Union Budget 2013-14: Healthcare industry demands decoded!

I doubt any nation on the planet is as obsessed about the budget as ours. Perhaps it has something to do with the fact that it’s powered by the tax we pay. And so, every year with much fanfare, the budget expectations kick in – experts tell us what they want, what they expect, what duties to remove, the government assures us that they’re spending more and more for our benefits while raising the taxes and so forth. Then comes the day when the Finance Minister drones on and on reading from a long list of figures, figures which have so-many zeroes that it becomes hard to keep track of the numbers. This goes on for a while until the government lauds itself on a budget well-presented and the opposition and other experts lament about a poorly presented affair and they finally disappear into the night with the aam admi – you and me – left wondering what really happened. But the fact is that the budget affects everyone in this country so I’ve tried to analyse some of the demands made by the healthcare industry’s movers and shakers:

• Increase GDP allocation on healthcare
• Grant infrastructure status to the healthcare sector
• Spend more on public health services
• Lower duty on import of medical equipment
• More allocation to medical education institutes
• Make medical visas easier to get
• Increase tax holidays

 Are you confused? Don’t worry, so was I until I gathered that these aren’t arcane demands but legitimate ones that’ll improve our country’s economy and overall productivity which I’ll attempt to break down into normal talk for normal people:

More allocation to healthcare spends from GDP

What it means: The government should spend more on healthcare

You don’t need to be a Nobel Laureate economist to realise that the health and well-being of a country’s citizens is tied to its economic progress and productivity. That however, doesn’t seem to occur to the various governments the country has seen. In 2011, the government spent a paltry 1% of its GDP on healthcare but last year’s budget promised to hike it up to 2.5%.

How low is low

Currently, India falls under countries who spend the lowest on healthcare in the world – 171 out of 175 countries in terms of public health spend. The Nigerian government spends more per cent of its GDP on healthcare! This has meant that 70% people in urban areas and 63% in rural areas go to private practitioners for healthcare services. This has led to very high out-of-pocket (OOP) expenditure for the general public. This means that 78% of all spends on healthcare are paid by the people and 72% of this is on drugs alone. Estimates suggest that 39 million people are forced into poverty each year because of medical expenditure. Also, millions, because of the rising costs simply can’t afford any sort of healthcare at all.

 What it means for people:  This should help reduce out-of-pocket healthcare expenditure and make basic healthcare services accessible to people who can’t afford it at all. More expenditure would also mean that there will be more public hospitals, drugs would be cheaper and less people would be forced into poverty because of healthcare costs.

Budget 2013-14 Update: The government increase its allocation to the healthcare sector increasing its expenditure from Rs 30702 crore to Rs 37330 crore. 

Grant infrastructure status to the healthcare sector

What it actually means: Infrastructure status makes it easier for that particular sector to grow because it gets a lot of government help.

Currently, sectors like water, roads, power (electricity), oil and gas, telecommunications, aviation, dams and irrigation are considered part of the infrastructure status. This allows them to pay lower interest rates on loans, pay lesser taxes and increased funds for setting up projects.

Read: Generic drugs – what you need to know

How it would benefit healthcare?

Infrastructure status would allow people to set up more hospitals and labs, hire more doctors and also allow Foreign Direct Investment (FDI) in healthcare.  It would also ease up the process of setting up standard medical educations and increase public-private partnership in the healthcare sector. If the government does want to achieve its oft-quoted dream of Universal Health Coverage – then granting industry status is very important.

What it means for people: Granting infrastructure status would benefit several people. It would allow hospital groups to expand faster and newer ones to come up.

Budget 2013-14 Update: Infrastructure status to the healthcare industry wasn’t granted

Read: What ails India’s healthcare system

Spend more on public health services

What this means: The government should spend more on public health services.

Comparison with other countries: Healthcare economics across the world can be broadly divided into two categories – capitalistic (like the United States) or socialist (UK and rest of Europe). In the first category, most healthcare resources are owned by private entities and in the second the state owns the resources, taxes the citizens and provides them healthcare. There’s ample evidence to provide that the second system works better because even though the US spends more per cent GDP on healthcare than any other country, the facilities aren’t available to all, whereas UK’s National Health Service or France’s system which was deemed by WHO in 2000 to be best in the world. The success of the latter is based on the fact that most European countries have universal healthcare despite spending less than the USA (USA – 15.2%, France – 11.2%, UK – 8.4%).

In comparison, India’s healthcare system is neither there nor here. Most of the resources lie with the private sector and this makes it harder for the government to implement public health schemes.

How they work

Last year’s budget increased allocation to two of the biggest projects to alleviate the healthcare woes of the poor – the National Rural Health Mission (NRHM) and the Rashtriya Swasthya Bima Yojana (RSBY) which literally means the National Health Insurance Scheme. Another proposed scheme was the National Urban Health Mission (NUHM) which will work along the lines of the NRHM and will look to alleviate the healthcare woes of the urban poor, particularly slum dwellers. Though discussed last year, the NUHM still hasn’t seen the light of the day and the government isn’t sure when it will be launched.

 The NRHM was a rural health initiative started in 2005, to alleviate the healthcare woes of rural India. The way it works is the government picked out 264 backwards districts to improve healthcare services which they would seek to improve the healthcare facilities in these places with a more pragmatic approach. This involved training locals as Accredited Social Health Activists (ASHA) and various indicators suggest that it has worked to a certain extent. Last year, the NRHM was allocated Rs 20,822 crore (increased from Rs 18,115 crore in 2011). Like the NRHM, the RSBY is mainly for the poor who can’t afford health insurance. It is a smart-card based insurance scheme for every Below-Poverty Line (BPL) family which allows them to get inpatient treatment up to Rs 30,000 per year. The scheme will cover the main bread earner, their spouse and three dependents. In 2012, the RSBY was allocated Rs 1097.6 crore.

What it means for people: The NRHM and the RSBY are both path-breaking schemes that look to improve the healthcare facilities of the poorest in the country. The government needs to keep on increasing funds to these schemes and also launch the NUHM to alleviate the woes of the urban poor, particularly slum dwellers.

Note: There has been enough evidence to suggest that the Mayawati-led BSP was part of a scam involving over Rs 10,000 crore during the party’s rule of UP when it siphoned off funds meant for the poor through the NRHM. Six people involved with the case including four medical officers were found dead, three of whom had been shot. Keeping this in mind, just allocating money isn’t enough and there needs to be transparent process to make sure funds aren’t being misused.

Budget 2013-14 Update: The government proposed a new National Health Mission which will have under its jurisdiction both the National Rural Health Mission and the proposed NUHM. The NHM was allocated Rs 21,200 crore for this purpose. 

Also read: How technology is making healthcare more accessible and affordable 

The other demands on the list are pretty much straight-forward:

Lower duty on medical equipment: Hospitals and doctors feel that the duty levied on medical equipment should be reduced to help bring down patient costs, particularly those that can’t be manufactured in India.

What it means for people: Lower duty will allow hospitals and doctors to charge less for expensive procedures.

Budget 2013-14 Update: There was no change in the excise duty levied on medical equipment. 

More allocation to medical colleges: Usually, government hospitals are given the largest chunk with AIIMS getting Rs 1124 crore last year. Six new AIIMS-like institutions were also set up which became functional from September 2012. Basically, the healthcare resources in this country are unequally distributed and more allocation will allow institutes in areas where there are fewer hospitals, particularly the rural areas.

What it means for people: One of the biggest problems in this country is healthcare distribution. Most medical colleges and facilities are located in urban centres and the aforementioned move could help set-up more medical colleges across the country.

Budget 2013-14 Update:  The FM proposed an increased budget of Rs 4,721 crore for educational medical institutions. The recently launched AIIMS-like institutions that started their academic years in September 2012 were given an allocation of Rs 1,670 crore. Also the FM promised that the hospitals attached to the aforementioned colleges would be functional in the current academic year. 

Increase tax holidays for hospitals and other medical institutions: A tax holiday refers to the amount of time an entity doesn’t have to pay taxes and this is important for hospitals. Insiders feel that the tax holiday period should be increased to 10 years instead of the current five to keep a hospital’s expenses in check.

What it means for people: It will make opening up hospitals a more attractive proposition and more entrepreneurs will be encouraged to venture into providing medical services.

Budget 2013-14 Update: There was no mention of any increase of tax holidays for hospitals. 

Easier medical visas: It’s ironic really that while its citizens can’t avail of all the healthcare services provided, India continues to have some of the best medical facilities in the world where the procedure is far cheaper than anywhere else in the developed world. This means that people from all over the world come to India for various complex procedures. Industry insiders want the procedure to acquire medical visas simper so that it boosts medical tourism.

What it will mean: Boosting medical tourism will increase the inflow of money and will help create more jobs for the natives. It will also allow hospitals to improve their services. 

Budget 2013-14 Update: No mention of easing the procedure of medical visas for foreigners. 

This in short, is most of the demands made by the healthcare industry. The proof of the pudding is in the eating and it will only be years later when we’ll find out if the increased allocations and other aspects of the budget have actually helped its citizens. Will it decrease the inequity in healthcare resources? Will it decrease the maternal mortality and infant death? Will we one day actually be a nation where every citizen – irrespective of their financial status – have access to some kind of healthcare service? Only time will tell.