This post has been self-published on Youth Ki Awaaz by Raghunath Nageswaran. Just like them, anyone can publish on Youth Ki Awaaz.

Misplaced Faith In Health Insurance: Looking At The Budget Through The Economic Survey

More from Raghunath Nageswaran

The Union Budget is an important document which reflects the fiscal commitments of the government towards various sections of the population. Therefore, it merits public attention and deserves to be widely discussed.

The Budget is one of the many policy instruments available to the government. It is supposed to be a statement of accounts. Over the years, it has come to be perceived as the most momentous policy document pregnant with the possibilities of ushering in structural change. In mainstream economic policy parlance, the budget is the occasion for ‘big-bang reforms’. Successive finance ministers have also pandered to this expectation by making grand-sounding statements.

On a prosaic note, it is important to remember that the allocations made in the Budget in any financial year are not definitive – the figures will be revised upwards or downwards and one can get the complete picture only after two financial years when the actual figures come.

More importantly, the Budget in any given year has to be analysed in the light of the Economic Survey presented a day or two before the Budget is tabled in the Parliament. We will be missing the wood for the trees if we attempt to look at the two in isolation.

Interestingly enough, the Economic Survey 2017-18 is not so gung-ho about the state of the economy. Contrary to the confident posturing of the budget, the Survey paints a pretty sobering picture of the economy. So the budgetary allocations and pronouncements must be analysed against the assessment made in the Economic Survey.

This short essay aims to examine the soundness of the much-trumpeted National Health Protection Scheme which promises an insurance coverage of ₹5 lakh to hundred million poor and vulnerable families, by “extending healthcare to at least 50 crore people in the country.”

Chapter 10 in Volume II of the Economic Survey 2017-18, titled “Social Infrastructure, Employment and Human Development” makes for a very depressing reading. At the very outset, even as it acknowledges the imperativeness of providing a robust social infrastructure for achieving economic progress, it states the following:

“Being a developing economy, there is not enough fiscal space to increase the expenditure on critical social infrastructure like education and health in India. However, given the limited resources, the Government has consistently prioritized strengthening the educational and health profile of the population.”

One cannot help but be astonished that the survey could muster the courage to make such an admission in an openly unabashed manner. The self-imposed artificial fiscal straitjacket, in the form of the Fiscal Responsibility and Budget Management (FRBM) Act, gives primacy to the so-called ‘fiscal discipline’ over the well-being of the people. This doesn’t inspire confidence in the lofty pronouncements made in the budget.

The unwarranted obsession with the fiscal deficit number (3% of the GDP) has no theoretical or empirical basis, especially in an economy operating at less than the full employment level of output. Also, it is pertinent to ask what prevents the government from increasing the fiscal space available, especially when it claims that the economy is witnessing a widening of the tax base as a result of the bold structural reforms it has undertaken.

The limited fiscal space argument stems from the view that the resources in an economy at any given point in time is fixed, thereby implying that such scarce resources need to be allocated efficiently. The view that allocating more resources to the social sector doesn’t constitute efficiency in allocation flies in the face of the supply-side growth theory – the strategy to which the government subscribes.

Critically evaluating the growth strategy of the Narendra Modi led NDA II government as outlined in the Economic Survey 2014-15, Alex M Thomas makes the following remark:

“Given that human capital development is a prominent determinant of economic growth in both orthodox and heterodox growth theories, it is indeed surprising to see it get so little economic attention in the current Indian economic ‘reforms’.”

Moreover, when it is very clear to the government that “investment in human capital is a prerequisite for a healthy and productive population”, offering an excuse that there isn’t enough elbowroom to devote more resources is an abdication of responsibility which falls squarely in the domain of the state. One cannot appreciate the view that economic growth will take care of people’s education and health without any external intervention. Historical evidence points to the growth experiences of countries driven primarily by mass, publicly-funded education and state sponsored universal healthcare benefits. The Economic Survey is not unaware of this fact.

The intellectual inconsistency in policy-thinking and analysis is very stark. Recognising that education, health, housing and sanitation are not just critical inputs in the human capital formation but also fundamental human rights (that every individual must enjoy and exercise) is key to our vision of a just, decent and humane society. By ceasing to treat human beings as capital and integrating human development with human rights, we can express our intent to move away from just being a market society. Also, the claim that the ‘government has consistently prioritized strengthening the educational and health profile of the population’ doesn’t stand scrutiny when tested against the paltry and (mostly) stagnant allocations (as a percentage of GDP) and India’s unenviable human development indicators.

Table 1: Trends in Social Services Expenditure by General Government (Centre and States)

Source: Economic Survey, 2017-18.

Now that we have seen the gap between rhetoric and reality, and the contradiction in the government’s own thinking with regard to the social sector, shedding light on the state of the nation’s health can help us question and challenge the rationale of an insurance-based National Health Protection Scheme.

We shall begin by looking at the Survey’s analysis of healthcare expenditure in India:

“[…] expenditure by the Government healthcare providers accounted for about 23 percent of the Current Health Expenditure (CHE) as per National Health Accounts 2014-15 that reflects the prominence of private hospitals and clinics among health care providers. The expenditure on pharmacies accounted for 29 percent of CHE by both health care providers (government and private). In a developing country like India, incurring higher levels of Out of Pocket Expenditure (OoPE) on health adversely impacts the poorer sections and widens inequalities.”

This categorical and accurate description of the failure of the state to provide universal healthcare and the excessive reliance on private players in a country with an abysmal health profile sums up the performance of the state in providing basic public services in a broad-based manner. In such a context, the new health protection scheme (in the form of insurance) has been promised.

There’s no doubt that an insurance has a very important role in enabling access to healthcare and medical services when poor and vulnerable households experience health shocks. But, how do we make sure that horrendous episodes of state apathy, as manifested in the tragic death of scores of children in the BRD Medical College Hospital in Gorakhpur last year, are effectively prevented from happening in the first place? Can insurance solve the deep-rooted malaise in our healthcare system and actively pre-empt such unfortunate circumstances? Acknowledging that the problems are systemic and that cosmetic solutions cannot make any significant dent is the first step towards addressing the problems.

Right from primary healthcare centres (PHC) down to the tertiary medical service provision, there are serious gaps in terms of administrative and technical capacity. A stock-taking exercise undertaken by IndiaSpend makes the following observations:

1. In 2016, sub-centres were 20% short of human resources, while primary and community health centres were 22% and 30% short, respectively, according to the 2016 Rural Health Statistics (RHS).

2. Most functioning rural health facilities in India lack basic infrastructure – 29% of sub-centres did not have regular water supply, 26% lacked electricity supply and 11% did not have all-weather roads connecting them, according to the 2016 RHS data.

3. Primary healthcare centres (PHCs) are supposed to be the first point of contact between the village and a medical officer. Each PHC is manned by a medical officer and 14 paramedical staff, and is supposed to be equipped with an operation theatre, six beds, essential laboratory facilities and a pharmacy.

4. While 63% of PHCs did not have an operation theatre and 29% lacked a labour room, community health centres were short of 81.5% specialists – surgeon, gynecologists and pediatricians.

To hope that the insurance-based ‘largest’ health protection scheme will tackle these structural nuts-and-bolts issues can be nothing but a pie-in-the-sky illusion. This should not distract us from the problems inherent in relying on insurance to fix our chronic health problems.

Researchers in the field of health economics have systematically recorded the pitfalls of health insurance. There is a view, even among mainstream economists, that healthcare – both preventive and curative – is an area that cannot be left to the market forces and private players. The agreement is more pronounced particularly in the case of health insurance.

Insurance readily exhibits the most well-known forms of market failure – information asymmetry, moral hazard, adverse selection, and externalities. Market failures occur when the forces of demand and supply operating through the price mechanism fail to allocate resources efficiently. Each of the aforementioned forms of market failure end up affecting those who need healthcare the most by way of under-provisioning, given the ‘public good’ characteristic of healthcare and the logic underlying the functioning of markets.

In most discussions about healthcare, what gets short-changed is the ‘preventive’ component, which is essentially what public health should be all about. Even though healthcare and disease-care, in the form of medical treatment in hospitals, are very important, they come much later.

Clarifying that public health and healthcare are two distinct aspects, T. Jacob John, professor emeritus at Christian Medical College, Vellore, argues in a Mint column that:

“Healthcare is labour-intensive, given by one worker to one client at a time. Clinics and hospitals are visible infrastructure and sought after as a felt need in times of distress. Public health, on the other hand, is invisible infrastructure, working in society to mitigate social determinants of diseases and in the environment to mitigate environmental determinants of diseases. […] Monitoring of all disease burdens can be done only by public health. Without monitoring by public health, most of our disease-control projects are flying blind. Democracies are for the welfare of all people. Disease prevention is about equitable use of resources since the benefits are enjoyed by everyone.”

What emerges from this analysis is the urgency with which the state’s capacity to deliver public goods and essential public services has to be ramped up. Of late, there has been an acknowledgement of the crucial role the state has to play in some areas to lay the foundation for a thriving market economy, even by those with a pro-market tilt. Their arguments in favour of enhancing state capacity are compelling, although some of their policy prescriptions may be problematic.

Nonetheless, having identified improved state capacity as a prerequisite for stable and sustainable growth, their policy advice should entail warning the government about the potential dangers of making insurance the bedrock of healthcare in India – and impress upon it the indispensability of a well thought-out public health infrastructure.


Featured image used for representative purposes only.

You must be to comment.

More from Raghunath Nageswaran

Similar Posts

By Surabhi Das

By Yahya Maghrab

By Spectruminsurance10

    If you do not receive an email within the next 5 mins, please check your spam box or email us at

      If you do not receive an email within the next 5 mins, please check your spam box or email us at

        If you do not receive an email within the next 5 mins, please check your spam box or email us at

        Wondering what to write about?

        Here are some topics to get you started

        Share your details to download the report.

        We promise not to spam or send irrelevant information.

        Share your details to download the report.

        We promise not to spam or send irrelevant information.

        An ambassador and trained facilitator under Eco Femme (a social enterprise working towards menstrual health in south India), Sanjina is also an active member of the MHM Collective- India and Menstrual Health Alliance- India. She has conducted Menstrual Health sessions in multiple government schools adopted by Rotary District 3240 as part of their WinS project in rural Bengal. She has also delivered training of trainers on SRHR, gender, sexuality and Menstruation for Tomorrow’s Foundation, Vikramshila Education Resource Society, Nirdhan trust and Micro Finance, Tollygunj Women In Need, Paint It Red in Kolkata.

        Now as an MH Fellow with YKA, she’s expanding her impressive scope of work further by launching a campaign to facilitate the process of ensuring better menstrual health and SRH services for women residing in correctional homes in West Bengal. The campaign will entail an independent study to take stalk of the present conditions of MHM in correctional homes across the state and use its findings to build public support and political will to take the necessary action.

        Saurabh has been associated with YKA as a user and has consistently been writing on the issue MHM and its intersectionality with other issues in the society. Now as an MHM Fellow with YKA, he’s launched the Right to Period campaign, which aims to ensure proper execution of MHM guidelines in Delhi’s schools.

        The long-term aim of the campaign is to develop an open culture where menstruation is not treated as a taboo. The campaign also seeks to hold the schools accountable for their responsibilities as an important component in the implementation of MHM policies by making adequate sanitation infrastructure and knowledge of MHM available in school premises.

        Read more about his campaign.

        Harshita is a psychologist and works to support people with mental health issues, particularly adolescents who are survivors of violence. Associated with the Azadi Foundation in UP, Harshita became an MHM Fellow with YKA, with the aim of promoting better menstrual health.

        Her campaign #MeriMarzi aims to promote menstrual health and wellness, hygiene and facilities for female sex workers in UP. She says, “Knowledge about natural body processes is a very basic human right. And for individuals whose occupation is providing sexual services, it becomes even more important.”

        Meri Marzi aims to ensure sensitised, non-discriminatory health workers for the needs of female sex workers in the Suraksha Clinics under the UPSACS (Uttar Pradesh State AIDS Control Society) program by creating more dialogues and garnering public support for the cause of sex workers’ menstrual rights. The campaign will also ensure interventions with sex workers to clear misconceptions around overall hygiene management to ensure that results flow both ways.

        Read more about her campaign.

        MH Fellow Sabna comes with significant experience working with a range of development issues. A co-founder of Project Sakhi Saheli, which aims to combat period poverty and break menstrual taboos, Sabna has, in the past, worked on the issue of menstruation in urban slums of Delhi with women and adolescent girls. She and her team also released MenstraBook, with menstrastories and organised Menstra Tlk in the Delhi School of Social Work to create more conversations on menstruation.

        With YKA MHM Fellow Vineet, Sabna launched Menstratalk, a campaign that aims to put an end to period poverty and smash menstrual taboos in society. As a start, the campaign aims to begin conversations on menstrual health with five hundred adolescents and youth in Delhi through offline platforms, and through this community mobilise support to create Period Friendly Institutions out of educational institutes in the city.

        Read more about her campaign. 

        A student from Delhi School of Social work, Vineet is a part of Project Sakhi Saheli, an initiative by the students of Delhi school of Social Work to create awareness on Menstrual Health and combat Period Poverty. Along with MHM Action Fellow Sabna, Vineet launched Menstratalk, a campaign that aims to put an end to period poverty and smash menstrual taboos in society.

        As a start, the campaign aims to begin conversations on menstrual health with five hundred adolescents and youth in Delhi through offline platforms, and through this community mobilise support to create Period Friendly Institutions out of educational institutes in the city.

        Find out more about the campaign here.

        A native of Bhagalpur district – Bihar, Shalini Jha believes in equal rights for all genders and wants to work for a gender-equal and just society. In the past she’s had a year-long association as a community leader with Haiyya: Organise for Action’s Health Over Stigma campaign. She’s pursuing a Master’s in Literature with Ambedkar University, Delhi and as an MHM Fellow with YKA, recently launched ‘Project अल्हड़ (Alharh)’.

        She says, “Bihar is ranked the lowest in India’s SDG Index 2019 for India. Hygienic and comfortable menstruation is a basic human right and sustainable development cannot be ensured if menstruators are deprived of their basic rights.” Project अल्हड़ (Alharh) aims to create a robust sensitised community in Bhagalpur to collectively spread awareness, break the taboo, debunk myths and initiate fearless conversations around menstruation. The campaign aims to reach at least 6000 adolescent girls from government and private schools in Baghalpur district in 2020.

        Read more about the campaign here.

        A psychologist and co-founder of a mental health NGO called Customize Cognition, Ritika forayed into the space of menstrual health and hygiene, sexual and reproductive healthcare and rights and gender equality as an MHM Fellow with YKA. She says, “The experience of working on MHM/SRHR and gender equality has been an enriching and eye-opening experience. I have learned what’s beneath the surface of the issue, be it awareness, lack of resources or disregard for trans men, who also menstruate.”

        The Transmen-ses campaign aims to tackle the issue of silence and disregard for trans men’s menstruation needs, by mobilising gender sensitive health professionals and gender neutral restrooms in Lucknow.

        Read more about the campaign here.

        A Computer Science engineer by education, Nitisha started her career in the corporate sector, before realising she wanted to work in the development and social justice space. Since then, she has worked with Teach For India and Care India and is from the founding batch of Indian School of Development Management (ISDM), a one of its kind organisation creating leaders for the development sector through its experiential learning post graduate program.

        As a Youth Ki Awaaz Menstrual Health Fellow, Nitisha has started Let’s Talk Period, a campaign to mobilise young people to switch to sustainable period products. She says, “80 lakh women in Delhi use non-biodegradable sanitary products, generate 3000 tonnes of menstrual waste, that takes 500-800 years to decompose; which in turn contributes to the health issues of all menstruators, increased burden of waste management on the city and harmful living environment for all citizens.

        Let’s Talk Period aims to change this by

        Find out more about her campaign here.

        Share your details to download the report.

        We promise not to spam or send irrelevant information.

        A former Assistant Secretary with the Ministry of Women and Child Development in West Bengal for three months, Lakshmi Bhavya has been championing the cause of menstrual hygiene in her district. By associating herself with the Lalana Campaign, a holistic menstrual hygiene awareness campaign which is conducted by the Anahat NGO, Lakshmi has been slowly breaking taboos when it comes to periods and menstrual hygiene.

        A Gender Rights Activist working with the tribal and marginalized communities in india, Srilekha is a PhD scholar working on understanding body and sexuality among tribal girls, to fill the gaps in research around indigenous women and their stories. Srilekha has worked extensively at the grassroots level with community based organisations, through several advocacy initiatives around Gender, Mental Health, Menstrual Hygiene and Sexual and Reproductive Health Rights (SRHR) for the indigenous in Jharkhand, over the last 6 years.

        Srilekha has also contributed to sustainable livelihood projects and legal aid programs for survivors of sex trafficking. She has been conducting research based programs on maternal health, mental health, gender based violence, sex and sexuality. Her interest lies in conducting workshops for young people on life skills, feminism, gender and sexuality, trauma, resilience and interpersonal relationships.

        A Guwahati-based college student pursuing her Masters in Tata Institute of Social Sciences, Bidisha started the #BleedwithDignity campaign on the technology platform, demanding that the Government of Assam install
        biodegradable sanitary pad vending machines in all government schools across the state. Her petition on has already gathered support from over 90000 people and continues to grow.

        Bidisha was selected in’s flagship program ‘She Creates Change’ having run successful online advocacy
        campaigns, which were widely recognised. Through the #BleedwithDignity campaign; she organised and celebrated World Menstrual Hygiene Day, 2019 in Guwahati, Assam by hosting a wall mural by collaborating with local organisations. The initiative was widely covered by national and local media, and the mural was later inaugurated by the event’s chief guest Commissioner of Guwahati Municipal Corporation (GMC) Debeswar Malakar, IAS.

        Sign up for the Youth Ki Awaaz Prime Ministerial Brief below