Bill introduced in Rajya Sabha to control 'medical inflation'

Amidst the rising cost of medical treatment in India, a private member's bill has been introduced in Rajya Sabha, which seeks to set up a National Commission to control "medical inflation" in the country.

The medical expenditure in India: (The Numbers)

• India’s total health expenditure went down from 3.9 per cent of the Gross Domestic Product (GDP) in 2013-14 to 3.2 per cent in 2018-19- latest national health estimates
• The Union government’s expenditure on healthcare went down to 1.28 per cent of the GDP in 2018-19 from the previous year’s figure of 1.35 per cent.
• The total healthcare expenditure has increased from 29 per cent in 2014-15 to 40.6 per cent in 2018-19.
• India witnessed the highest medical inflation rate of 14 per cent among Asian countries in the year 2021.
• The cost of medical treatment in India went up by 7.21 per cent- Ministry of Statistics and Programme Implementation
• As of now, the out-of-pocket expenditure of an individual for healthcare is 63 per cent in India.

What is medical Inflation?

• Medical inflation can refer to a situation where there is an increase in the average and unit cost of healthcare services over a period. Alternatively, it can refer to an increase in both unit cost and utilisation cost of services.
• Causes:
  • Changes in healthcare availability and access (demand and supply)can be considered one of the primary causes of rising medical inflation.
  • Consumer behaviour is also a motivating factor for change in the usage of services per person.
    
    

Need for reforms:

The National Commission for medical inflation is required as;

• The Directives Principles of the Constitution mandate the state to ensure health to all.
• Also, the Right to Health under Article 21, gives backing for the Bill proposed, to set up the National Commission to reduce out-of-pocket expenditure.
• The proposed Commission should also be tasked with;
  • standardising the prices of essential medicines,
  • medical diagnostic tests,
  • pathological tests and all other relevant medical and
  • allied services across the country

Why does Public Health matter?

• Public health promotes and protects the health of people and the communities where they live, learn, work and play.
• Public health works to track disease outbreaks, prevent injuries and shed light on why some of us are more likely to suffer from poor health than others.

What are the loopholes in present health insurance coverage in India?

• Uncovered population: In the absence of a low-cost health insurance product, the missing middle remains uncovered despite the ability to pay nominal premiums.
• Ignored segment: Most health insurance schemes and products in the Indian market are not designed for the missing middle.
• Out of Budget: Private voluntary health insurance is designed for high-income groups – it costs at least two to three times the reasonable level for the missing middle.
• Affordable goes to BPL: Affordable contributory products such as ESIC, and Government subsidized insurance including PMJAY are closed products. They are not available to the general population due to the risk of adverse selection.

What are its implications?

• High out-of-the-pocket expenditure (OOPE): The private sector is characterized by high OOPE, leading to low financial protection, and is mostly self-employed or middle-income groups of the society.
• Impact on the standard of living: The catastrophic health expenditure and its impact on savings and standard of living are experienced by a substantial share of the population, almost 1/4th at the 10% threshold level, connecting it to the purchase of health insurance as an investment for health security is not intuitive ex-ante (Ex-ante refers to future events, such as the potential returns of a particular security, or the returns of a company).

Health insurance policies in India:

• PMJAY (Ayushman Bharat: Pradhan Mantri Jan ArogyaYojana): Pradhan Mantri Jan ArogyaYojana' (PMJAY) was launched in 2018.
• Also known as Ayushman Bharat or the National Health Protection Mission, it was launched as the world’s largest health scheme with an aim to serve a population equal to 27-28 European countries.
• RashtriyaSwasthyaBimaYojana (RSBY): It provides fully subsidized comprehensive secondary and tertiary healthcare packages with annual coverage of Rs. 5 lakhs per family on a floater basis.
• Private voluntary health insurance (PVHI) schemes: PVHI is a contributory and voluntary scheme.
  • These are retail insurance products with coverage for nearly 11.5 crore persons.
  • PVHI are broad of two types — individual/family or group business(excluding Government).
  • The former is targeted by individuals and families, as the name suggests, and covers 4.2 crore persons.