The launch of the Pradhan Mantri Jan Arogya Yojana on Sunday is the first step in a long process. An initiative so audacious in its scope and ambitions has implications that extend well beyond healthcare to the shape of the Indian economy. When a country has the world’s highest disease burden as India does, the human and economic costs are tremendous—to the tune of $6.2 trillion between 2012 and 2030, according to the World Health Organization (WHO). It follows, though, that its challenges are commensurate.

According to the National Sample Survey Office, out-of-pocket health expenditure approached 70% as of 2014; consequently, approximately 60 million people sink deeper into poverty or are pushed into it annually. The bulk of this goes on small ticket outpatient treatment. Effective intervention here would reduce the strain on the government’s underwriting of large ticket secondary and tertiary care expenses. This ties in with India’s shifting epidemiological profile, where the majority of the disease burden is now due to non-communicable diseases. Cardiovascular diseases, say, or diabetes can often be managed effectively without hospitalization if spotted early.

This is where Ayushman Bharat’s less-heralded half—and first challenge—comes in. As of March 2017, 156,231 health sub-centres, 25,650 primary health centres and 5,624 community health centres formed the backbone of India’s public health system. Modicare aims to upgrade 150,000 sub-centres to health and wellness centres (HWCs) that will provide a wide range of diagnostics and outpatient care. This will not be easy given how decrepit the network is. According to a 2017 report of the task force on primary healthcare in India, working under the aegis of the Union ministry of health and family welfare, only 11% of sub-centres and 16% each of primary and community centres meet the Centre’s Indian Public Health Standards.

Upgrading them and broadening the scope of services they offer will be a mammoth task. It starts with fixing infrastructure problems that range from lack of power to inadequate equipment. There is no clarity on where the money for this will come from. Addressing the manpower shortages will be even more difficult. Most of the centres suffer from this to varying degrees, often making do with less than half the trained personnel they need. The success of the accredited social health activists—Asha workers—instituted as part of the 2005 National Rural Health Mission shows it is possible to scale up with community health workers and plug some of the gaps. But that doesn’t obviate the need for—or shortage of—trained doctors and nurses.

Getting the maths to add up for the health insurance aspect of Ayushman Bharat will be the second challenge. There is a large gap between the premiums private health insurers currently charge for basic coverage and the premiums the Central and state governments will pay. The Centre holds that this will work out due to the basic logic of underwriting risk: The larger the pool, the lower the individual costs, especially when distribution will piggyback on government networks, cutting out the associated costs. And risk pools don’t come much larger than the programme’s initial target of a little over 110 million households.

There are, however, two problems with this scenario. First, the population is underserved when it comes to healthcare. This means that many of its healthcare needs are either unrealized or taken care of outside the formal healthcare system. If Ayushman Bharat is able to deliver on the outreach and infrastructure front, a rise in walk-ins and the subsequent realization of risk are inevitable. This could throw the numbers—for both insurers and the state—out of whack.

The second problem follows on from this. Insurers live and die by data—actuarial databases that allow them to calculate probability distributions for different health risks and treatments. As Sudipto Mundle has pointed out in Mint, no such data exists in India for the vast segment of the population Ayushman Bharat will cover. Will insurers be willing to trade off risk estimation and price discovery for a shot at a large pool? And will the gamble pay off?

The travails of Ayushman Bharat’s predecessor, the Rashtriya Swasthya Bima Yojana (RSBY), point to the third challenge. RSBY’s outcomes were unflattering. In Targeting and effects of Rashtriya Swasthya Bima Yojana on access to care and financial protection (Economic & Political Weekly, 2017), Soumitra Ghosh and Nabanita Datta Gupta found that it had failed both in targeting and in reducing health-related poverty in the households it did reach. This was down largely to poor regulation that failed to check insurers cutting corners or medical procedure inflation on the part of health providers looking for a heftier insurance payout. Given that Modicare will be implemented by state governments—and that the northern states where it is most needed are the ones with the least capacity to effectively regulate it—this is a poor omen.

It will take some time before enough data comes in to evaluate how the Modicare rollout is faring. But this much seems certain: implementing it successfully will take years of sustained effort and course correction.

Will Modicare improve health outcomes for India’s poor? Tell us at views@livemint.com

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