The quest for universal health coverage policy India needs to keep the promise of incentivizing hospitals.

Abstract

In its 2011 report, the High Level Expert Group (HLEG) instituted by the Planning Commission on Universal Health Coverage(UHC) for India commented as a well-functioning UHC system must align the economic incentives of health care providers with the goals of system 10. But in reality, Govt. block grants often do not fully cover the actual treatment costs incurred by the health institutions. Whether this basic weakness of Govt. will enable its people to access a successful universal health care service? In this policy paper, we explore this question by using a publicly available dataset disseminated by Govt. of Karnataka providing information about the incentives received by hospitals from a Govt. health scheme, namely, Vajpayee Arogyashree Scheme(VAS) and an empirical framework that models the hospital utilization as a function of its capacity and the amount of incentives it receives from Govt. Ourstudy shows that while the demand for health care is expected to continue rising, Govt. is failing to incentivize the hospitals for providing their services. We also find evidences that due to lack of incentives, private hospitals are dropping out gradually from the aegis of Health scheme funded by the Govt. We conclude by discussing the potential implication of our result and the alternative ways towards the journey for Universal Health Coverage in India.