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Government-Sponsored Health Insurance in India
There is some evidence, however, that states are seeking alternative approaches to hospital governance. In Kerala and AP, the availability of demand-side financing for public hospitals has opened an additional stream of funds to upgrade these facilities and incentivize staff. In Kerala, for example, public hospitals represent 60 percent of the RSBY case load and 53 percent of revenues. Public hospitals are receiving additional state financing to upgrade public facilities (Arora and Nanada 2011). According to state authorities, this additional financing places public hospitals on par with private facilities. However, there are two problems with this experience. First, since public hospitals receive a supply-side subsidy, the demand-side financing from RSBY represents an additional source of public revenue while the private providers receive only the demand-side package rates. As a result, a situation of dual subsidy is emerging, which could lead to accusations of unfair competition from the private providers. Second, as mentioned, a major problem facing public facilities in India is accountability. Upgrading alone will not solve problems related to absenteeism, inhumane treatment, poor skills, and insufficient effort, which have been documented in public facilities (NCMH 2005; Human Rights Watch 2009; Benerjee, Glennerster, and Duflo 2008; Planning Commission 2005; Gill 2009; MOHFW 2009; Das et al. 2011; Das and Hammer 2007; Chaudury et al. 2006). To its credit, Kerala is exploring arrangements to grant greater autonomy to public hospitals. Recently, public hospitals have been given greater decision-making authority over financing to hire additional staff. Drawing solely on revenues from Rajiv Aarogyasri, a government medical college in AP strengthened its cardiothoracic surgery infrastructure, shored up its supplies of medicines and consumables, and also witnessed a steep rise in surgeries performed at the center. The same hospital, and several others across the state, introduced a dialysis center through a public private partnership (PPP) arrangement. Nearly all the patients are members of the state’s health insurance scheme. The hospital is able to use some of the “extra� revenues from the same health insurance scheme to improve services elsewhere in the facility.63 Despite these innovations, much more will need to be done in terms of creating an incentive environment in which public hospitals are accountable for results, and compete for GSHIS beneficiaries. Also, if states want to move toward a situation of competition for demand-side revenues, all facilities, public and private, should eventually operate under the same rate structure after phasing out dual subsidies.