Countering The Imbalance In Health Care Financing

– A Study On Karunya Benevolent Fund

Abstract

The aim of this paper is to analyze the growing health care expenditure in Kerala and the government’s effort to reduce out of pocket expenditure through the Karunya Scheme. The scheme breaks new ground on several different fronts in providing health benefits to large number of under privileged populations.

1. Introduction

It is very widely acknowledged that health is an important component of human development. Empowerment of people comes from the freedom they enjoy, and this includes, among others, freedom from poverty, hunger, and malnutrition, and freedom to work and lead a healthy life (Sen, 1999). Access to health care is critical to improving health status and good health is necessary for empowerment. Government intervention in health is also argued for, due to the presence of high degree of asymmetric information in the health sector. Not surprisingly, throughout the world, governments have had a significant role in providing and regulating health services and their role is particularly important in developing countries with large concentration of the poor. Despite poor health indicators, government spending on health care in most low- and middle-income countries is well below what is needed. Low revenue collections, competing demands for revenues, and relatively low spending priority contribute to this insufficient spending.1 1Consequently, limited access to public health care facilities forces people to go to private providers, resulting in substantial out-of-pocket (OOP) spending, especially for the poor.2

Universal health care is providing ―access to key primitive, preventive, curative, and rehabilitative health interventions for all at an affordable cost.3 However, most low- and middle income countries find this a major challenge, as it would require substantial increases in public spending and productivity increases in an environment of severely strained resources. Of course, there has been considerable success in achieving universal health coverage in some middle-income countries, including Thailand and some Latin American countries, while other countries, such as China, Indonesia, and Vietnam, are focusing their attention on improving access.

1 Heller (2006) defines fiscal space as ―the availability of budgetary room that allows a government to provide resources for a given desired purpose without any prejudice to the sustainability of a government‘s financial position

2 WHO, 2004

3 World Health Assembly, 2005.

The health sector challenges in India, like those in other low- and middle-income countries, are formidable. Further, the gap between the actual spending and the required amount is larger in the relatively low-income states and this results in marked inter-state inequality.

Of course, there have been some recent initiatives to augment public spending on health care, but these have met with only limited success. The National Rural Health Mission (NRHM), established in 2005, and the recent introduction of Rashtriya Swastya Bima Yojana (RSBY) a national health insurance scheme for people below the poverty line are the two most important initiatives by the central government. Several state governments also have come up with their own insurance schemes. Despite these initiatives, the actual public spending on health has not shown much increase.4

2. The Critical Need For Health Care For Under Privileged

India was one of the pioneers in health service planning with a focus on primary health care. In 1946, the Health Survey and Development Committee, headed by Sir Joseph Bhore recommended establishment of a well-structured and comprehensive health service with a sound primary health care infrastructure. This report not only provided a historical landmark in the development of the public health system but also laid down te blueprint of subsequent health planning and development in independent India.

Health is a primary human right and has been accorded due importance by Constitution 5 It stresses upon state governments to safeguard the health and nutritional well being of the people, the central government also plays an active role in the sector. Improvement in the health status of the population has been one of the major thrust areas for the social development programmes of the country. This can be achieved through improving the access to and utilization of Health, Family Welfare and Nutrition Services with special focus on underserved and under privileged segment of population. Main responsibility of infrastructure and manpower building rests with the State Government supplemented by funds from the Central Government and external assistance.

Most rural and informal sector workers in the world do not have any form of health security. The labour sector of the Indian economy consists of roughly 487 million workers, the second largest after China. Of these over 94 percent work in unincorporated, unorganised enterprises ranging from pushcart vendors to home-based diamond and gem polishing operations.6However, they are poor, most of them are not in employer-employee relationships, they do not have any form of security (e.g. maternity benefits, retirement, health insurance), nor do they have representative organizations that might help them fight for these benefits.7

4 Economic Survey 2013 claims that India’s GDP has extended its spending on health by 13% the same survey also points out that it has the lowest health spending as a proportion of its GDP.

5 Article 21

6 India's Ministry of Labour, 2008 report

7 Ahmad et al. 1991, Gumber & Kulkarni 2000

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The poor are particularly vulnerable to the lack of health security. The poor spend a greater percentage of their budget on health related expenditures. Further, the high incidence of sickness cuts into their budget in two different ways, i.e. they need to spend large amounts of money for treatment and are unable to earn money while under treatment. In fact, healthcare costs are one of the primary reasons for rural indebtedness and poverty. Moreover, there is the issue of accessibility. Obtaining treatment at a town or district level hospital involves travel costs, which are not insignificant. Thus for many, simply accessing health care is by itself, an expensive proposition.

Health care covers not merely medical care but also all aspects pro preventive care too. Nor can it be limited to care rendered by or financed out of public expenditure- within the government sector alone but must include incentives and disincentives for self care and care paid for by private citizens to get over ill health. Heath care at its essential core is widely recognized to be a public good. Its demand and supply cannot therefore, be left to be regulated solely by the invisible hands of the market.

Thus, we need to focus on

- Universal access- Fair distribution- Special attention to vulnerable groups and under privileged- Redefining the role of government in health care system

Fair financing of the costs of health care is an issue in equity and it has two aspects

- How much to spent by Government on publicly funded health care and on what aspects?

- How huge does the burden of treatment fall on the poor seeking health care?

3. Public Private Participation in HealthcareA public–private partnership (PPP) is a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies. These schemes are sometimes referred to as PPP, P3 or P3. The public sector model in healthcare has not been able to accomplish its objectives of providing better healthcare facilities in affordable rates covering most of the population in India. The public-private partnership or PPP model seems like an ideal alternative to curb the current situation and provide universal health coverage.The model looks into a partnership between the public healthcare facilities and the private ones. This is mainly done by the government sponsoring the private players to work in a particular field. The model has successfully worked in various other sectors like the airports, telecom, irrigation and etc.

Table -1 Successful PPP Projects in India

Sl.No: Location Private Player Nature of the Name of the Target

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program Programme population

1 Karnataka Narayana Hrudayalaya

Coronary Care Units of selected district hospitals linked with Narayana Hrudayalaya hospital.

‘Karnataka Integrated Tele-medicine and Tele-health Project’ (KITTH)

rural and semi-urban patients

2 Karnataka Narayana Hrudayalaya

Health insurance scheme

Yeshasvini: Cooperative Farmers Healthcare Scheme

Rural poor

3 Jaipur Sawai Man Singh Hospital, Jaipur

Life Line Fluid Drug Store to contract out low cost high quality medicine and surgical items on a 24-hour basis in the hospital.

Contracting in Sawai Man Singh Hospital, Jaipur

Low cost medicine for rural poor

4 Uttaranchal Birla Institute of Scientific Research (BISR).

to provide health care and diagnostic facilities to poor and rural people at their doorstep in the difficult hilly terrains.

The Uttaranchal Mobile Hospital and Research Center (UMHRC)

poor and rural people in hilly terrains.

5 Gumballi and Sugganahalli, Karnataka

Karuna Trust Management of Primary Health Centers in Gumballi and Sugganahalli contractedto Karuna Trust in 1996 to serve the tribal community in the hilly areas.

PHC’s in Gumballi and Sugganahalli, Karnataka

tribal community in the hilly areas.

6 Tamil Nadu World Bank aided health system development project potential non governmental partner - Seva Nilayam

Emergency Ambulance Services scheme in Theni district of Tamil Nadu to reduce maternal mortality rate .

Emergency Ambulance Services scheme

Rural poor in Theni

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7 Andhra Pradesh

Different NGO’s Manage health centers in the slums of Adilabad. to increase the availability and utilization of health and family welfare services

Urban Slum Health Care Project, Andhra Pradesh

slum dwellers

8 Raichur Apollo hospitals Group, with financial support from OPEC (Organization of Petroleum Exporting Countries)

to give super-specialty health care at low cost to the people Below Poverty Line

Rajiv Gandhi Super-specialty Hospital, Raichur

BPL people

9 Karnataka National Rural Health Mission

to provide well trained female health activist

Accredited Social Health Activist (ASHA) training program

Rural poor

10 Chhatrapati Sahuji Maharaj Nagar district., UP

Asia Heart Foundation

To provide basic healthcare, set up a chain of primary healthcare centers

Rajiv Gandhi Arogya Yojana

Rural poor

Source: Ministry of finance, Government of India Report (2012)

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4. Rethinking the ‘Kerala Model’ in Health careThe Kerala model of development, based on the development experience of the southern Indian state of Kerala, refers to the state's achievement of significant improvements in material conditions of living, reflected in indicators of social development that are comparable to that of many developed countries, even though the state's per capita income is low in comparison to them. Achievements such as low levels of infant mortality and population growth, and high levels of literacy and life expectancy, along with the factors responsible for such achievements have been considered the constituting elements of the Kerala model.More precisely, the Kerala model has been defined as:

A set of high material quality-of-life indicators coinciding with low per-capita incomes, both distributed across nearly the entire population of Kerala.

A set of wealth and resource redistribution programmes that have largely brought about the high material quality-of-life indicators.

High levels of political participation and activism among ordinary people along with substantial numbers of dedicated leaders at all levels. Kerala's mass activism and committed cadre were able to function within a largely democratic structure, which their activism has served to reinforce.

While India ranks at the bottom of the Index in overall score, Kerala, if measured on the same points, would buck the trend. With only 3% of India's population, the tiny state provides two-thirds of India's palliative care services. The Economist has lauded the 'Kerala Community Model' in healthcare.

After the year 2000, a number of studies focused on the increasing burden of disease in Kerala: besides heart disease and diabetes, road traffic accidents and their consequences were on the rise, as were suicides. Apart from these ‘lifestyle’ diseases, which could be attributed to large-scale transformations in society, Kerala at this juncture also witnessed the reappearance, or even the resurgence, of infectious diseases: epidemics of dengue, chikungunya, rat fever and hepatitis became an annual feature in the state. This indicated large-scale environmental degradation. Most water sources were polluted, and garbage disposal in urban areas loomed large as an insurmountable problem. Many micro-level studies pointed to the high expenditure in health care, which were driving many families to financial ruin and suicide.

A large proportion of families, both in rural and urban areas, depended on private health care. Data also indicated that Kerala had become, ranked by income inequality, one of India’s leading states. In health, as in many other things, Kerala had become a ‘non-model’.

The trend of health care expenditure (medical and public health) as a proportion of total revenue expenditure for the last 12 years along with other major Southern states shows Kerala continues to perform relatively better than the other states. Even though the share of medical and public health expenditure has come down over time (after 2001-2002). Overall, medical and public health revenue expenditure as a per cent of GSDP has declined from 0.97 per cent in 1984−85 to per cent to 0.63 in 2010−11.

Despite intensive efforts by the state, health challenges remain which are not being adequately addressed by current health policies and practices. These challenges are three-fold and are presented in following Figure.

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Figure 1: Health challenges

Focusing on the third point, health financing, there has been increasing privatisation of health care services in Kerala. However, price of private health care turns out to be exorbitantly high, which impedes poor people to access this system. Quality control and monitoring of the services also would become a grim issue in the private system.

Out of pocket expenditure on health has also increased significantly in Kerala. It is widely acknowledged that out-of-pocket (OOP) expenditure on health care has significant implications for poverty in developing economies. Out-of-pocket payments for health can cause households to incur catastrophic expenditures, which in turn can push them into poverty. It is evident from the following table that, Kerala has experienced the highest increase in out-of-pocket expenditure. This shows the vulnerability of Kerala’s population to health care expenditures.

Table 2: OOP spending on healthcare as a percentage of total expenditure

States Rural Urban Total

Andhra Pradesh 4.9 4.1 4.7

Assam 1.6 2.6 1.7

Bihar 2.8 3.0 2.8

Chattisgarh 5.2 5.9 5.3

Delhi 1.6 1.9 1.9

Goa 2.4 3.8 2.9

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HEALTH STATUS Health indicators not par with developed nation

Increasing incidence of diseases

Gender issues and age related issues

HEALTH INFRASTRUCTURE

Inadequate Infrastructure

Declining public health centers’ and community health centers’

HEALTH FINANCING

Increasing Out of pocket Expenditures

Increasing Per capita Expenditures

Gujarat 3.8 3.8 3.8

Haryana 5.0 4.1 4.8

Himachal Pradesh 5.1 5.0 5.1

Jammu & Kashmir 2.5 2.3 2.4

Jharkhand 3.2 4.4 3.4

Karnataka 3.4 3.3 3.3

Kerala 7.8 6.6 7.5

Madhya Pradesh 5.3 4.0 5.0

Maharashtra 5.5 5.0 5.3

Orissa 4.1 3.7 4.0

Punjab 5.5 4.1 5.1

Rajasthan 4.3 4.4 4.3

Tamil Nadu 3.8 4.0 3.9

Uttar Pradesh 6.8 5.4 6.5

Uttarakhand 3.8 3.0 3.6

West Bengal 5.1 5.0 5.1

Dadra & N. Haveli 1.8 2.4 1.8

Source:Estimates From NSS 61st Round, Paper presented for consideration of the Expert Group on Poverty, Planning Commission 12 May 2009

To counter these challenges, the state government has launched several health initiatives under the purview of the National Rural Health Mission (NRHM). NRHM came at an opportune time, when the state was finding it difficult to meet the demand for resources. Apart from various programmes that are implemented in all the Indian states through National Rural Health Mission (NRHM), there are certain special initiatives that have been implemented in Kerala. One such initiative is Karunya Benevolent Fund Scheme to ensure that Keralites of all ages and backgrounds can have affordable and an equitable chance of achieving health.

5. Karunya Benevolent Fund Scheme by Kerala Government- Public-government-public participation model

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Health financing is the most urgent issue of all for a health care strategy. It is impossible to envision dealing with access or quality without addressing this aspect. It is crucial for the state government to take initiatives to provide financial coverage for health depending on the income strata of people. It is an important strategy to provide access and quality health care to every citizen.

The Karunya Benevolent fund Scheme introduced by K.M Mani, finance Minister of Kerala in 2011-2012 Budget. The Union Defence Minister A. K Antony inaugurated the scheme on Feb 26, 2012. Karunya Benevolent Fund' - provides financial aid for poor people suffering from serious ailments, by raising funds through Kerala lottery named Karunya Lottery.

Karunya Benevolent Fund is providing financial assistance to under-privileged people suffering from acute ailments like Cancer, Hemophilia, Kidney and Heart diseases and for Palliative Care. The amount for the health scheme is raised through lottery. This welfare measure will be helpful to those who suffer from ailments, the cost of treatment of which are proved to be unbearable to lower and even middle strata of society. The income generated through the sale of Karunya Lottery is exclusively devoted for extending financial assistance to the purpose.

Since then the scheme is providing financial assistance to under privileged people suffering from acute ailments. The Karunya Benevolent Fund has so far funded the medical expenses of around 22,000 patients amounting to Rs2.86 billion.

In 1967, when the Kerala government launched lotteries, it was the first state to do so in the country. After trying out some special-purpose lotteries like draws for sports, education and welfare of jawans, the state government decided to launch Karunya lottery in 2011-12. The department set aside the revenue from this lottery to fund the Karunya scheme. The treatment under the Karunya scheme was initially provided through the government medical colleges and hospitals. But now 62 private hospitals have been accredited to the scheme.

6. Achievements

Under Karunya, families with income below Rs 3 lakh per annum (these would also include those above the poverty line) are given financial assistance up to a maximum of Rs 2 lakh. The ailments covered under the scheme are cancer, heart disease, kidney trouble and palliative care. For some diseases like haemophilia the assistance is up to Rs 3 lakh.

July 2012, The government give accreditation to 32 private speciality hospitals for treatment of poor patients using grants from the Karunya Benevolent Fund

In April 2013, the scope of Karunya Benevolent Fund scheme for the poor and underprivileged extended to cover mental illness, thalassemia and sickle cell anaemia.

In July 2013, new dialysis centre opened at Government Medical College Trivandrum, as a pilot project of the Karunya Benevolent Fund initiative to set up dialysis units in government hospitals. An amount of Rs five crore has been sanctioned from the fund to five medical colleges in state to set up dialysis units with

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ten machines each. Rs 3.15 lakh will be spent for setting up dialysis units in the district and taluk hospitals.

In October 2013,the Karunya Benevolent Fund, which provides financial assistance to under-privileged people suffering from acute ailments and for palliative care, by raising funds through Kerala Lotteries, extended to organ donors.

In October 2013, Government has decided to set up Karunya Homes in five government medical colleges utilising the proceeds from Karunya lottery, where those accompanying the patients could stay.

Government announced extended assistance to haemophilia patients under the Karunya Benevolent Fund. It would not be limited to Rs.2 lakh and that the government would provide further assistance to haemophilia patients for continuous treatment, on the basis of hospital bills.

By December 2013, The Karunya Benevolent Fund has funded the medical expenses of around 22,000 patients amounting to Rs2.86 billion.

In January 2014, the government is planning to open 18 more outlets this year. The pharmacies will be set up in the district and taluk level hospitals. When it was launched it was planned to set up 35 outlets and so far 16 pharmacies have been opened.

7. Few Beneficiaries

PT Viswanath (44)

An auto rickshaw driver was diagnosed with cancer of the intestine. He was only 43. He was about to sell his auto rickshaw to pay for the initial treatment but then came to know about Karunya. He got Rs 1.4-lakh grant from the Karunya Benevolent Fund in 2012.

Razia (45)

A homemaker from Kollam had a heart problem and was advised a surgery. Karunya underwrote her medical expenses to the extent of Rs 1.5 lakh.

Santha P K(41)

A homemaker from Thrissur had heart disease. Karunya underwrote her medical expenses to the extent of Rs 1.6 lakh in February 2013.

8. Lottery as a Social Tool

Lotteries have been banned in some states as it is cited as a speculative game in which the poorer sections of the society spend their money. According to Babu Kallivayalil, member, central council, Institute of Chartered Accountants of India, schemes like Karunya are welcome as they bring a part of the money back to the poor people and It is a good scheme through which the profits of the lottery are used for a social cause

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The lotteries department is ramping up its publicity machinery to spread the message that buying a lottery ticket is a philanthropic activity. The department has in association with Kerala's film fraternity launched a high profile advertisement campaign to make lotteries appealing even to the higher income groups. Promotional films featuring leading film stars in Malayalam such as Mohanlal, Kavya Madhavan, Menaka Suresh and Manoj K Jayan among others appeal to the people to buy Karunya lottery as it is for a good cause.

ConclusionThe key story in this model is the law of large numbers being effectively used to provide a high degree of health security to the poorest populations of the world. This is not a new story, to be sure. The key innovative aspect is the success in mobilizing these large numbers, who are geographically dispersed. The existing organizations and government that connect people must be drafted as a means through which health security can be introduced. The transferability of schemes like this depend almost entirely public private participation and the existence of health care infrastructure of a reasonable kind.

References1. Sarosh Kuruvilla, Professor of Comparative Industrial Relations,Collective

Bargaining and Southeast Asian Studies Cornell University “The Karnataka Yeshaswini Health Insurance Scheme For Rural Farmers & Peasants: Towards Comprehensive Health Insurance Coverage For Karnataka?” (2005)

2. Good Health at Low Cost. Proceedings of the Bellagio Conference, Bellagio, Italy, The Rockefeller Foundation, 1985.

3. P.G.K. Panikar and C.R. Soman, Health Status of Kerala: The Paradox of Economic Backwardness and Health Development. Centre for Development Studies, Trivandrum, 1985.

4. K.P. Kannan, K.R. Thankappan, V. Ramankutty and K. P. Aravindan, Health and Development in Rural Kerala. Kerala Sastra Sahitya Parishad, Trivandrum, 1991.

5. M. Govinda Rao and Mita Choudhury National Institute of Public Finance and Policy“ Health Care Financing Reforms in India” 2012

6. Indrani Gupta, Institute of Economic Growth,Delhi,”Out of pocket Expenditure and Poverty, Estimates from NSS 61st Round. 2009

7. UCL School of Pharmacy “ Health and Healthcare in India” 20138. Next Billion Health care “All about India-A Healthcare Market in Transition” 20139. www.karunya.kerala.gov.in10. vision2030 www.kerala.gov.in

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