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Severe Cut-Backs Expected in PM's Ambitious Health Care Plan for India

by Vanessa Jones on March 31, 2015 at 3:40 PM
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Severe Cut-Backs Expected in PM's Ambitious Health Care Plan for India

A comprehensive universal healthcare plan was Prime Minister Narendra Modi's top priority, as mentioned in his election manifesto. But it looks like he may have to drastically cut back on his ambitious National Health Assurance Mission, which estimates a cost of $18.5 billion (Rs. 1.16 lakh crore) for five years.

In the initial draft by the health ministry in October 2014, the cost estimates totaled $25.5 billion for four years. The draft policy had made provisions for free drugs, diagnostic services and insurance for serious ailments for India's 1.2 billion people. In January 2015, when it was presented to Modi, it was reduced to $18.5 billion — still deemed to be too much. Predictably, the project was not approved. Sources inside the government health ministry told Reuters (a news agency) that it had been asked to revamp the policy, but work is yet to start.


The Modi government's first full-year Budget, announced in February 2015 by Finance Minister Arun Jaitley, had increased infrastructure spending, leaving less federal funding immediately available for social sectors. "The constraint on India's financial resources was conveyed to health officials, and even to those from other ministries," said one government official who is not from the health ministry but attended the meeting where Modi was present.

Modi's election manifesto had said that previous public health schemes had been mired in payment delays and could not meet the growing medical needs of the public. Still, he has another four years left in his first term to fulfill the promise.

India spends just about 1% of its gross domestic product (GDP) on public health, but even those funds are not fully utilized in the badly-managed public health system. A health ministry vision document in December 2014 had proposed raising spending to 2.5% of GDP in public health but did not specify a time period. That's why health experts were disappointed when the Union Budget for 2015-16 raised the allocation only by about 2 percent from the previous year, less than inflation.

This lowered prospects for the massive health plan, they said. "How can it happen when you have truncated resources?" a health ministry official asked.

An expert panel along with an expert from the World Bank, in consultation with Modi's office, had drafted the health plan. It included insurance that covered serious ailments and treatment such as heart surgeries and organ failure, although two officials felt that this benefit would soon be withdrawn. The new ministry couldn't answer why this new plan could not be combined with existing health schemes.

The decision to slash insurance would have an impact on the country's thriving health sector which was slated to see huge growth with the new program and millions of patients were channeled into private hospitals. At present, only 17% of the country's population had any form of insurance.

Source: Aditya Kalra

Source: Medindia

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