-Soumitra Joshi

India has been a predominantly agricultural economy over the past years with most of its population being rural. Considering this, public and health policy traditionally focused on rural India. The demographic shift over the recent years however does not see a proportionate shift in the focus of policies. Urban healthcare has been and continues to be an offshoot of the rural health system. For e.g., the National Rural Health Mission was launched in 2005, while the National Urban Health Mission was launched in 2013. These two programs were, in the same year, clubbed as sub-missions under the National Health Mission[1]. There is hardly any program in India, be it financial or health systems, that has emerged from the core philosophy of urban health. Although these programs are running well, creating unique structures and health financing mechanisms for urban healthcare is important considering the changing demographics and economy.

As of the 2011 census, about 34.93 percent Indian population is living in urban areas, and there are 53 cities in India with 1 million plus people. The Mumbai Metropolitan Region has nine municipal corporations and 2.35 crore urban/semi-urban dwellers[2]. It is projected that by 2030, 60 crore people will be living in urban areas of India, and by 2050, 50 percent of the Indian population will be living in urban areas[3]. Along with the current and projected population, urban economies are changing rapidly. In the coming decades, urban areas will be powerhouses of the economy. A capital investment of USD 1.2 trillion will be necessary to meet the projected demands in the urban economy (MGI Report)[4]. The MGI report further states that 70 percent of net new employment will be generated in the metropolitan area. A new kind of economy known as gig and platform economy is emerging. The gig/platform economy is a majorly urban phenomenon. It is estimated that there were 77 lakh gig workers in the Indian economy in 2020-21; it is projected that by 2030, there will be 2.35 crore gig workers in the Indian economy[5]. An urban primary healthcare system catering to this target group needs to be built over the next three decades.

Primary healthcare plays two essential roles in the health systems. Firstly, primary care quickly resolves the problems at its roots, and secondly, it works as a gatekeeping mechanism for secondary and tertiary care. Along with this, primary care is expected to work for prevention, behavior change, and communication for a healthy lifestyle. The utilization of primary care depends on the health-seeking behavior of the population. Behavior Change and Communication (BCC) plays a critical part in health-seeking behavior. Along with BCC, financial accessibility also plays an essential role. India has reached the epidemiological transition phase. Non-Communicable Diseases have increased tremendously. As per the “India: Health of the Nation’s State Report,” contribution of NCDs to total Disability Adjusted Life Years is 55.4%[6].

Considering NCDs’ increasing prevalence and incidence, consistent follow-up and early detection are critical. Such detection and follow-up will be possible only if primary care is easily accessible.

In India, primary healthcare is delivered by both the Government and Private healthcare. As per the National Health accounts, 48 percent of expenditure on health is out of pocket; 48 percent of current health expenditure is for primary care[7].  Current health financing systems have a substantial market and regulation for secondary and tertiary care. For primary care, the private sector works on an out-of-pocket expenditure model. In the government sector, primary care is provided free of cost in the Primary Health Centre or Urban Primary Health Centre. But sustainable financial protection is required as there is a shift in preference toward the private sector. As per National Health Accounts, out of the total health systems’ spending on primary care, 37.6 percent is accounted for by the private sector.

In the last few years, the urban poor have been facing high Inflationary pressure[8]. The urban poor, the bottom 20 percent in terms of income, face 10.5 percent inflation in the fuel and light category, 58 percent in the food and beverage category, and 31.5 percent in the core inflation category. With this data, we can predict that the urban poor must also face much more inflationary pressure in healthcare. In such a situation, the right kind of primary insurance products must be developed to reduce the cost of primary care at the level of the urban poor population. Such products will distribute the inflationary pressure. The private sector is robust in urban India, a better quality, extensive network of service providers can be built.   

65.49 million people are living in 13.7 million slum households across India[9]. MGI report states that by 2030, 91 million urban individuals will be in the middle class. Rather than a drawback, this could be seen as a statistical opportunity. The economies of scale principle state that marginal cost decreases when large production is undertaken. The same principle can be applied to Urban PHC insurance. This population is an opportunity for the private sector to create a sustainable and scalable business model. However, the segmentation of products should be avoided. Along with the urban poor, bringing the middle class into the product distribution will mitigate the potential underwriting risk for the insurance companies. With diverse populations across age groups, “adverse selection of individuals” can be prevented.    

In the short run, creating a health insurance model catering to urban primary healthcare is crucial. This will create financial protection for the urban poor and reduce their out-of-pocket and catastrophic health expenditure. Although considering the epidemiological transition, changing economic structure, and increasing average population age, it is pertinent to create a universal health coverage solution that will cover the population through primary, secondary, and tertiary insurance.

[1] National Health Mission. Retrieved from: https://nhm.gov.in/index1.php?lang=1&level=1&lid=49&sublinkid=969

[2] MMRDA. Retrieved from: https://mmrda.maharashtra.gov.in/about-mmr

[3] Ministry of housing and urban affairs. https://nudm.mohua.gov.in/about/#:~:text=At%20the%20current%20rate%20of,2050%20(WUP%2C%202018).

[4] India’s urban awakening. Mckinsey. Retrieved from: https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/Operations/Our%20Insights/Urban%20awakening%20in%20India/MGI_Indias_urban_awakening_executive_summary.pdf

[5] India’s booming gig and platform economy. (2022). NITI Aayog. Retrieved from: https://www.niti.gov.in/sites/default/files/2022-06/25th_June_Final_Report_27062022.pdf

[6] India: Health of the Nation’s State

[7] National Health Accounts. Retrieved from: https://nhsrcindia.org/sites/default/files/2021-11/National%20Health%20Accounts-%202017-18.pdf

[8] Quickonomics by CRISIL. https://www.crisil.com/content/dam/crisil/our-analysis/views-and-commentaries/quickonomics/2021/10/same-inflation-different-burdens-by-income.pdf

[9] Down to earth. https://www.downtoearth.org.in/blog/urbanisation/rapid-urbanisation-where-do-urban-poor-stand–78613

Photo Credits –PARI

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