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Opinion

India poised for deep structural health reforms: analysis

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Despite the history of a weak health system, India was near a tipping point on healthcare reforms even before the outbreak of coronavirus disease (Covid-19). We had both the income levels and the basic components that have been precursors to revolutionary reforms in various countries.

India’s weak health care is a legacy of limited care after Independence, and the multiple priorities of a young nation. Health care has not been an issue that attracts votes, and government spending is only 1.2% of GDP. Health insurance is fragmented and less than a third of the population has coverage. Furthermore, access to health care is poor, fragmented, biased in urban areas, and often of poor quality.

This inherited burden could change rapidly with the reform of structural health systems, and it could be imminent. Once reforms begin, the results could be dramatic over a 10-15 year period. As seen in more than 20 countries that have embarked on structural health reform, out-of-pocket medical expenses will drop to less than half of pre-reform levels. And access to healthcare facilities will improve, resulting in more than double the outpatient visits per capita.

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

More importantly, for sustainable change, we are seeing the emergence of a set of building blocks that were critical to initiating, accelerating, and sustaining large-scale reforms in the 21 countries we analyzed. There are four building blocks.

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

The second is the emergence of technocratic capacity. Strong pro-reform technocracy allowed change in Thailand, Indonesia, China, Mexico, and Chile. Technocracy was developed by qualified and academic research institutes and / or led by state-specific experiments.

In India, as we entered this coronavirus crisis, we have had increasingly strong technocratic capacities, with experience from various experiments including schemes in Tamil Nadu, Kerala, Andhra Pradesh and Telangana. Kerala’s robust handling of the Nipah and Covid-19 outbreaks demonstrates how stronger technocratic capabilities can drive results. Technocratic capabilities have also been developed through private sector innovation with low-cost digital insurance models and hospitals. As we emerge from this crisis, we will have greater institutional capacity in all areas.

Third, large-scale reforms begin with a set of “blocks.” These are initial initiatives that cannot be reversed without serious consequences, such as universal insurance plans, such as the Jaminan Kesehatan Nasional in Indonesia or the 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 “blockages” that are difficult to reverse and provide a platform on which to build.

Finally, sound administration is essential for reform. In most countries, the government has played a key role. Also in India, the roles of Niti Aayog, the National Health Authority and state health agencies are evolving, which will likely add pressure on the system to achieve efficiency and better results.

The Covid-19 crisis and the presence of these building blocks will provide a great impetus to public health. While India’s reform journey, like others, will be nonlinear and uneven, there are some areas that could emerge as priorities.

Insurance coverage will be expanded through schemes such as Ayushman Bharat, the State Employment Insurance Plan, state plans and private insurance. These funds will also need to be spent efficiently as demand increases, driving the need for better purchasing designs and schemes. Suppliers will also feel pressure to improve efficiency, particularly those paid through demand-side financing. Buyers will be responsible for how the accumulated money is spent, which will increase the use of claim data to alter supplier behavior.

Primary care will also be a higher priority. The higher incidence of noncommunicable diseases (55% in 2016 vs. 31% in 1990) will present affordable ways for citizens to use ambulatory care more regularly. These include the expansion of health and wellness centers, the formalization and aggregation of smaller private actors, and the expansion of private primary health care chains through joint purchasing agreements.

Governance and regulation must keep up. Regulators will no longer be invisible as more of the population sees and feels the results of their actions. Corruption cases and fraudulent claims will add pressure on regulatory bodies. This will be especially true in private insurance and public and private healthcare.

Finally, digital innovation will allow much of this reform, backed by Aadhaar and other data.. Not all of these initial measures will succeed, not all reforms will “hang,” but those 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 is a director of Bain & Company.

The opinions expressed are personal.

Reference site

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