India’s health system has been going through an incessant transformation since pre-colonial period. Combination of four basic health financing models, namely, Beveridge, Bismarck, National Health Insurance, and Out-of-Pocket (OOP), have succoured the system to transpire in its present form which has failed to reach out to vulnerable, marginalised section of the population. Although this transformation is context-driven and the system has taken its present shape in response to changing social, economic and political scenario of the country, however, its felicitousness to the present economic context is questionable.

Health care was provided privately in pre-colonial India. It was available only to infinitesimal privileged classes. Traditional healers were the primary sources of care. Out-Of-Pocket model was followed in the country. The concept of public provisioning had been largely elucidated with the advent of British in India. Perspective about health and health care provisioning changed. Although, this transformation process was not a very pleasure experience for the subjugated and colonized indigenous at the beginning, since the facilities were established for rendering services to the colonizers only. However, over time, as knowledge got transfused and the services were extended to all, the intensity of ‘health hazard’ gradually diluted. The nationalists advocated for institutionalizing public health in post-colonial India. Several committees were set up and well-intended policy measures were taken up since the inception of five year planning. However, state’s commitment to increasing the public expenditure on health was not fulfilled. Consequently, the sector did not flourish adequately. Health was recognized as basic human rights internationally, by this period. However, the fact did not get reflected in the state’s commitment towards the sector. During post-liberalization period WHO introduced user fee on health care and the spirit of publicly provided health care started getting diluted. It became inevitable to open the sector for private players in order to survive against increasing international pressure and inadequate public expenditure. Profit making entities started investing in large scale on different concomitant ventures. Diversified financing mechanisms got introduced in the system. Gradually, health care financing model evolved as a mix and match of these four models in India.

Health care is financed through tax revenues in Beveridge model, e.g., public hospitals and health facilities. Such models are found in countries like Britain, Cuba etc. If one considers public expenditure on health in India, it is abysmally low at 1.4 per cent of GDP in 2017-18. Thus, healthcare infrastructure is in a poor state. There exist shortages in human resources. None of the states, except Kerala, could achieve required bed population ratio prescribed by the Mudaliar Committee till date. Around 21.9 per cent of population was below the poverty line in India in 2017. They are completely dependent on public provisioning for health care. However, the introduction of user fees at public hospitals in post liberalization period has led to under-utilization of services from public health facilities.

Under Bismark model, resources are pooled through payroll deduction from both employers and employees, e.g., ESIS, CGHS, and other insurance policies bought by private companies for their employees. Such models are found in Germany, Japan, Switzerland etc. It is difficult to implement Bismarck model in India since a large section of working population, i.e., 94 per cent, is engaged in informal sector.

Under National Health Insurance System, healthcare is provided by public and private sectors and is paid by the state, e.g., Publicly Funded Health Insurance Scheme (PFHIS) like Rashtriya Swasthya Bima Yojana (RSBY), National Health Protection Scheme (NHPS), and other state specific publicly provided health insurance schemes. This model is followed in Canada, Taiwah, South Korea etc. Government of India’s new National Health Protection Scheme “Ayushman Bharat” is one such programme. The programme claims to cover over 10 crore of poor and marginalized families. However, it does not take into consideration the fact that the section just above the poverty line, equally vulnerable and susceptible to market forces, and dependent on public provisioning which charges user fees now, is not protected. The scheme aims to identify beneficiaries on the basis of Socio-Economic Caste Census data, which faces serious criticism for the methodology it adopted to calculate income of the households.

Under Out-Of-Pocket expenditure model, people incur the costs of healthcare on their own. This is done in two ways, viz. 1) by paying for the services and 2) by buying private insurance schemes. In India, out of pocket expenditure constitutes over sixty per cent of total expenditure on health since none of above mentioned three models could effectively provide safety net to the population against exorbitant cost of healthcare. Several studies have shown how unwarranted expenditure on healthcare affects households’ economic condition adversely.

None of these models, in isolation or in different combination with one another, are sufficient to provide universal coverage to the population. The Government of India has, very openly, articulated its intention of changing position from being healthcare provider to purchaser in the National Health Policy, 2017. It is time to revisit the policy framework and introspect.

The views expressed in this piece are those of the author, and do not necessarily reflect the position of CBGA. You can reach Mampi Bose at mampi@cbgaindia.org.