Finance Minister Arun Jaitley has taken all the risks in his last full budget. The middle class is obviously miffed at the sleight of hand in the income tax announcement. Instead of claiming that the government is giving some benefit through standard deduction, it would have been better to project it as a replacement for transport and medical allowance. Only the FM knows if this was a strategic mistake or a tactical mistake made by the speech writers.
Budget speech is the most important policy event of the year and is dissected closely. Therefore, it is important that it be fair, transparent and complete. The manner in which standard deduction was announced shows that bureaucrats felt they could fool taxpayers. The lack of details on the massive healthcare insurance scheme shows poor preparedness, too.Two steps are needed quickly on the health scheme or Modicare as it is being called. First, the government needs to explain how it will work and give full details. Second, it needs to be launched quickly so that the benefits can reach citizens before the government gets into election mode. Otherwise, it may lead to a higher discontent.
Lack of details means higher chances of misinterpretation. The healthcare scheme is an insurance for medical emergencies, specifically hospitalisation. Ten crore families that will be insured will have to pay a nominal amount to be recognised and mapped by the insurance system. Jandhan Aadhaar and Mobile is the digital foundation for rolling out this scheme. The government should not run or manage this scheme that’s in insurance companies’ domain. The government’s job is to usher in reforms by revamping the regulatory structure and digital infrastructure to roll out this scheme.
Changes in regulations will be needed to make sure that the scheme is attractive enough for the sector: insurance companies, healthcare service providers and recipients. The learnings from the failures in the shtriyaSwasthiyaBima Yojana and the best practices from CGHS, the defence services healthcare schemes, need to be adopted in Modicare. But the scale of the scheme is such that some reforms and incentives may be needed to make sure that private healthcare service providers accept it. It is important that the private sector is part of it as it delivers more than 80 per cent of the healthcare services in the country. They have to accept it; the government cannot expect the poorly-run government hospital sector to deliver the mammoth scheme. Let the mistakes made in NHP 2017 not be repeated with Modicare.
People prefer private hospitals over government ones. If the scheme is structured properly, regulatory reforms done will help in solving the biggest problem ailing the healthcare services. Rising healthcare costs are leading families to bankruptcy and poverty. Government statistics show the number of households facing catastrophic expenditure due to health costs was 18 per cent of all households in 2011-12 compared to 15 per cent in 2004-05. Independent estimates suggest that it would be closer to 30 per cent in 2017-18.
The most important impact of Modicare is that when the government becomes the largest buyer of healthcare services, it can lead to standardisation of medical procedures and prices. This will bring down the overall prices of healthcare services, help improve services and prevent frivolous tests and procedures for even the middle class. To show its sincerity towards this reform, the regulatory structure for healthcare sector should be done before the launch of the scheme.
Any insurance company looking at bidding for this scheme, and I am assuming that the government will not manage it, would be attracted by size. Therefore, the access and delivery through JAM -- which means enrolment of citizens already registered as MNREGA beneficiaries or BPL families -- will have to be done. This is the digital infrastructure that needs to be leveraged for reaching 10 crore families. Insurance companies would obviously be interested in accessing such large base. The government should, therefore, negotiate the best premium so that the cost to the exchequer and user can be low.
The myth that everything can only be done by allocating large sum of funds has to be broken. Modicare is one reform that can effectively build a new way of delivering better quality of services by creating an enabling environment of regulation and infrastructure around it.
The writer is a policy analyst based in Delhi and can be reached at email@example.com