National Health Assurance Mission: India’s Universal Healthcare Rollout to Cost Rs 1.6 Trillion

India's universal health plan that aims to offer guaranteed benefits to a sixth of the world's population with an estimated cost of 1.6 trillion rupees ($26 billion) will be launched soon, a senior health ministry official said.

Under the National Health Assurance Mission, Indian government would provide all citizens with free medications and diagnostic treatment, as well as insurance cover to cure serious ailments.

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C K Mishra, an additional secretary at the union health ministry, said that the proposed health plan would be implemented in phases from April 2015 and will cover the entire population by March 2019.

The center will have to spend an estimated $11.4 billion annually on the project. "If you have to deliver the service, that is what it will take," Mr. Mishra says, revealing for the first time an expert team's cost estimations that will be considered by the finance ministry for inclusion in the union government's spending plans.

However, healthcare experts caution that it could take at-least a decade before as many as 1.2 billion people in India are adequately covered and that the costs of provision could face significant upward pressure.

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If approved, the government would need to drastically raise its healthcare expenditure. In the 2014-15 financial year, the federal budget allocated about $5 billion to healthcare.

Meanwhile, Mishra says, "At present, we are not able to implement it across the regions, states (right now). So we are choosing number of districts each year.

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Despite India’s rapid economic growth in the last 20 years, the government spends only about 1 percent of gross domestic product on healthcare. That compares to 8.3 percent in the United States and 3 percent in China.

More newborns die in India than in economically backward neighbours such as Bangladesh, and preventable diseases such as diarrhoea kill more than a million children every year.

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Most of the government hospitals are overcrowded and lack of resources to meet the growing demand, while access to essential health services in rural areas and smaller towns remains poor.

"I can say that you are covered, but your closest health care centers are 100 kilometres away. You are limited by that reality," said Rana Mehta, leader of healthcare at consultants PwC India.

"To develop sufficient infrastructure and then provide care over a period of time would obviously take decades."

A research by Indian business lobby FICCI and consultants EY in 2012 found that universal health cover in India was feasible in ten years and would require government health spending to rise to 3.7-4.5 percent of GDP.

In Depth:

Mr. Mishra said the new health plan would focus on improving preventive healthcare services by ensuring adequate availability of expert doctors in rural areas, while new infrastructure would be developed under existing welfare programmes.

Tertiary care services or specialized consultative care services would be provided through an insurance-based model and the government will offer more than 50 percent drugs free to all its citizens.

Along with the drugs, about 12-15 diagnostic treatments would be offered in the package.

States would be encouraged to enter into outsourcing agreements for the provision of treatment, said the health ministry official.

In recent years, thousands of small test centres and private hospitals have flourished, betting on high demand created by lack of facilities in government hospitals. Such providers opened 80 percent of India's new hospital beds during 2002-2012, says a PwC-NatHealth report.

While private organizations will be involved in the ambitious project, the government will have to ensure speedy payments for the partnership to work, said Harish Pillai, chief operating officer at private healthcare group Indus Health.

"Private players can definitely help and execute it better, but the government should not only see us as commercially-driven entities," added Pillai.

The World Bank and Britain's health cost-effectiveness agency NICE will also be assisting India in the venture, providing advice and technical assistance on treatments the government should offer in the package.