘National Health Protection Scheme: Why Insurance can’t replace primary healthcare’ <> accessed 28 March 2018

CH Unnikrishnaan, ‘Three Years of Modi Govt: Healthcare Sector’  <> accessed on 28 March, 2018

Dipa Sinha, ‘Budget 2018: India’s Healthcare System Needs More Money and an Urgent Overhaul’ <> accessed on 28 March, 2018

Mayank Jain, ‘Private Sector’s profit in healthcare soar as Indian Government ivestment stagnates’ <> accessed on 28 March, 2018

Ministry of Health and Family Welfare, Government of India, ‘National Health Policy 2017’ <> accessed on 28 March, 2018

Rukmini S, ‘Did Spending on Health and Education fall since 2014? Finally Some Answers <> accessed on 28 March, 2018

CH Unnikrishnaan, ‘Three Years of Modi Govt: Healthcare Sector’  <> accessed on 28 March, 2018

Aditya Kalra., ‘ India plans to raise health spending by 11 percent in budget; less than requested’ <> accessed on 28 March, 2018

Sanchita Sharma, ‘ India’s public health system in crisis: Too many patients, not enough doctors’ <> accessed on 28 March, 2018

FP Staff, ‘Gorakhpur hospital tragedy: BRD Medical College was never a safe health facility for kids’ <> accessed on 28 March, 2018

Deepanshu Mohan, ‘New National Health Policy Paves Way For More Hype and Less Action’ <> aceessed on 28 March, 2018

Poonam Muttreja, ‘Govt needs to Invest More in Healthcare, family planning measures’ <> accessed on 28 March, 2018

Meenakshi Datta Ghosh, ‘Instead of Focusing on Insurance, India should Learn From Uk’s Public Healthcare Model’, <> accessed on 28 March, 2018

Ashwajit Singh, ‘India’s healthcare spend remains dismal; why budget should focus on better utilisation of resources’ <> accessed on 28 march 2018

Varun Gandhi, ‘ To ensure that the NHPS does not falter, strong administrative and regulatory control are needed’ , <> accessed on 28 March, 2018

Gayatri Virmani is a third year student at Jindal Global Law School.

Featured Image Source- iamwire

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