Even though the Constitution of India embodies the spirit of a welfare state committed to securing justice and wellbeing of all citizens, a specific mention of the welfare state is contained in the Directive Principles of the State Policy in Part IV (Articles 36 to 51). The Drafting Committee of the Constitution identified these as the ultimate objectives of the nation. These objectives included many things, from abolition of untouchability to removal of discrimination and legal disabilities on the women.

However, the concept of ‘welfare’ remains a contentious issue. Even well-known theorists of the welfare state such as T. H. Marshall, William Beveridge and Richard Titmuss avoided using the term ‘welfare’. A reason behind this was that the term welfare state tends to evoke images of a mendicant clientele receiving undeserved benefits from an overbearing state. Some people believe that better ways are available to secure upliftment and well-being of the people than to hand out doles. Some others believe that providing welfare through public spending on the social sector goes a long way in bringing people out of abject poverty. But the controversy apart, the use of the term welfare has indeed become common by the supporters and opponents of the concept alike.

The duties of the Welfare State generally include devising policies and programmes ranging from securing the welfare of the poor to providing social security, social justice, infrastructure and opportunities for growth and establishing economic equality for the citizens. Providing adequate healthcare for all, from this perspective, comes across as one of the fundamental duties of the Welfare State.

The governments all over the world provide healthcare facilities to the citizens broadly in two major ways. The first is the public infrastructure-based healthcare model where the emphasis is on larger public expenditure on health infrastructure and the second is the insurance-based healthcare model where the importance is given to providing an insurance cover for the people leaving the task of building the infrastructure mainly for the private sector.

Under the public infrastructure-based healthcare model, governments lay maximum emphasis on providing medical treatment to the citizens either free of cost or at affordable prices. The task here requires building of new hospitals and primary health centres, recruiting human resources like doctors, nurses and paramedics on government payrolls and providing treatments to one and all at affordable prices. On the other hand, under an insurance-based healthcare model, governments provide insurance of a specific price range to a particular section of society, mainly those living below the poverty line and the non-taxpayers.

The insurance-based healthcare model comes across as something quite easily done by the governments without committing humongous resources which are required for building a public healthcare system. No wonder, the popularity of the insurance-based model has gone up in the last few decades. Many state governments and the Central Government have been adopting the insurance-based healthcare models and touting them as the citizens’ right to health without doing much by way of policies or programmes.

This flies in the face of the fact that the public health infrastructure in all such states could be crumbling, while posing tremendous difficulties for the common citizens in getting treatment. Since the budget for the health sector is highly limited, the insurance based healthcare model could lead to further deterioration of the public health system if we are not careful.

Are Governments Hiding Their Failures?

When the colonial British left, about 70 percent Indians were mired in deep poverty. The first few governments had to face immense challenges on many fronts where building of systems was required from scratch. Providing healthcare for the poor and deprived sections of this vast country was one such challenge. The government built new hospitals, medical centers and tried to cover villages to cities under a rudimentary public health system. This was the time when deadly diseases like smallpox, polio and leprosy which are curable today, wiped out millions of people in short spans of time. In the first few decades after Independence, multispecialty Hospital like AIIMS were also built to provide treatment for difficult diseases at affordable prices.

The infrastructure built in the first few decades was nowhere near adequate but some of the systems built then, such as district hospitals in urban areas and primary health centers in rural areas, are still visible today. These systems were not expanded over time, partly because India was spending a much smaller portion of its budget on public health than required. India has traveled a journey of 75 years after independence and it is a good time to evaluate our successes and failures in providing a decent healthcare system for our citizens.

For some time now, particularly since the liberalization of the economy in the early nineties, a shift became visible in the healthcare sector of India. More and more private hospitals started coming up for those who could afford them. These provided world-class medical facilities even though these services came at exorbitant prices. Earlier, India’s healthcare system was mainly based on public infrastructure which is now also adopting a public-funded insurance model. One reason behind its adoption is that the healthcare model based on public infrastructure is not meeting the needs of the citizens. We will look at the advantages and disadvantages of public funded insurance model further. But let us also check as to why the public health infrastructure is crumbling.

One of the obvious reasons behind this is underspending of public money and resources on this sector. For the year 2019-20, Government Health Expenditure (GHE) was Rs. 2,71,544 crores which is 1.35% of GDP (As per the National Health Policy (NHP) 2017, the Government aims to increase the health expenditure up to 2.5 % of the GDP by the year 2025).

As author P. Sainath writes in his book- ‘Everybody Loves a Good Drought’ that “Never in history have government spent more than 1.8 per cent of GDP on health.”

Neighboring country China was also facing comparable challenges of high population and impoverishment While it also achieved Independence around the same time as India (in 1949).

If we look at the data of the last two decades, China’s current health expenditure as a percentage of GDP has been higher than India4 . From 2012 to 2022 its health expenditure has been between 5.2% and 7.05%. Similar trends emerge when compared with Sri Lanka, United Kingdom and United states. If we look at the figures of the year 2019-20, United states had spent 18.82% of GDP as current health expenditure and United Kingdom had spent 11.8% of its GDP5 .

The result of low expenditure was that public infrastructure could not be built at the desired speed. As a result, India’s public health infrastructure remains woefully inadequate today. For example, in terms of hospital beds, India has 0.5 hospital beds6 (In 2017) per 1,000 population, compared to 4.2 beds in Sri Lanka, 2.9 in the US, and about 4.3 beds in China. Similarly, in the case of primary health workers, the WHO recommends one doctor per 1,000 population and one nurse per 300 population, whereas India is functioning with only one doctor for every 1,511 people and one nurse for every 670 people .

Poor people suffer the worst effects of weak public health infrastructure. In such a situation where the public infrastructure is going to stay below expectations for the foreseeable future, the public funded insurance model has come as a boon for people from the weaker socio-economic background struggling to meet their ends. In such a situation it cannot be rejected even though it comes at the cost of taking healthcare to the doorsteps of common people.

In the light of this, let us evaluate the existing challenges associated with this model:

1. Change in the Nature of the State

In the welfare state, it is the duty of the state to provide better healthcare to the citizens. Adoption of these insurance schemes as healthcare models may lead to absolving the state of its basic duties which may encourage the deterioration of the existing public health systems.

The central government and many state governments are promoting health insurance schemes. The central government runs the PM-JAY scheme for health insurance. As per the estimates of Budget 2023-24, about 8 percent of the total budget of the Ministry of Family and Welfare has been allocated for this scheme8 . Similarly, the Rajasthan government has allocated Rs 5,186.45 crore for the Medical and Health Department in the budget 2023-249 around 40 per cent of which has been reserved for Chiranjeevi Insurance Scheme. In the case of Kerala’s public health sector about 20 per cent is spent on insurance schemes called Karunya Arogya Suraksha Padhathi.

There are also significant variations between and within states in terms of public health infrastructure, according to the Rural Health Statistics 2020-21 due to which many people are not able to avail the benefits of public healthcare. One reasonable way to address the shortcomings of India’s healthcare systems is to use the publicly funded insurance schemes through the private hospitals while we improve the deficiencies in public health infrastructure.

When we invite private players in the healthcare sector, it becomes mandatory to work on strengthening our system of regulation of private hospitals. It is common knowledge that some private hospitals are collecting huge amounts of money from governments and insurance agencies by conducting unnecessary medical tests and by making false bills11. An adequate mechanism of regulation and monitoring will ensure that public money is not wasted in the name of public welfare.

2. Need to Work on Insurance Coverage

It is also noteworthy that the insurance coverage of common people in India is low and not uniform across states and union territories. Nearly 400 million individuals in India have zero access to health insurance12. According to the National Family Health Survey (NFHS-5), 30% of women in the age group of 15-49 do not have any kind of insurance and there is a huge gender gap in health spending in India.13 In such a situation, the introduction of a publicly funded health insurance scheme will increase the chances of women getting better healthcare. There is also a variation among states in terms of health insurance coverage. While in Rajasthan the percentage of such families in which at least one member is insured is 88%, in the case of the state of Bihar this figure is 17%14.

3. Rural-Urban Divide

The divide between rural and urban regions in terms of healthcare facilities is a reality in India. A study titled Bharat Health Index (BHI) 2023 stated that only 25 per cent15 of the semi-rural population in India have access to modern healthcare within their localities. While, only 28 per cent of the country’s population lives in urban areas, they continue to have access to two-thirds of the total hospital beds. While 72 percent of the population who live in rural India are left with access to just one-third of hospital beds.

Along with infrastructure, rural areas are also deficient in terms of human resources. Nearly 21.8 percent of doctors’ posts in PHCs in rural areas are vacant. Similarly, Community Health Centres provide specialised medical care to surgeons. According to the Rural Health Statistics 2020-21 out of the sanctioned posts,72.3% of Surgeons, 64.2% of Obstetricians & Gynecologists, 69.2% of physicians and 67.1% of pediatricians are vacant.

To ensure better economic health of the common people, it is important that people get health services at affordable prices and the out-of-pocket expenditure remains low. Insurance based healthcare model can be helpful in this. The penetration of the insurance-based models needs to reach the length and breadth of India while simultaneously improving the monitoring and regulation of private hospitals. However, it must be kept in mind that the two models cannot be seen as complete replacement of one another. The real challenge, therefore, is to extend the benefits of the publicly funded insurance schemes to the common citizens while we continue to work towards improving public health infrastructure. There is no rule that the two systems cannot coexist. This is particularly so because becoming completely dependent on the insurance based model will increase the arbitrariness of the private sector and compromise the country’s ability to deal with pandemics and health emergencies.

This article has been published in the quarterly journal of Common Cause. Click here to read the article with references.