• Ayush Singhal

ModiCare: Maximum Governance or Minimum Government?

A considerable amount of time has passed since the Budget for the financial year 2018-19 was announced in February. The benefit of a delayed response, such as this, is that the intricacies of the Budget statement have begun rolling out, and projects and schemes start entering the formulation phase. What is disappointing is that the details being rolled out are just affirmances that the Budget is pseudo-populist. Pseudo-populist, because the Budget was more of an embellished statement and didn’t really concern itself with the welfare of the people. The executive announced a lot of schemes and measures, but neither the funds, nor the structure elaborated, seemed enough for most of the major ideas to take off. This article series shall discuss the pseudo-populism on the Healthcare and Agricultural front- the two primary focus areas of welfare measures in 2018-19 Budget. The first article focuses on Healthcare, or as the media calls it- MODICARE.

Ayushman Bharat

The Ayushman Bharat National health protection mission (AB-NHPM) aka ModiCare, was the biggest announcement of the Budget this year. The government has set out on an ambitious task of providing medical insurance worth Rs.5 lakh (US$8000 approx.) per annum, per household, to 10 crore households (approx. 500 million people). The step is commendable, considering India has one of the lowest expenditure on healthcare, as a percentage of GDP and ranks 154th in the world on the Healthcare index, published by Lancet. The most conservative estimates suggest that the scheme would cost, at the minimum, Rs.60,000 crores (US$10bn approx.), and these estimates go up to Rs.1,20,000 crores (US$20bn approx.). However, the government has allocated a meager sum of Rs.2000 crores (US$333mn approx.) to conduct such a mammoth exercise. When one thinks of welfare schemes of similar scale in recent memory, Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) is the first to come to mind. MNREGA was a flagship scheme of the Manmohan Singh led UPA- I government which provides 100 days of guaranteed employment, each year, to every rural household in the districts that it is operational. The difference between the two schemes is that MNREGA followed a staggered implementation process.

Before its launch, the scheme was given a legislative structure and form through National Rural Employment Guarantee Act 2005. A pilot implementation of the scheme was done in 2006 and after incorporating inputs from the ground, the scheme was launched to cover all the districts of the country in 2008. The then finance minister, P. Chidambaram allocated 16,000 crores (US$2.4bn approx.) to MNREGA in his Budget statement for the financial year 2008-09, but the realised expenditure was almost twice as much. Even after a relatively systematic implementation of MNREGA, the government had to shell out double of what it had initially allocated. According to sources, the government plans to roll out the funds over the course of the year. But the major problem with such unplanned implementation is that a lot of people are denied their due, owing to unavailability of funds as had happened in case of MNREGA, despite substantially more expenditure. One can only wonder what the scenario would be like when the estimated expenditure is 30 times more than the allocated funds.

The government estimates for this scheme are, to put it mildly, optimistic. The Government has estimated a per person annual premium of Rs.1100 (US$20 approx.) to cover both Secondary (district level hospitals with greater facilities than local health centers) and Tertiary (super-specialized facilities) healthcare. The Tamil Nadu government alone, shells out premiums of Rs.900 (US$15) and Rs.1600 (US$24) for secondary and tertiary healthcare, respectively, in its health care insurance scheme for a far lower sum assured. There is a limit to which economies of scale could help and the government has grossly underestimated both, the number of hospitalization cases and premium amount.

Recent experience with HealthCare Insurance

Schemes like NHPS require a highly sophisticated implementation process. It is a part of the gradual departure from provisioning of public services to the regulation of public services by the state. Any serious policy analyst working on India knows that the state has miserably failed at providing public services such as education and healthcare. There is no guarantee that the future would be any different. This process and would require intensive training of public officials at both central and state level. However the past experience with Rashtriya Swastha Bima Yojna (RSBY) is a clear example of state’s inability in implementing such schemes on a large scale. RSBY which would be subsumed by NHPS, but the scheme has had problems despite 10 years of trial and error. In Bihar, the number of employees in RSBY is less than ten and the nodal officer holds an additional charge. The grim situation exists across all the fifteen states which managed to implement it. Moreover, what the privileged class might not realise is that information dissemination and awareness exercises are cumbersome and usually a complete failure, especially in remote regions. In a study conducted by Tata Institute of Social Science, it was found that only 70 percent of those who had BPL (Below Poverty Line) cards, and were thus intended beneficiaries of RSBY were not even aware of the scheme or had little to none understanding of their rights under the scheme.

ModiCare: Possible or a Palace-in-air?

The details of NHPS released recently by the government are convoluted, to say the least. The document mentions that RSBY covered 3.63 crore families across 278 districts in the year 2016-17. There are t wo major problems here:

1) While the 3.63 crore figure is touted as an achievement, there is no mention of the reduction in this number from the 2016 figure of 4 crore.

2) RSBY was covering only 39 percent of the districts, most of them being the moderately populated districts of hill states such as Uttarakhand, Assam etc., the claim of the scheme covering 60% of the intended beneficiaries of NHPS is therefore, questionable.

These statistics do not even give a fair assessment of the number of hospitalization cases and other important metrics and resemble a laudatory advertisement more than a substantive statement of policy. The number of families covered /enrolled in the scheme, alone do not give a fair picture of the ground realities, as we have seen earlier. There is a need to factor in the actual disbursements, existence of proper hospitals, doctors etc. The question is fairly simple, what use is health insurance when there are no hospitals to go to, or the ones that exist are understaffed or have no available beds?

Perhaps the most peculiar aspect is that the Health Ministry is itself clueless about the scheme and it is the NITI Aayog which is taking the lead in charting out the details of design and implementation. In a recent press conference, the officials of Ministry of Health and Family Welfare, surprisingly referred the media to the NITI Aayog, when prompted with questions concerning NHPS.

One of the promises of the current government was cooperative federalism. With NHPS, the Union is seeking cooperation from the states for financing a major portion of the scheme. But the Ayushman Bharat National Health Protection Mission Council (AB-NHPMC) and Ayushman Bharat - National Health Protection Mission Agency (AB-NHPMA), both apex bodies wouldn’t have any representation from the states. While the process of formulation and implementation of NHPS should be more deliberative in nature with a robust feedback and evaluation mechanism, it is almost entirely unidirectional.

The reports on RSBY, even a decade after implementation are so disturbing that one can only hope that NHPS turns out to be better. A study done in Chhattisgarh found that people had to shell out money despite being beneficiaries of RSBY. The study showed that people enrolled under RSBY (a cashless scheme like NHPS) had to shell out around Rs.6000 (US$100) while people not covered were spending Rs.7000 (US$115) on average, showing that corruption had ensured that there is barely any difference. Private hospitals can easily inflate the bill to get more money from the government, which in turn leads to higher expenditure on medicines, an expenditure borne by the individual as often the medicines prescribed are not available in the vicinity but at the pharmacy in a private hospital. More often than not, hospitals, owing to the influence of pharmaceutical sales representatives, end up prescribing patented medicines, even when generic alternatives are available at cheaper prices.

There is also a possibility that the implementation of NHPS means that in-patient care expenses (those incurred in the hospital) are cross-subsidized by reducing support for out-patient expenses (those incurred before and after hospitalization). The latter are borne directly by the individual concerned, even if the insurance covers the former. Health Budget 2018 has already raised skepticism on this front. There has been a significant rise (2.1 percent) in allocation to Health as part of the Union Budget but simultaneously, allocation to National Health mission (comprising almost 30 percent of the total allocation to Health Budget) has decreased by 2 percent. The flagship scheme last year, Reproductive and Child Health Care (25 percent of NHM budget) saw a decline of 33 percent. The focus on centers of Primary Health (local level health centers), Health and Wellness Centers, and the Maternity Nutrition Scheme also decreased significantly. Outpatient care comprises over 60 percent of the out of pocket expenditure. A wage laborer cannot afford to get admitted and lose two-three days of wage and usually opts for outpatient care. If this scheme of moving money continues under NHPS, the lives of contractual laborers and people working in other sections of the informal sector would be devastated.


The intent of providing access to Universal Healthcare in the secondary and tertiary sector is a very noble one. However, this should not lead to hardships for its intended beneficiaries themselves. The two biggest responsibilities that welfare state owes its people are – Education and Healthcare. The state has already passed the buck on the private sector for education (through RTE) and now it is doing the same with healthcare. Principally the focus should be on strengthening and increasing the efficiency of Public health Care System and not relying on private healthcare. The British Model, where hospitals are managed by the government is what India has used for decades, the American model, where private hospitals are subsidized for poor using state insurance, seems in-congruent with the geographical and structural realities of the country. The need of the hour is to focus on increasing state capacity, training of public officials and development of sophisticated governance systems for the long-term benefits.

About the Author

Ayush Singhal is a poet, a social worker, a debater and a student of Public Policy. He holds an undergraduate degree in Political science from Kirorimal college, Delhi University. He has worked with Public health foundation of India, Pratham, Centre for Indian political research and analysis among others. He has interests in Indian Political History, Policy implementation and development, Education and Urbanisation.

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