Universal Healthcare Coverage – a global agenda: FICCI and EY Report

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FICCI and EY launched “Universal health cover for India: Demystifying financing needs” at FICCI Heal 2012

New Delhi, 28 August 2012 – FICCI and EY’s latest Knowledge Paper “Universal health cover for India: Demystifying financing needs” launched at FICCI Heal 2012 aims to provide a roadmap for achieving the “Universal Healthcare Coverage” (UHC)* by answering some key questions like: (1) what will it take to deliver UHC (2) Can India afford to make UHC a reality and (3) what should be the role of government and private sectors in accomplishing this agenda, which could well set the future of Health Revolution for the country.

The paper attempts to define context of possible health care demand, role of government and the private sector, financing imperatives and critical success factors for establishing and sustaining Universal Healthcare Coverage (UHC) in its true spirit with emphasis on supply-side financing.

Sangita Reddy, Chairperson, FICCI Health Services Committee says, “The economic advancement in India has enabled the government to clearly articulate its intent to increase the public financing of health to 2.5% of India's GDP, in the 12th Plan to move towards affordable, accessible quality healthcare for all. The FICCI-Ernst &Young study estimates that UHC in India can be achieved over a period of 10 years with Government health expenditure increasing to 3.7% to 4.5% of GDP and reduction in out of pocket expenses to 20-30%. This also represents multiple opportunities to build innovative new models to ensure that Care is sustainable and costs do not spiral continuously”.

 Muralidharan Nair, Partner – Life Sciences, EY says, “We believe that implementing UHC has more to do with political will, social solidarity and effective governance than with the ability of the state to ensure sustainable funding. We estimate that government sponsored UHC covering most of the inpatient needs, out patient needs including drugs and diagnostic services would require a public expenditure of approximately 4 per cent of GDP, need less than 1.7 beds per thousand and can be achieved by 2022. In order to ensure uniform adoption and implementation we recommend predominant funding from the Central government, raised primarily through direct taxes with the responsibility of implementation with the states.

Dr Nandakumar Jairam, Co-Chair, FICCI Health Services Committee & Chairman & Group Medical Director, Columbia Asia Hospitals India opines “The adoption of UHC as a policy imperative will entail providing access and affordability to all in the long run. Advancement of care will also be an equally important imperative to attain UHC in the true spirit. This will necessitate seeding investments to build Centres of Excellence for medical needs that are relevant to Indian epidemiology and in designated geographic zones that are accessible to all for the most complex of care.”

Framework for financing the proposed UHC for India

The challenge of financing UHC is often evaluated in the light of rising cost pressures against limited resources. The size of the population and the type of quality service under UHC is believed to necessitate a relatively higher share of spend on health care as a % of GDP:

  • Health care spend as a % of GDP across most nations that have achieved more than 80% coverage of population through universal health systems is 5%–12%, with exceptions such as Thailand ( 3.9% of GDP) and the Philippines (3.6% of GDP)
  • To assume appropriateness of these reference points as benchmarks and take them as representatives of the typical cost burden of UHC may not be correct in the Indian scenario. On the contrary, the efficiency of health care systems, and policies and practices adopted by nations (which in the case of India are unique and may not be comparable with other countries) define costs of health care delivered and, consequently, the extent of GDP spends on health care
  • In India, the lower affordability of average citizens has led to the creation of systems and policies that are capable of delivering health care at low costs. We need to be acutely sensitive of preserving them while creating a UHC system that is sustainable at a reasonable level of spend while ensuring outcomes that are comparable globally

Estimated expenditure on UHC

  • Including OoP expenditure, we estimate total spending on health between 5.5% and 6% of GDP. China, which has embarked on a journey toward UHC and has covered 84% of its population, spends 5.1% of GDP on health, of which 2.7% was spent by the government
  • The implementation of UHC is likely to increase the consumption of health care services. A sharper increase is anticipated in the short term, when a large latent need is addressed. Hence, total expenditure on health is likely to increase
  • Given the scale of implementation and infrastructure constraints, it may be prudent to assume a 10-year timeframe to accomplish UHC in totality. We, thus, estimate government health expenditure of ~3.7% to 4.5% of GDP in 2022 to implement the UHC program, which covers out-patient (consultation fee, drugs, diagnostic tests) and in-patient (ailments covered under RSBY and Aarogyasri)* services for the entire population

Critical success factors for an effective and sustainable UHC

Key factors that will decide the success of UHC program are as follows:

  • Acute focus on health outcomes: It is critical to calibrate the aspiration of UHC and the enhanced spend on health care, with an equally sharp focus on improving health outcomes. Key levers for focus would include:
    1. Reducing disease burden through a robust and functioning primary care system, including prevention, early detection and out-patient care
    2. Quality of in-patient care: To keep UHC from becoming a farcical expenditure, it is imperative to monitor the quality of in-patient care, along with facilitating the effective utilization of the available infrastructure
    3. Integrated approach: This will ensure adequate focus on allied determinants that have a critical impact on health, mainly nutrition, sanitation and wellness
  • Making care accessible to patients: It is critical to ensure adequate generation and equitable distribution of supply of health services under a UHC program. Key levers for focus would include
    1. Filling the physical and human infrastructure gap with acute focus on correcting distribution inequity
    2. Integration with other schools of medicine
    3. Technology-enabled healthcare
  • Ensuring strong focus on cost of care: To ensure that the financial burden of an UHC is managed effectively, the UHC regime demands a strong culture of cost consciousness. Key levers for focus include:
    1. Drug price policy and generic adoption, (b) Indigenous medical technology, (c) UHC reimbursement rates, (d) Administrative costs
  • Enabling Governance: An effective and efficient UHC regime demands optimal health system governance that ensures transparency, defines the appropriate levels of checks and balances to secure integrity of delivery and provides granular epidemiological data for evidence-based decisions. Key levers for focus include:
    1. Centre-state role and accountability, (b) Use of technology for transparency and managerial effectiveness
  • Building Centers of Excellence (CoE): The adoption of UHC as a policy imperative will entail providing access and affordability to all in the short and medium term. Advancement of care will also be an equally important imperative to attain UHC in the true spirit. This will necessitate seeding investments to build CoE for medical needs that are relevant to Indian epidemiology and in designated geographic zones that are accessible to all for the most complex of care

Mr. Nair from EY further added, “India has since long adopted Health as a fundamental right though expenditure on Health is one of the top 3 reasons sinking population below poverty line even while a vast majority of population struggle or fail to access quality healthcare. We believe providing health cover to all is a moral imperative of the Government which possibly lost priority in the exigencies of subsistence economy that India was till a decade back. However, with the sustained economic resurgence, time has come for India to adopt Universal Health Coverage as an active Vision”.

As we embark on this agenda, India must preserve and improve on its unique advantage of a cost-effective healthcare delivery system and adopt a holistic approach towards health and not just sickness, with differential focus on prevention and primary care The government, in our view should play the leading role in demand financing and primary/preventive care while facilitating active private sector participation for infrastructure creation and delivery in secondary and tertiary care with targeted incentives to bridge the supply demand gap and mitigate the inequity in geographical distribution.

Ends

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About FICCI

Established in 1927, FICCI is the largest and oldest apex business organisation in India. Its history is closely interwoven with India’s struggle for independence, its industrialization, and its emergence as one of the most rapidly growing global economies. FICCI has contributed to this historical process by encouraging debate, articulating the private sector’s views and influencing policy. A non-government, not-for-profit organization, FICCI is the voice of India’s business and industry. FICCI draws its membership from the corporate sector, both private and public, including SMEs and MNCs; FICCI enjoys an indirect membership of over 2,50,000 companies from various regional chambers of commerce. Log on to www.ficci.com for more details.