Decoding Obama’s healthcare revolution: lessons for India?

The Supreme Court endorsement of the Patient Protection and Affordable Care Act, better known as Affordable Care Act (ACA) or “Obamacare”, on Thursday is a watershed in America’s move towards universal healthcare, and an example of public health taking political centrestage.

In simple terms, the Supreme Court (SC) ruling upholds Obama’s poll commitment to provide healthcare to everybody, which his Republican rival Mitt Romney promises to roll back if he comes to power.

Strangely, the country and its politicians are bitterly divided on protecting vulnerable people from health catastrophes.

The law, passed in March 2010, will expand health coverage to 16.7 percent of the American population who live dangerously without any form of health insurance and will also improve the quality of coverage for the insured. Over the years, the number of people outside health coverage has been steadily rising. Between 2008 and 2010, it rose by four million.

Here are the salient features of the law, which now has no obstacle for implementation unless Obama loses his next presidential elections:

1. All those without health cover will have to now mandatorily buy insurance. At present, Americans have three types of health coverage — Medicaid, Medicare and private insurance. Medicaid and Medicare are state sponsored schemes aimed at poor and old people (and children and the disabled) respectively, who cannot buy private insurance. Private insurance are either bought by individuals directly or by their employers.

Without insurance, a single episode of bad health can bankrupt a person in America; however at least 50 million people live such dangerous lives. Some studies have in fact shown that many of them can afford to buy health insurance, but don’t do it either voluntarily or involuntarily.

The ACA makes it mandatory for everyone, without cover, to buy insurance. If one cannot afford, the government will give “stipends”. If one doesn’t buy health insurance, there will be a penalty.

Called “individual mandate”, this was in fact the central and most contentious part of the ACA. Despite fears of it failing judicial scrutiny, the SC ruled in its favour terming the penalty as a tax.

Given the extreme sensitivity of American people to the word “tax”, Obama didn’t want to use it for political reasons, but would be happy that the court has used it and his problem has been solved.

2. Besides insisting on “individual mandate”, the law will also ensure expansion of coverage by health insurance companies. For instance, American health insurance companies are notorious for denying coverage for pre-existing conditions. The new law will ensure that the companies are unable to do that any more.

For Obama, insisting on everybody buying health insurance is a pre-requisite for him to ask the companies not to omit people with pre-existing conditions. The logic is that if the uninsured people are given a choice, they will not buy insurance unless they have some health problem, which will give the companies a chance to omit them for pre-existing conditions.

More people on healthcare will also give the insurance companies additional numbers for improving their bottomline. Proposed “insurance exchanges” will offer people a competitive and transparent marketplace to buy their insurance cover.

3. Additionally, the insurance companies cannot refuse to keep people up to 26 years of age under their parents’ insurance. This move will again reduce the burden of healthcare on people, or rather young people.

4. ACA also will expand the coverage of Medicare and Medicaid. Both are federally funded, but executed by the states. Medicaid covers 50 million poor people and a third of all children in America. The new law will raise the eligibility bar for Medicaid so that people with incomes that are considered ineligible now will be covered by the free scheme.

The additional cost for this expansion will be initially paid for by the federal government, but will have to be picked up by the states by 2020. The states are mostly unhappy because this move will put enormous strain on their budgets. Twenty six of them went to court.

The ACA had provision to penalise the states by withdrawing Medicaid and Medicare funds if they do not comply with the expansion. The Supreme Court however didn’t agree with this and now the fate of the expansion of coverage beyond 2020 purely depends on the willingness of the states to bear the extra burden. Experts feel that political pressure will compel the states to fall in line.

5. The Obama administration will also expand the scope of coverage for old people under Medicare. At present beyond a threshold, Medicare is not free in the sense that the beneficiaries will have to pay the full cost of prescriptions. The ACA seeks to close this “doughnut hole” by providing discounted medications to those who have reached the threshold. This will again cost a lot of extra money.

In summary, with the SC endorsement, the decks have been cleared for universal healthcare in America by a) compelling the un-insured to insure voluntarily or with state support; b) forcing the insurance companies to stop their unethical tricks such as omission and c) expanding the state-sponsored coverage for the old, the poor and the disabled.

The ACA is a political hot potato that Obama is betting his future on. Such is the opposition from conservative quarters, general public and corporate interests that his Republican rival’s main poll promise is the repeal of the law. If Obama wins a second term, it will certainly be a public endorsement of the most progressive pro-people legislation in the world in recent times.

Despite such intense pressure from almost all influential quarters, Obama has shown the world that all that universal healthcare takes is political will. It will upset business interests and will invite massive financial burden (a trillion dollars a year), but leaving people unprotected to health catastrophes is inconsistent with a modern nation.

This is the point that India needs to take home if it is serious about pursuing its 12th plan goal of Universal Health Care (UHC) — that public health is a political issue, investing in public health is unavoidable for the well-being of a nation and that one has to muster strategic political resources to move ahead with the plan.

India has in fact made some constructive noises for the UHC. The Planning Commission seeks to roll out a cashless, portable UHC plan in the 12th plan and hopes to achieve the target of universal health coverage by 2017.

A high level expert group constituted for this purpose has proposed a National Health Plan (NHP) which will make healthcare an entitlement for every Indian citizen. It will offer every citizen a guaranteed access to essential health package, including cashless, inpatient and outpatient primary, secondary and tertiary care. The services will be offered by both public facilities as well as private companies.

The Indian plan is more ambitious than what Obama has set out to do given the scale, socio-economic and political complexity and resource-needs of the country. The Planning Commission, based on the advise of an expert group, proposes to pilot test the UHC in at least one district in every state this year before scaling it up.

The central government will bear 85 percent of the cost of UHC, leaving the 15 percent to the state. Compared to the Obama plan, where he wants the expanded coverage of the free care to be borne by the state by 2020, this is way too reasonable. However, the biggest challenge for India will be the political commitment by the state governments, strength of health systems, and effective governance.

A major governance challenge will be corruption and the possibility of some states outsourcing bulk of the service to health insurance companies than investing in the state’s health infrastructure.

On paper, the UHC looks fabulous; but in reality there will be big roadblocks like in every centrally assisted scheme. The expert group on UHC has taken a holistic human development approach to public health and this needs to be converted into a political opportunity.

It’s high time that public health became a political issue in the elections as corruption or law and order has been. This is where civil society has got to play an important role.

Every other country that India is often compared with, such as Brazil, China and South Africa and smaller countries such as Thailand, has marched far ahead of us in achieving universal health coverage. China has embarked on a $130 billion plus plan to cover its entire population by 2010. By last year, 95 percent of its population has some form of insurance. Even countries like Rwanda and Ghana have made impressive strides.

That America, which spends 18 percent of its GDP on healthcare, hasn’t been able to universalise health coverage is a clear indication of the fact that UHC is not about money, but about political will.

In comparison, India at present spends less than 1 percent of its GDP on health (government spending) and plans to raise it to 2.5 percent in the 12th Plan. As in the case of America, it will certainly be an issue of political will than money.