Ayushman Bharat – a noble but challenging initiative
Health Insurance

Ayushman Bharat – a noble but challenging initiative

In the Union Budget announced in 2018, the Finance Minister Mr Arun Jaitley announced what is probably the Central government’s most ambitious programmes, Ayushman Bharat, aimed at providing universal healthcare to all Indians, especially the underprivileged.

This scheme aims to cover more than 10 crore poor and vulnerable families with an insurance cover of Rs. 5 lakh per family.

Ayushman Bharat expects to lead to standardised treatment guidelines for surgical and non-surgical procedures, with extensive use of data analytics to monitor implementation. The programme will also have a positive impact on allied industries such as pharma, medical devices, and diagnostics among others.

Some of the other key benefits of the programme includes:

  • Low premium high penetration will benefit Universal Health Care.
  • Mandatory cover to healthy young population will help lower Claim Ratio so that lower insurance premium will benefit all and as there is alternate payment mechanism available that will divert substantial patient flow towards private health care facilities, with the increased volumes reducing the processes for services.
  • Quality of Health Care will improve as a number of initiatives are being undertaken – for example, NABH accreditations etc. specifically for quality in Healthcare Delivery Systems.
  • Higher number of patients who are able to afford treatment will lead to better volumes for the pharma and device industries, with enhanced patient loads will lead to economies of scale for hospitals further leading to reduction in costs, making treatments more affordable.
  • Access to affordable healthcare will mean that fewer people fall below the poverty line and debt traps as a result of health-related concerns.
  • Initiatives like drug price control policies and capping the costs of Stent, Orthopaedic prosthesis etc is bringing in transparency in processes while ensuring that quality treatment can be provided at affordable pricing.
  • Universal Health coverage can be a Win- Win situation for Insurance, Pharma, Devices as well as other related Health Care industries.

Though a laudable initiative, the scheme is not without its challenges. To begin with, universal healthcare on this scale will not be easy to execute, and more importantly fund. Within one year of its launch, one has already seen some challenges with regards to funding, and the contribution of states and the Centre.

While patients in urban areas may get access to healthcare, despite Ayushman Bharat, they may not be able to afford the costs of private hospitals. Additionally, rural India which largely lacks medical infrastructure will not benefit in the short-term. And, even if the state/ Central government were to build physical infrastructure, staffing them with qualified medical personnel would remain a challenge.

Despite economies of scale being an incentive, private hospitals may not necessarily agree to the prices prescribed by the government for treatment of patients under the programme. Similarly, with prices capped, it will lead to lower profits for pharma and device companies, who may become loath to offer their cutting edge advanced products and technologies in this market, depriving even those patients who can afford to pay for them with access.

Additionally, Integration of the Central programme with those launched by several state governments will remain contentious, and finally, while funding agencies may fund the programme, the money still has to be repaid and tax payers may well feel saddled by an additional burden.

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