Will Burden of User Charges in Healthcare Lead to Pauperisation?

The NITI Aayog’s proposal to run district hospitals under public-private partnership (PPP) model has kicked up a storm with public health experts pointing to the evidence that PPPs in health sector in India have failed massively. Earlier this week, Kerala’s Health Minister K K Shailaja said that the scheme will not be implemented in the State. It came in the backdrop of presentation of the Union Budget by Finance Minister Nirmala Sitharaman in which she announced PPP model to be adopted in tier 2 and 3 cities for delivery of Pradhan Mantri Jan Arogya Yojana -Ayushman Bharat.

What has gone missing from the analysis in popular media is another worrisome aspect of the Aayog’s proposal – its blatant advocacy for user charges in various forms.

User charge or user fees refers to official fees collected by public health facilities. It can be in the form of registration fees that is paid before seeing the doctor, money paid for diagnostics, bed and other utilities. In India, majority of service utilisation in public health facilities is free of cost, including essential medicines. The Aayog proposes to allow private providers to charge money for various services from all categories of patients, be it free patients or otherwise. Beneficiaries of the category ‘free patients’ will be decided by a competent authority at the district level. The rest of the patients will be charged “appropriate hospital charges based on market competitive rates”. A closer look at the proposal tells us that even free patients will not be provided all the facilities free of charge. The provider is entitled to collect Rs 10 for registration from all the patients.

Then, there is a provision of ancillary facilities where the private provider would determine and recover the charges. It includes services such as cafeteria, boarding and lodging for patients and their attendants. These services are critical support for patients and their families to be able to continue treatment.

“But the private entity will be able to determine and charge costs for use of these ancilliary services. Therefore, even a “Free patient‟ would be at the mercy of commercial enterprises for their accommodation etc. and this model agreement gives complete freedom for “any commercial facilities” to be introduced within the campus,” said a statement by the Jan Swasthya Abhiyan submitted to the NITI Aayog.

This is not the first time; efforts to introduce or increase user charges in public health facilities keep surfacing. In November 2019, the Union Health Ministry issued an office memorandum to the Central Institute Body of the All India Institute of Medical Sciences to revise tuition fee of students and user fee charged to the patients. This will lead to increase in patients’ expenditure in all six AIIMS across the country. AIIMS are the premier tertiary care institutes and provide some of the most niche treatments to the poorest in India. Many more AIIMS have been approved by the government and are under construction.

User charges have not produced desired results in consumption of services in public sector, numerous documents of international agencies as well as Government of India show. In 2009, the then Director-General of the World Health Organisation (WHO), Dr. Margaret Chan had said, “User Fees for health care were put forward as a way to recover costs and discourage the excessive use of health services and the over-consumption of care. This did not happen. Instead, user fees punished the poor.”

A review of user charges by a committee in AIIMS-Delhi supports Chan’s understanding. The committee, chaired by Dr. Anoop Saraya, Head, Department of Gastroenterology, found that user charges form only 3% of the total expenditure at the hospital – which is not a substantial amount.

The committee also found that the book-keeping cost for taking user charges shrinks the limited amount that is brought to the hospital for patient care even more. In 2016-17, AIIMS-Delhi generated Rs 67 crore from user charges. Book-keeping for the same added up to Rs 32 crores – nearly half of the total collection.

Discussions on user charges started in the late 1980s with the World Bank’s Agenda for Reform and the implementation of the Bamako Initiative of United Nations Children's Fund (UNICEF) and WHO. However, soon, evidence emerged showing the negative impact on access to healthcare for the poor; pauperisation of users; and ultimately poor health outcomes. Further, user charges eventually lead to higher expenditure on health because a large number of people neglect seeking care at the earliest, making it a highly inefficient way of raising revenue. The evidence, mostly from African countries, was so overwhelming that in 2013, the president of World Bank, Jim Yong Kim, stated that “anyone who has provided healthcare to poor people knows that even tiny out-of-pocket charges can drastically reduce their use of needed services. This is both unjust and unnecessary”.

In the late 1990s and early 2000s, Indian government introduced user charges in public sector hospitals. The National Rural Health Mission also endorsed this strategy to create local resources to meet the local needs. However, realising the issues with it in the last decade, the government has introduced policies that aim at reducing out-of-pocket expenditure, instead of increasing it through provisions such as user charges.

Recent documents from the Government of India point in this direction and underscore the importance of free medical services. The National Mental Health Policy of 2017 proposes free drugs, free diagnostics and free emergency care services in all public hospitals. The Policy recommends prioritising the role of the public sector in shaping health systems in all its dimensions.

The National Health Policy of India, 2017 also envisages a public healthcare system that is comprehensive, integrated and accessible to all. One of its stated goals is to achieve significant reduction in out-of-pocket expenditure due to healthcare costs and reinforce trust in public healthcare system. Imposing user charges goes against this important goal.

There is ample evidence that user charges put extra financial burden on the poorer populations. In a study in Haryana in 2012, health economists found that only 5.3% patients were given exemption from user charges for out-patient care though nearly 30% of the population is below poverty line. The result of high cost of healthcare is that people neglect seeking care at the earliest and postpone until an emergency situation arises. This creates inefficiency in health system as care is being sought at a more expensive level, typically a hospital, rather than a health centre. Also, public healthcare providers who depend on revenue from user charges, are likely to prioritise patients who can pay.

The AIIMS-Delhi study, mentioned above, conducted a survey of the patients visiting the hospital. It found that a patient residing in Delhi spends Rs 1,900 per visit on average. Patients coming from outside have to spend Rs 4,300 per visit on an average.

According to the periodic labour force survey of 2017-18, the average monthly income of Indian workers was Rs 9,874, roughly Rs 330 for a day. Imposing new or increasing existing charges will further add to the misery of a huge population. The government should, instead, allocate more budget to health and strengthen public healthcare. The burden of care should not be on the public which is already paying taxes every time they buy a commodity, medical or otherwise.

Jyotsna Singh is a health writer based in Delhi. Views are personal.