Ayushman Bharat- National Health Protection Mission (AB-NHPM)

Healthcare in India

  • Healthcare in India is largely underpenetrated, with government expenditure at around 25% of the GDP and an underperforming public healthcare ecosystem.
  • Problem of 3A’s– refer to the figure
  • Dual disease burden: Even as the incidence of lifestyle diseases is steadily on the rise, a vast majority of rural and poor patients still suffer from infectious and acute diseases.
  • Low levels of healthcare spend: India’s per capita public expenditure on health increased from Rs 621 in 2009-10 to Rs 1112 (around $16 at current exchange rate) in 2015-16.
  • However, it is still ‘nominal’ compared to other countries. Switzerland spends $6944 on health per capita, whereas the US spends $4802 and UK spends $3500.
  • Out of pocket expenditure pushing people into poverty– It is extremely worrying that nearly 55–60 million Indians are pushed into poverty every year because they are unfortunately compelled to shell out half of their annual household expenditure to meet medical needs, specially for hospitalisation.
  • Shortages in government run insurance schemes- A majority of insured population is covered under Employees’ State Insurance Scheme or government sponsored schemes but these schemes have significant coverage limitations.
● Severe shortage of trained medical professionals—including nurses, dentists, and administrators—but especially doctors.
● The United States has 2.672 doctors per 1,000 people, and 3.1 hospital beds per 1,000 people.
● India, on the other hand, has a mere 0.599 doctors and 0.9 hospital beds per 1,000 people.
● Inequity in infrastructure: While the urban India is witnessing a mushrooming of world-class medical facilities, the rural areas are bereft of even basic healthcare facilities.
● Government should remove disincentives on health insurance. For example, indirect taxes on individual health insurance have increased from 12.5% to 18% over the last few years. GST on individual health insurance should be reduced.
● As per 71st round of National Sample Survey Organisation (NSSO)-
○ 85.9% of rural households
○ 82% of urban households have no access to healthcare insurance.
● Currently, around 28-30% of population has some form of healthcare insurance.
○ About 3-4% have retail health plan and the rest is government sponsored schemes.
● Shortage of healthcare ecosystem- like hospitals and beds. Even majority of these are in urban areas. Beyond that, centres, including PHC centres aren’t registered. Ayushman Bharat will create this ecosystem in rural India.
● Quantum of health insurance have increased but largely limited to urban areas. In rural areas, people continue to spend from their own pockets.
● Competition Committee of India report on affordability stated that 50 to 65% of Indians did not have regular access to essential medicines. And this despite over 40% of the Indian pharmaceutical industry’s $33 billion worth of drugs being exported.
● Affordability can be seen in two ways: medicine affordability and treatment affordability
● Huge borrowings to provide healthcare- Catastrophic healthcare related expenditure pushes families into debt, more than 24% households in rural India and 18% population in urban area have met healthcare expenses through some sort of borrowings.
● Ensuring affordable drugs is a necessary prerequisite for bringing down the overall healthcare expenses. Inflated trade margins and quality of medicines needs to be addressed.
● Medical Devices in India are not only largely imported but have high trade and manufacturing margins eventually hurting patients.
● High Out-of-pocket expenditure- WHO’s health financing profile for 2017 show 67.78% of total expenditure on health in India was paid out of pocket. The world average is 18.2%.


In order to address the shortages in healthcare system in India –one of the major policy initiatives of the government has been the announcement of the Ayushman Bharat – National Health Protection Mission (AB-NHPM) for the vulnerable section of the Indian population which, if implemented effectively, will help the nation move closer to the Sustainable Development Goal of ‘Universal Health Coverage’. It is expected that the scheme will have a far-reaching impact on the entire Indian healthcare and insurance landscape.

Ayushman Bharat – National Health Protection Mission (AB-NHPM)


Standardise treatment guidelines (STGs)● Mandate adoption of STGs for standardise treatment and billing
○ Quality of care- improved quality of services received by patient
○ Increase in evidence-based medicine treatments, leading to improved health outcomes
○ Improved consistency of care
Standardised package rates● The scheme identifies approximately 1350 treatment/surgical procedures for which package rates will be fixed
○ Claims management- Uniformity of surgical expenses, thereby enabling efficient management of claims
○ Helps in curbing tendency to overcharge
○ Helps in standardising prices of treatment across the country for similar type of institutions
Updating ROHINI● The scheme will also help in enriching the database of hospitals registered with the Registry of Hospitals in Network of Insurance (ROHINI) System
● Help in the management of claims costs through reduction in fraudulent claims.
Enrichment of National Health Resource Repository (NHRR)● Generation of repositories on hospitals, providers and other human resources for health.
IT integration and data generation● The scheme will help in generating large volumes of data which may be used later for designing better and targeted health programmes. This will assist in effective medical management; in studying the impact of including or excluding specific diseases, populations or coverages; and in optimising cost and improving efficiencies.
Multiplier impact on allied sectors● The scheme will have a multiplier impact on the healthcare and allied sectors like pharmaceutical, diagnostics and medical devices and the overall Indian economy by way of employment generation.
Health and Wellness Centres● Ayushman Bharat will upgrade over 1.5 lakh sub centres to health and well centres (H&WC) by 2022.
Employment Generation● The scheme will have a multiplier effect on the Indian economy through employment generation and promoting healthcare industry in tier 3 and 4 cities.
Benefits of ayushman bharat● Hospitals
○ Push for package rates
○ Focus on quality
○ Focus on accreditation
○ Focus on operational improvements to reduce costs

● Pharmaceuticals and diagnostics
○ Focus on low-cost, good-quality drugs and on centralised procurement
○ Focus on supply side shortages

● Digital and IT service providers
○ Develop IT architecture to link patient data and insurance companies with SECC and Aadhaar data
○ Digitisation trends will further help in reduction of costs

● Insurance
○ To build capacities for effective claim management, actuarial capacities, clinical audit capacity and hospital scrutiny
○ Negotiate package rates, improve system automation

● Government
○ Identify additional sources of financing
○ Build in system automation for monitoring and grievance redressal
○ Regulators to ensure fair competition



Policy shortcomings:-

Systemic challenges that needs to be addressed:-

  • Right pricing strategy- Difference between market price and NHPM price is high for costly procedures, thereby limiting the availability of these procedures. It is imperative to follow right pricing strategy on scientific basis for the scheme to make maximum impact.
  • Right infrastructure strategy required to meet new bed capacity demand from AB-NHPM.
  • Policy is reactive than proactive- The policy is reactive in nature rather than proactive. Policy lack focus on preventive care.
  • Health is a state subject– Thus, taking all states on board will not be easy as many states prefer their own state insurance schemes over AB-NHPM.
  • Providing rural masses with healthcare facilities as available in urban India is still a distant dream.
  • Coverage extensive not exhaustive- Although the coverage is extensive under AB-NHPM but it is not exhaustive. Middle class is out of the ambit of the scheme.
  • Foreseeable fraud challenges in NHPS
    • Enrolment of genuine/ghost beneficiaries
    • Impersonation in connivance with cardholders and hospital, leading to fraudulent admissions
    • Conversion of OPD patient into an IPD patient
    • Showing medical management cases as day care procedures
    • Deliberate blocking of higher priced package or multiple packages to claim higher amounts
    • Treatment of diseases which a hospital is not equipped for
    • Non-payment of transportation charges
    • Hospitals/doctors not following standard protocols
    • Doctors performing procedures needlessly
    • Hospital charging money even though it’s cashless scheme

Way forward

  • As per Competition Commission of India (CCI) report- A significant proportion of out-of-pocket expenditure made by patients on medicine bills. The report cites public procurement as a solution, but its present levels are insignificant.
  • It is in this backdrop that financial models like medical loans and crowdfunding have started to emerge and must further be pushed in an attempt to address the needs of the “unbankable” and make the system more inclusive.
  • In the long run, AB-NHPM should envision strengthening of primary care, inclusion of out-patient treatment and a public healthcare delivery system, and expanding the scope of coverage to the entire population in order to make the government’s transition from provider to payer a successful one and achieve Universal Health Coverage in the true sense.
  • All these measures taken together will help in regulating the hitherto unregulated hospital and healthcare sector and in making the health insurance sector a sustainable one.
  • In the long run, the conversation on healthcare has to shift from pricing to sustainability and viability.
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